Stores for Free? From the Not Sure if It’s a Good Idea file

We all like free.  But free isn’t always good.

That was one of the two thoughts that I had when I read this article from Bizdistricts.com.  On the surface, it certainly sounds like a good idea:

The CreateHereNow program aims to offer free rent to new businesses. It allows empty storefronts to be occupied for the first three months at no charge – with hopes that these eventually will be paying leaseholders.

The program, which is featured on The Day, has been implemented at 20+ cities across the US state of Connecticut. The $500,000 program is run through the state Department of Economic and Community Development.

The groups that have passed muster to become the city’s first CreateHereNow storefronts include an independent eyeglass retailer, a cooperative boutique, bike repair shop, wellness cooperative, furniture and design store, skateboard shop and a children’s learning center.

Like I said, we all like free, and free probably beats vacant most days of the week, at least in the short term. And while I have certainly dealt with plenty of get-businesses-into-vacant-storefronts-one-way-or-another initiatives, I don’t know this one specifically.  So read the rest with that caveat in mind.

If you’re going to do a program like this, there’s several factors that I think you should be very careful to address:

  • Running a business is not a natural skill.  While we like to say that some people are natural-born for sales, or that someone has a talent for making things, almost no one is naturally gifted in the whole range of skills and tasks that it takes to run a small business.  As I’ve written elsewhere, a small business owner gets forced to become a jack of all trades, and if the small business owner doesn’t have aptitude for (or willingness to) learn one of several core skills (inventory management, accounting, display set-up, employee management, etc.), then you’re probably looking at a failed business in pretty short order. Careful vetting of businesses, like they’re doing with these programs, can help, but Stuff Happens.  If you’re going to be in the business of helping businesses get started, you have to be prepared to help them build their skill sets.  That seems to work best as a combination for formal training and peer connections, but it’s often overlooked, or poorly delivered.  And central to making an initiative like this work.  Failure that people learn from is not a bad thing, and failures are a natural part of small business life, but you have to keep in mind that a few high-visibility failures can put a program like this at significant risk.
  • Too much space is not a good thing.  Especially in districts that have a lot of vacant space, we find pretty quickly that we can get a whole lot of square footage for not a lot of money.  That’s not necessarily a good thing.  Space requires stuff to fill it — inventory, tables that will generate demand for food, etc. If the space is not filled, or filled sparsely, that makes the business look half-done, unprofessional, unsuccessful. A new business owner may be better set up for success in a very small, even tiny space, than an overly big one.
  • Free space that was vacant for a reason… will still have that reason. A commercial space can be hard to fill for a lot of reasons. Yes, it may be that the building ( or the block that it’s on) may not be living up to it’s potential simply because the market doesn’t get it yet– it’s an up and coming location, it’s newly renovated, it’s a type of building that the lenders don’t know how to work with yet (often the case for mixed-used buildings in districts that haven’t gotten much recent investment). But…there could be other reasons. Is the building poorly maintained? Poorly insulated? An out of the way location? A scary or intimidating neighborhood? Just because it was great once doesn’t automatically mean it’s a good building or location now. Failing to address issues like maintenance or getting people to come to the location could easily set a new business up for a very rocky start.
  • Small business start-up strategies should be part of nearly every community’s tool kit– we need them to seed our economies, keep our money in our community and give our public places. But just like you don’t grow a healthy vegetable garden by throwing a handful of seeds at a vacant lot, growing a successful crop of small businesses takes more than just free buildings.

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