Slump doesnt scare startups

New independent businesses take off in Southwest despite the stormy economic climate

The sun is always shining in Greg Alford’s world.

That’s why he always wears sunglasses, why he’s not overly concerned about the nation’s financial troubles and why he and friend Chris Jackman, known as C.J., can start a brand-new restaurant without any previous experience and not worry about it.

“I just know that people are going to eat,” Alford said. “If you give them good food and reasonable prices, they’re going to eat.”

His theory has proven true so far. Since opening C&G’s Smoking Barbecue June 8 at 48th Street and Nicollet Avenue, Jackman (C) and Alford (G) have had a steady stream of customers gobbling up their ribs, Coney dogs, sunfish, corned beef, chicken wings and other specialties.  

The barbecue shop is one of several new independent businesses taking off in Southwest despite the stormy economic climate, a phenomenon that’s not limited to this area.

Any time is the right time

Right now in the Twin Cities, within 25 miles of Downtown, there are roughly 2,000 new businesses being formed every month, said Patrick Boulay, president and CEO of startup resource New Business Minnesota.

“It’s a huge number,” he said. “It’s why we exist.”

That count includes everything from the weekend handyman service to the company looking to build a better heart valve, Boulay said, and the down economy isn’t slowing the boom.   

Though some banks have tightened lending, interest rates are down, startup costs and overhead are low and the social-networking age has made marketing cheap and easy, Boulay said. Entrepreneurs these days are technologically armed, unlike their counterparts during previous recessions, when Internet, cell phones, fax machines and other modern business tools weren’t on the scene.  

“The speed at which you can do things is remarkable,” Boulay said.

There’s also more “involuntary entrepreneurs,” people who have decided to start their own careers after being laid off. Others are simply breaking old habits and looking for new opportunities.  

“When the economy starts changing, people start rethinking things,” Boulay said. “They take a look at old relationships and doors start opening.”

Ed Daum, director of the U.S. Small Business Administration’s (SBA) Minnesota district, said between April and May of this year, the SBA awarded 519 loans totaling nearly $99 million. Of those recipients, 164 were new businesses. That’s a slight increase from the 158 startups that received loans during the same period last year, when 484 loans totaling just over $88 million were awarded.

“I’ve been with the SBA for a long time and I just think anytime is a good time to start a business,” Daum said.

As for today’s market, Daum echoed the advantages Boulay noted and added that rent is cheap and employees are plentiful.

Of course, getting started in a slow economy has its drawbacks, Daum said. Persuading thrifty consumers to spend on a new product can be tough, and some banks are still wary about handing out loans. He said developing a solid business plan before a trip to the lender is essential.     

Brad Ruiter, spokesman for the Minnesota Bankers Association, which represents 95 percent of the banks in the state, said a clean financial history is also important.

But, he said, lending statewide was up 4 percent in 2008 and 1 percent in the first quarter
of this year.  

Getting by with a little help

“I had to get a loan and help from family as well. I probably couldn’t have done it without them,” said Larz Yungbliut, who opened Dragonfly Coffee at 50th Street and Penn Avenue this spring.

Yungbliut worked in the coffee industry for 17 years before losing his job overseeing Dunn Bros. corporate store near The Depot Downtown in January. He thought about moving to California, where he got his start, but decided to stay in Minneapolis to avoid selling his home and to be with the people he’s befriended over the years.

“Basically, I made a decision that with my experience and the support of my family — that was a big thing, support from them — to launch my own spot and take my knowledge and put it to use for myself instead of for somebody else, basically,” Yungbliut said.

He threw himself into the idea, devoting countless hours to his quaint shop’s business plan, build-out and operation. He is his sole employee, working seven days, 80 hours a week. Friends and family volunteer at the store occasionally.

Yungbliut said he’s been involved in the opening of new shops before and learned from mistakes he’s seen. He’s relying on experience to pull him through.

“I’m still on a wing and a prayer with this and I would never advise anyone to do it the way I’m doing it, which is really bare bones,” he said. “You want to have savings for about a year if you can.”

With little more than online networking and word-of-mouth for marketing, business has been surprisingly strong at Dragonfly Coffee so far, Yungbliut said, and he hopes to eventually hire some help. Staying focused and not getting frustrated have been the biggest challenges.

“Within the first two weeks I had a flood here that flooded the whole building and you could want to give up right then with that kind of thing happening, so you have to be willing to weather the storms,” he said.  

Less than two miles northeast of Yungbliut’s shop, sisters Molly Hanson and Samantha Loesch are preparing to open their first restaurant, Kings Wine Bar. The family-funded venture has been in the works for more than a year and the duo has overcome a variety of challenges, most notably turning a photography studio into a wine bar and restaurant complete with a full kitchen.  

“Of all of the things we were worried about — the liquor license and the parking variance — those were a breeze,” Hanson said. “We had those approved last year and we’ve just been waiting to get construction done.”

Hanson has previous experience running a bookstore and a photography business, but both sisters are brand new restaurateurs, so the learning curve has been steep. They hope to open this month.

“We’ve been watching what’s happening in the restaurant industry quite a bit,” Hanson said. “And we still feel that the market we’re targeting will be good.”

Pete Maccaroni, former executive chef at the Sample Room in Northeast Minneapolis, was hired to work the kitchen and Hanson expects a rotation of about 26 employees. She and Loesch, both single moms, expect to be there as much as they can, but Hanson said they have a huge family that’s eager to help out.

Doing what you love

Jackman and Alford have both been cooking for most of their lives. For them, it’s a passion.

“I caught on fire cooking grits one day when I was in kindergarten,” Alford said.

The two regularly manned the grill at backyard barbecues, where the praise was always generous. One day Alford pitched a business idea to Jackman.

“He said if you can cook those ribs that you cook on your smoker at home in a restaurant, they’ll sell,” Jackman said. “And I thought, wow, let me think about that, talk to my family and get back to you. I said OK, and here we are today. And it’s working.”

The space they found on south Nicollet used to be an Italian restaurant, so the build-out was minimal. Jackman, Alford and a handful of family and friends staff the new place.

Alford previously worked for 25 years as an auto mechanic. Jackman is a property manager and satellite television salesman. The friends funded the business on their own and are hoping it becomes their sole livelihood.

So far, sales are strong and the future is looking bright. So don’t expect to find Alford without his sunglasses.

Reach Jake Weyer at 436-4367 or jweyer@mnpubs.com.