Why Local Leaders Should Support Immigrant-owned Businesses

June 7, 2017

By Jon Wolseth
Community Development Specialist

Storefront of immigrant-owned businessDuring lunch at a taqueria in western Iowa, I spied a handmade sign at the counter informing customers that alcoholic beverages would no longer be served. The phrasing of the sign gave the impression that the restaurant had lost its liquor license. However, it didn’t seem likely, because I had heard that the restaurant was under new ownership.

After several conversations with the owner, Doña Carmen, I learned that the restaurant hadn’t lost a liquor license; rather, the former owners had been selling beer without one. Knowing that they needed a liquor license but unsure how to obtain one, Doña Carmen and her husband decided it was best to not sell beer at all.

Each time I went to visit over the course of several months, we discussed the licensing process and costs. When Doña Carmen felt comfortable with the process, we went to the city clerk together to fill out the necessary paperwork, pay the application fee, and write down the next steps in the city’s process, which included attending a public hearing.

Doña Carmen and her husband went to the city council meeting several weeks later. Their application was approved and subsequently they received the state license in the mail. Being able to sell beer in their restaurant represented a $900 per month increase in profit. They also began a positive relationship with city staff, especially the city clerk, who took a special interest in the couple and assured them that they could come to her in the future with any questions regarding permits.

Situations similar to Doña Carmen’s are more likely to arise in cases in which the business is immigrant-owned, because immigrant entrepreneurs are typically outside of the established formal and informal power structures of the majority community. This puts them at a distinct disadvantage when opening a business.

Because immigrant-owned businesses tend to be opened with less capital (and therefore less cushion), any misstep in the first two years of business can lead to an early demise. This does not just affect the business owner, but also sends ripples throughout the local economy, creating an empty storefront and a destabilizing downtown. Eventually the loss may impact the entire community.

Immigrant-owned businesses are becoming more and more prevalent in Iowa. Driving through communities such as Perry, Ottumwa, Storm Lake, and Marshalltown, the impact of immigrant-owned businesses in the central business district is evident. These businesses play a vital role in Iowa’s economy, contributing significantly to our local tax base. Storefronts that would otherwise be empty--due to the general decline in rural retail caused by pull factors such as e-commerce and big box stores--are instead filled with ethnic grocery stores and restaurants, vaquero Western Wear shops, and Quinceañera gowns and party supplies.

The benefits of immigrant businesses go beyond the economic. Their presence draws traffic to downtown areas, adding a spark that inspires others to open businesses. Therefore, city staff, chambers of commerce, and local elected officials, all of whom have a vested interest in maintaining a healthy and vibrant downtown with active storefronts, should want these businesses be successful.

There are several key points where local officials can assist immigrant entrepreneurs as they establish themselves and later, as the business expands. These are areas upon which the health and success of a business hinges.

Main Street lined with immigrant-owned businessesCapital

As mentioned, immigrant-owned businesses may be opening and operating on a shoestring budget. Traditional loans from lending institutions typically do not serve immigrant-owned businesses, especially because owners are wary of carrying debt. However, access to small amounts of additional capital can improve business operations, either through investment in additional merchandise or new equipment or to cover an emergency expense. Community leaders should consider offering low-interest microloans to business owners, such as that modeled after Iowa Microloan (http://www.iowamicroloan.org). A loan of no more than $5,000 and even as small as $500 that can be repaid in a short time frame will give business owners the support to take a risk on improvements.

Permits

The regulatory environment for US businesses is considerably more complex than that of many of the countries of origins of Iowa’s immigrant population. This is especially true for ordinances and codes governing downtown business districts, such as signage, building permits, zoning, and historic preservation. Regular visits by local officials to immigrant businesses assures that changes and operating procedures requiring permits and permission can be assessed prior to becoming a point of conflict. When a permit is required, local officials need to take the time to explain the purpose behind the regulation, demonstrating that it is not arbitrary and that it applies to all businesses equally.

Building Appearance and Maintenance

Most immigrant-owned retail businesses are initially under-capitalized, so they tend to gravitate toward buildings with affordable rents that are in need of repairs. Building ownership is often seen as a step toward financial security and independence. If a business is established and thriving, the city should investigate whether the owners also own the building or would be interested in purchasing a building. If the owners also own their building, assisting them with making energy-efficiency upgrades and discussing the possibility of renovating upper-story apartments to increase revenue would be in order.

Storefronts

Downtown businesses are judged by the quality of their storefronts. This includes attractive signage, interesting window displays, and an inviting façade. There are cultural norms (and sometimes local ordinances) that govern what is considered an appropriate storefront. Immigrant entrepreneurs make aesthetic choices about the look of their storefronts based on their own cultural norms, as well as access to resources. The sign might be broken because it is more of a priority to stock the shelves with merchandise. Windows may be covered with signs because they are viewed as advertising space for what the store offers. Colors may be brighter because they are considered eye-catching and beautiful. When storefront appearance becomes a point of conflict, local officials should take the time to listen to the store owners before rushing to judgment.

For the long-term vitality of the central business district and the local economy as a whole, municipal officials need to put in extra effort, building relationships and trust with immigrant business owners that can only be established through repeated, friendly visits. They should be open to what business owners are trying to accomplish, listening to their needs and frustrations. Finally, they should not assume that the same answers used when working with nonimmigrant-owned businesses will fit. Together we can work toward a common vision of vibrant and prosperous downtowns in Iowa.

A version of this article originally appeared in the January 2017 issue of Cityscape magazine.

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