A COMPREHENSIVE ANALYSIS OF WESTSIDE PARK
Part I of an Exploratory Study to Establish a Special Improvement
District on Springfield and South Orange Avenues, Newark, NJ
Report to the Corinthian Housing Development Corporation and New Community Corporation
May 11, 1998
Current Business Conditions, Assistance, and Networking
All of the businesses in the target area can be considered neighborhood or micro-enterprise businesses. The characterization of a micro-enterprise business is drawn in part from existing micro-enterprise programs. While specific criteria may vary, these types of programs often serve start-up and existing businesses in the retail and home-based sector that have generally five or less employees. From last year's report, 15.6% of the businesses had zero employees while 80.1% had 6 or less employees. The businesses that have zero employees are mainly family businesses. In contrast to the definition of small businesses, as defined by the Small Business Administration. SBA guidelines are retail businesses with annual receipts averaging approximately up to five million. The figure is even higher for many types of retail businesses, as well as many falling under the service sector.
Based on the merchant and physical survey of the commercial corridors along South Orange and Springfield Avenue, and of the focus groups held with local merchants and CDCs, some main points can be made relating to the current business conditions, assistance businesses may be receiving, and merchant organization. Please note that the statistics discussed for each question are approximate numbers (although accurate) but the total numbers may not add up to 100% for each due to the fact that there is missing data on some of the fifty-two surveys. It is also important to note that the turnout to both focus group meetings were very low and they may not represent the opinion of the merchants and local CDCs.
The survey results indicate that a majority of business owners do not live in Newark. Approximately 60% of owners live in areas outside Newark, while 25% live within a fifteen block radius of where their business operates. The additional 15% live elsewhere in Newark. For this reason, the majority of business owners would like to see improvements made in the area which their business functions but a smaller percentage (25%) have a vested interest in not only business improvements but overall neighborhood improvements because they also live in the neighborhood.
The majority of business owners along the two target commercial corridors are African-American. They make up approximately 40% of these business owners. The rest of the business owners racial make-up is as follows in Table XVI:
Table XVI. Racial Composition of Business Owners
|
Ethnicity
|
Valid Percentage
|
| African American |
40% |
| Caaucasian |
15% |
| Hispanic |
4% |
| Asian |
6% |
| Other |
11% |
*Estimate Percentages from merchant survey results.
N=52
Many of the businesses have been in operation for many years. In fact, 25% of the businesses have been located at their current location for more than 25 years. The remaining break down of business existence in their current location can be seen in Table XVII.
Table XVII. Current years businesses have been at current location.
|
Length of Time
|
Valid Percentage
|
| 1 year or less |
9% |
| 2-5 years |
26% |
| 6-10 years |
21% |
| 11-20 years |
19% |
| More than 25 years |
25% |
*Estimate Percentages from merchant survey results.
N=52
In addition, there are many vacant lots located along each commercial strip that have been abandoned for many years. One of the main obstacles that must be overcome along each strip is to find out who owns these vacant lots (city, private owner) and develop strategies to try to put these lots back into a productive use. It is difficult to get people to stay in the neighborhood to shop considering many of the businesses are generally struggling. It is estimated that 35% of the businesses have declined in the last year and an additional 35% have been able to remain stable. The remaining 30% of businesses have claimed they have grown in the past year.
A major void that is apparent on both streets is there is a lack of eating establishments and restaurants, about 10% of the total businesses (over 6% are fast food). There are a few fast food type establishments but really no restaurants. For this reason, local residents must go elsewhere to go out to eat.
The overwhelming majority of the businesses we spoke to are not part of a chain or franchise. Of the businesses, 92% are independent functioning entities, while 4% are part of a chain and 4% are part of a franchise. This means that almost all of these businesses must rely on their own finances and business knowledge to function. They do not have other chain (or franchise) stores that they can rely on for additional financial and technical assistance. This makes it harder for these businesses to efficiently run because they do not have the needed business support networks.
The majority of merchants are not aware of any programs that are out there that provide assistance to local businesses for improvement or expansion. Of the businesses, 73% of them are not aware of any programs that provide financial assistance while only 27% are aware of such programs. Further, 77% have never applied to the city or another similar source for financial assistance. From this it is apparent that many of the businesses are not aware of any programs that help provide assistance and even fewer have applied to such sources to gain funding. Interestingly enough, despite this fact, 47% of the businesses plan on expanding in the next five years, while 45% do not have plans for expansion. From speaking with one business owner, he claimed that he was looking to expand his businesses and planned on using a credit card to pay for the improvements, while another business owner said that she would like to expand her business but did not see an expanding customer base that would allow such expansion. The question arises, where will the money come from to expand the business? An example like this make it clear that something needs to be done to link merchants with the proper sources where they can turn to get financial assistance. What the students in the class did while doing the surveying was distributing a "Guide to Local Business Assistance" to all the merchants we surveyed. This guidebook is a list of various sources that merchants could reach out to for assistance. However, in many instances they will need additional help to get in contact with the proper people at these organizations. It may be difficult to call these assistance programs blindly and be successful in gaining the proper help needed. The current assistance programs that are available are discussed in detail in Volume 2.
The majority of merchants are not part of a business or merchant organization. About 51% are not affiliated with any such organization, while 31% are. This element can be critical in trying to improve the business environment. A well-run merchant/business association of local merchants can be a support system for the all of the business owners involved. If there is a major problem that arises in the neighborhood, such as business burglaries, merchants can organize to do something about this matter that is affecting many of the businesses and driving away potential customers. Strong participation may be the first major step in getting merchants organized and committed to improving local business conditions. Many of the business owners speak to very few of the business owners or managers within a fifteen block radius in which they function.
A majority of businesses use local banks. Nearly, 78% use local banks. Of these 78% of merchants that are banking locally, the break-down of the banks in which they are using can be seen below in Table XVIII.
Table XVIII: Analysis of Local Banks Used by Merchants in Target Area
| Banking Institution |
Valid Percentage |
| City National |
3% |
| First National |
3% |
| Broad National |
9% |
| Summit |
21% |
| Fleet |
21% |
| First Union |
32% |
Source: 1998 Project Community Survey
N=52
These statistics can be used as a leverage tool by local merchants to put pressure on these banks to make more micro-enterprise loans to community businesses. This tactic can be pursued by an organized business organization, as discussed earlier.
