Aid Programs Get Down to Business
Flora Montes de Oca’s plans to expand her factory had come to a frustrating standstill just a few months ago, with the new plant site she bought in Sun Valley idled by bureaucratic permitting hurdles. But help from a retooled city-funded program has given her hope.
Consultants brought in by the Valley Economic Development Center are helping her seek a parking variance so she can soon begin building a facility that will more than triple her space. Engineering students from Cal State Northridge are designing the layout as part of the same program.
The North Hollywood company, which manufactures cable harnesses for automated metal fabrication machines and other uses, has added two employees at its cramped quarters and plans to hire 10 more after the move.
“I was really at the right place at the right time,” said Montes de Oca, 35, who started the business from her garage seven years ago. “Then it was like a chain [of events] that just took me like a breeze.”
But it was more than serendipity that helped Montes de Oca. Hoping to have a more lasting effect on economic development, the city of Los Angeles has radically overhauled its business-assistance program, seeking out companies like Montes de Oca’s Production Flow.
Since early this year, the city has channeled federal grant dollars to key growth industries with the potential to create decent-wage jobs for lower-income residents. Those chosen so far: metals and printing in the northeast San Fernando Valley and furniture manufacturing in South Los Angeles.
A separate initiative is taking consulting services to the streets to assist small retailers and service providers in flagging commercial corridors. The idea: to boost revenues and profit margins and thereby help improve the quality of goods available in some of the city’s disadvantaged pockets.
Last week, Valley Economic Development Center retail consultant Kimberly Frelow hit Canoga Park businesses along Sherman Way to offer help to retailers there. At R.E.I. Crafts, known for its shelves of ribbon and lace, she conducted an assessment for owner Denise Robertson. By the time she finished, Robertson had agreed to participate in a six-week peer program that helps retailers set and meet goals. The pair discussed ways for Robertson to target her marketing to existing customers and her need for another Spanish-speaking employee.
Down the street, Frelow checked up on Kids to Kids, which sells used children’s clothes and toys. Owner Marge Bravin had placed a sidewalk sign outside her store--something she had discussed with Frelow on her last visit--and had more foot traffic as a result.
Herbal retailers in Chinatown, an auto-repair shop in East Los Angeles and a flower store in Harbor City are among dozens that have received one-on-one help to navigate regulatory hurdles, better market their goods and hire the right employees.
Many of the retailers can barely leave the cash register for bathroom breaks, let alone take time to seek free workshops, so bringing services directly to them solves a problem that plagued the city’s earlier efforts.
“We really felt like she was this angel,” Nicole Vigil, co-owner of Harbor City Florist, said of the Women’s Enterprise Development Corp. consultant who left a flier in her store one day. “All of a sudden she just appeared and had fabulous ideas.”
Making ‘the Shoe Fit the Foot’
The idea to target specific industry sectors and neighborhoods in need of help may not seem revolutionary. But for the city, it is. For years, public dollars flowed into a general program to train new entrepreneurs and offer one-size-fits-all assistance to businesses fortunate enough to learn of the services.
But a review of the program, administered since the early 1990s by the city’s Community Development Department with millions of dollars in funds from the U.S. Department of Housing and Urban Development, found that results were elusive at best. The Entrepreneurial Training Program, which taught the basics of business ownership, had “virtually no effect on job creation,” according to the study, which was ordered by Mayor Richard Riordan’s office in 1999.
Another city program, the Business Assistance Center, has offered consulting and help with loan packaging to more established businesses. But it showed relatively anemic gains in revenue and job growth for the companies it assisted, the study found. Furthermore, businesses such as manufacturers in need of specialized services found themselves out of luck with the general consulting available to them, the review said.
The findings were stinging. HUD money is supposed to flow only to programs that produce a public benefit, such as job creation for low-income people or reversal of blight in downtrodden areas. Although city reports to HUD showed several thousand jobs created from 1995 to 1998, the study found that when lost jobs also were taken into account the net gain from the program was “effectively zero.” Other improvements--say, to the quality of services provided in a neighborhood--were impossible to track under the old system.
The review, conducted by outside consultants with input from city staff, proposed the overhaul that is now being implemented. “We’re trying to make the shoe fit the foot much more specifically,” said Jasper Williams, director of industrial and commercial development for the Community Development Department. “We’re being entrepreneurial in government.”
To that end, the program--funded with about $2.5 million a year--has been broken into three components. One retains the focus of the former program, concentrating on the city’s smallest businesses. An entrepreneurship program targets low- and moderate-income people eager to start a business, particularly if they locate in zones that have been targeted for revitalization. Under the same contract, a separate microenterprise program assists businesses with five or fewer employees as long as owners are low- or moderate-income people or the business grosses $200,000 a year or less, Williams said.
The retail and service components also are aimed at areas where other revitalization efforts are underway, such as the city’s Targeted Neighborhood Initiative or state and federal enterprise and empowerment zones. The idea, Williams said, is to try to gain momentum in those neighborhoods instead of spreading public resources thin citywide.
Success will be measured in revenue growth and increased profitability, which will ultimately improve the quality of goods and services offered in lower-income city pockets.
Nonprofit agencies across Los Angeles already are working with retail and service businesses under the new contracts. After Canoga Park, the Valley Economic Development Center will begin targeting Pacoima businesses next month, then move on to Van Nuys Boulevard. In Chinatown, a retail consultant for the Chinatown Service Center recently brought together a group of Chinese herbal retailers to meet with Los Angeles County Health Department officials, who regulate certain types of herbal products.
“The county had certain regulations, and they weren’t good at communicating those to the herb retailers,” said Cook Sunoo, program director for the Asian Pacific Island Small Business Program, which is coordinating the contract for the Chinese, Korean, Japanese, Thai and Filipino business communities. “About 15 of these herb shop owners came in and listened to the presentation and were told what they should or shouldn’t do.”
Jury Out on Success
The most unusual components of the program for the city, however, are the growth contracts targeting businesses like Montes de Oca’s. Organizations bidding for the contracts--which set clear job creation and revenue growth goals--had to choose industries that have been identified as growing sectors that produce decent-wage jobs.
Furthermore, they had to secure commitments from companies such as Production Flow before the contracts were awarded. They also had to lay out plans to bring in specialized consulting help.
For example, the Vermont Slauson Economic Development Corp. is tapping the California Manufacturing Technology Center to help furniture manufacturers make production more efficient, and the Pacific Design Center will help businesses with furniture designs.
The jury is out on success. the Valley Economic Development Center’s manager for the printing and growth contracts, Jose Anaya, said the economy’s slowdown affected the program as some companies shied away from expansion. The looming Hollywood strikes also derailed plans to steer struggling printing companies toward lucrative entertainment-related business.
Nevertheless, 15 jobs have been created or saved at the eight metals companies participating in the growth program. In printing, 19 jobs have been created and 13 saved at five companies. Sixteen of those hires were made by Custom Decorating California, a Sylmar company that silk screens and hot-stamps bottles, mainly for the hair-care industry, and is increasingly moving into printing labels.
Owner David Long said he had lost customers and radically scaled back operations in recent years, largely because of pressures in the industry that have cut out the middleman for container design. Since he began working with the Valley Economic Development Center’s consultants, however, his business is on the upswing.
Anaya and independent consultant Julian Medrano helped steer him toward the higher profit margins of label printing, where overheads are lower than in silk screening, Long said. They also helped him analyze his marketing weaknesses, hire a sales manager and draft an employee manual to prevent human resource litigation.
“I get a lot of help,” he said. “They understand business.”
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Business Aid Programs
The city of Los Angeles has retooled its business assistance program. It contracts with various agencies to bring training and consulting to start-ups, micro-enterprises (companies with just a few workers), retail and service businesses, and businesses in key growth industries. The agencies also provide small-business services beyond the scope of the city contracts.
Agency: Valley Economic Development Center
Services: Helps micro-enterprises, Spanish-speaking start-ups, potential entrepreneurs, and retailers and growing businesses in the printing and manufacturing industries, mostly in the San Fernando Valley.
Phone: (818) 907-9977
Agency: Vermont Slauson Economic Development Corp.
Services: Aids micro-enterprises, start-ups and potential entrepreneurs, retail and service businesses, and growing furniture manufacturers in South-Central Los Angeles.
Phone: (323) 753-2335
Agency: FAME Renaissance, economic development arm of First AME Church
Services: Works with Vermont Slauson Economic Development Corp. to provide service to micro-enterprises, start-ups and potential entrepreneurs in South-Central Los Angeles.
Phone: (323) 730-9194
Agency: Women’s Enterprise Development Corp.
Services: Assists retail and service businesses in San Pedro, Wilmington and Harbor City areas.
Phone: (562) 983-3747
Agency: CHARO Economic Development Corp.
Services: Assists micro-enterprises, retail and service businesses, primarily in East Los Angeles. Services available in Spanish.
Phone: (323) 269-0751
Agency: Barrio Planners Inc.
Services: Assists start-ups and would-be entrepreneurs in East Los Angeles. Services available in Spanish.
Phone: (323) 726-7734
Agency: Asian Pacific Island Small Business Program
Services: Helps retail and service businesses in conjunction with the Chinatown Service Center, Korean Youth and Community Center, Little Tokyo Service Center, Search to Involve Filipino Americans and the Thai Community Development Center.
Phone: (213) 473-1605
Agency: Community Financial Resource Center
Services: Works with micro-enterprises, start-ups and would-be entrepreneurs in San Pedro area.
Phone: (323) 233-1900
Agency: Pacific Asian Consortium in Employment
Services: Works with micro-enterprises, start-ups and would-be entrepreneurs in Hollywood and parts of north Los Angeles.
Phone: (213) 353-3982
Sources: Los Angeles Community Development Department, Times research
