On a steamy Saturday afternoon, seven entrepreneurs are planting the seeds of business growth in Cleveland’s Larchmere neighborhood.
There are few customers inside the Corner Shop Collective at East 127th Street and Larchmere. A rumbling storm has dampened foot traffic for the Aug. 12 launch of the retail collective’s second season. But a DJ’s thumping music and the prospects for more business in the coming months are priming the smiles and hopes of small business owners whose wares – tea blends, confections, skin care products, specialty gifts and women’s clothing and accessories – are on display in this shared space next to the Unbar Cafe.
“I’m the resident dreamer of the team,” founder Kashala Smith says of the creative blends sold by Steeped Pearl, an artisan tea company that’s part of the collective. “But I do not know how to do taxes.”
The Corner Shop Collective, and the training that goes with it, “helps me get grounded and fills in the educational gaps” to run a company, Smith said.
Steeped Pearl and six other companies will be open in this shared space for the next 10 months. They will immerse themselves in street-level retail, attend weekly training on topics like accounting, marketing and hiring, and receive one-on-one coaching.
Ultimately, the women running these businesses will learn whether opening their own retail shop makes sense or if another strategy is better, says Jasmine Dixon, vice president of the northern Ohio market for the Economic & Community Development Institute.
“We want to incubate these businesses and help them grow,’’ Dixon says of the retail collective, which ECDI operates as part of its business-accelerator program.Support for underserved businesses
ECDI is a Columbus-based nonprofit focused on developing and financing small business growth among minorities, women, immigrants and refugees. Last year, ECDI made hundreds of loans totaling $20.5 million, mostly in Ohio, ranking it as one of the top U.S. Small Business Administration microlenders in the country. Microlenders are specially designated by the SBA to distribute loans of up to $50,000.
“Our goal is to help level the playing field for historically underserved businesses,” said Dixon, who works with an ECDI team based in Cleveland’s Midtown neighborhood.
ECDI has been operating in Cleveland since 2012 thanks largely to funding and support from the Cleveland Foundation. Among several dozen ECDI funders, besides the Small Business Administration, are the city of Cleveland; Cuyahoga County; JumpStart Inc., a venture-development organization based in Cleveland; and the Ohio Department of Development.
The Corner Shop Collective is designed as a low-risk opportunity for small businesses to test their retail concepts.
“A lot of businesses go into retail and they fail, despite the blood, sweat and tears that go into it upfront,’’ Dixon said. “We saw this issue over and over. We wanted to create something that gives you the opportunity to test being in a retail store and get market exposure.”
Businesses in the collective avoid costly overhead, paying only a nominal rent and a percentage of their sales. They also receive a $1,000 stipend to spend on their businesses as they see fit.
Robust training is provided by the Women’s Business Centers of Ohio, also an ECDI program.
There are four Women’s Business Centers, or WBCs, in Ohio, among 145 nationwide funded by the Small Business Administration. Despite the name, business owners who are men can also take advantage of the centers’ services, which include a professional advisory network that’s free to use, said Nicole Liatos, senior director of the WBCs of Ohio.
“We realize our entrepreneurs don't have the capital to be able to hire an attorney or hire a CPA and so we provide those services pro bono,” Liatos said. “What's really great is that the folks who are part of this network are typically volunteers who see the work we do and want to give back to their community.”Building businesses together
The businesses in this year’s retail collective were selected with the Larchmere neighborhood’s creative energy in mind, Dixon said. ECDI looks at how long the businesses have been operating and if they had engaged previously with the area’s small business and entrepreneurial organizations.
Business owners also had to commit the time and energy needed for street-level retail and the collective’s extensive training, Dixon said. They must collaborate, learning about all the businesses and products in the collective so they can cover for each other, if needed, and help build the collective’s brand.
“That's the main thing that makes this different outside of just putting yourself in a space and selling yourself,” Dixon said. “They are working together to help each other grow. … I tell people it’s a hybrid between running your own operation but at the same time, it’s a co-op because you still have to work together to make the shop as a whole successful. That’s going to make everybody successful.”
Collaboration and low overhead are powerful tools for the collective, said Patty Ajdukiewicz, Director of Small Business Services at JumpStart.
Small businesses “come together, learn from one another, and navigate the intricacies of operating a business," Ajdukiewicz said. The business owners can “take a calculated risk before venturing into their brick-and-mortar location. Leasing a space is one of the main challenges we see amongst our clients. To have a support net like this, in those initial stages, is invaluable and sets them up for success down the road."Testing their retail strategies
Among this year’s seven businesses is one holdover from the collective’s first season of operation, which ended in May. Skin District, selling artisanal, all-natural skin care products, is anchoring and managing the space.
“We felt like it was such an awesome program that we want to give our services back,’’ said Deborah Smith-Aarons, who with her wife, Neicya Aarons, operate Skin District with their children, Myah’Lynn, 11, Riley, 8, and Raveah, 7. The children are owners of the company and involved in creating and selling the soaps, balms, shampoos, masks and other skin- and hair-care products.
Skin District was able to market and test more than 100 soaps at the Larchmere site during its first season, Smith-Aarons said.
“If one doesn’t work, I’m not losing a big chunk of money,’’ she said. “Instead, I'm gaining experience understanding my target market in this area. We continue to test our concept and tighten it.”
Skin District did more than $55,000 in sales in the collective’s first season, Smith-Aarons said. The company recently received a $25,000 loan from JumpStart after participating in its Small Business Impact Program. They used the money to buy a delivery van, and future plans call for opening a spa and salon, Smith-Aarons said.
The retail collective’s first season showed that not every small business was ready for its own retail space.
“Some of our vendors realized that pop-up shops are better for them,’’ Smith-Aarons said. “Some of them are just selling online now.”
Three of the six vendors from the first season, including Skin District, continue to pursue street-level retail in some capacity, Dixon said.
“Our goal in the future is to eventually have a larger space so that we can house more businesses,” Dixon said.
Kashala Smith, the founder of Steeped Pearl, envisions a shop some day for her artisan tea company. Increased exposure at the retail collective “will get us to the knowledge about whether brick and mortar is something we can do.’’
She credits ECDI and the Women’s Business Centers with preparing her for the journey.
“They are warm, they are beautiful,’’ Smith said. “I feel nourished.”
