Stockton: A Far from “Miserable” Place to Do Business

Stockton is located in the heart of fertile California’s Central Valley, but based on recent press, you would think the city was a wasteland where dreams go to die.

In Forbes‘ list of “America’s Most Miserable Cities” this year, Stockton was ranked dead last among U.S. places to do business, based on rising rates of unemployment and violent crime. The Huffington Post called it “Foreclosureville U.S.A” for its 9.5 percent foreclosure rate, one of the nation’s highest.

But Stockton’s small business owners beg to differ. One is Chrissy Dehoyos, who runs Kharma Spa & Boutique on Pacific Avenue, Stockton’s “Miracle Mile” of shopping. “We call ourselves the best little secret in town,” she says.

Dehoyos bought the spa in January and says there’s a host of small businesses on the pedestrian-friendly street trying to make a go of it here. “There’s a floral shop, a yoga place — all sorts of different businesses. There’s so much potential here,” she says.

But California is strapped for cash, and Governor Jerry Brown just signed a bill to axe the redevelopment agencies that local government have previously relied on to attract business. So Stockton’s small companies — and the private and public organizations aiming to help them grow — know they can’t rely on Big Government anymore. Now, it’s all about “the community,” and marketing themselves to the residents who will keep them in business.

Stockton also has a few nonprofit organizations focused on small business growth. Besides the Miracle Mile Improvement District, there’s the Downtown Stockton Alliance, which markets the historic area, and tries to get more businesses to move in by offering loans and appropriate retail space.

Mimi Nguyen, the Alliance’s Economic Development Director, says her group looked at Stockton residents’ desires for downtown shopping, which totally changed the way it markets events in the neighborhood. “We used to do Art Walks every second Friday between spring and fall, but because people knew what to expect and found it repetitive, we changed that up.” Now the Art Walks only happen in the summer. Second Fridays happen year round, but the Alliance mixes up the events based on the time of year, like special dinner/hotel packages for Valentine’s Day, and “holiday tours” in September that take business owners around downtown to look at venues for holiday parties. Monthly Pub Crawls were always popular, but now the Alliance sells a pack of food and drink vouchers that crawlers can use to visit the eateries of their choice. “We’re driving more foot traffic to more businesses,” says Nguyen.

On the government side, the City of Stockton just started up a Small Business Micro Loan Program. Last summer, it gave out $300,000 to help current businesses and startups with financing and to spark local job growth. Interest rates are at prime plus two percent, repayable within five years. The businesses receiving loans must create or retain at least one part-time or full-time job for a Stockton resident.

This year, 11 businesses, ranging from a bakery to a trucking company, got loans from $3,000 to $30,000, and created 25 jobs. Next year, the City plans to give out $450,000 in loans. Greg Folsom, deputy director of Stockton’s Economic Development department, says it has deferred and reduced capital-development fees by as much as 50 percent to make it easier and less expensive for new business development.

One microloan recipient is the Abbey Trappist Pub, recently started by two Stockton natives who came back from the Bay Area to bring the craft beer trend home. Co-owner Ryan Hanyak says that despite the typical government red-tape procedure to get anything done, city officials were eager to get them going. Getting customers was the easiest part — the pub was an immediate hit, despite beers priced a lot higher than Miller High Life. “Stockton has traditionally been a mecca for chains, and independents got pushed to the sidelines, so it’s great to finally see some pushback,” Hanyak says.

Like other Stockton startups, the Abbey Trappist is focused on building a community-based business that gives back. Evey month, the pub partners with a local nonprofit, hosting a reception in its honor, and matching up to $500 in donations by pub patrons. This month, the featured nonprofit is the Stockton Police K9 Connection, which buys dogs for the financially-strapped police department.

Stockton has 290,000 residents, but for business owners, it’s really a collection of much smaller towns where word of mouth rules. To start a business in this economically-depressed area, you have to pick the right spot in the right neighborhood, says Hanyak. “Stockton is a patchwork of socio-economic zones, and you have to choose carefully to maximize street visibility, price, and clientele. For independent retailers, finding a spot in an established shopping area can be difficult and expensive, but worth the cost if you actually want to see customers.”

About Vanessa Richardson

Vanessa is a freelance writer in San Francisco who writes about small business and personal finance. She has been a staff writer for Money and Red Herring, and now writes frequently for sites like Bankrate, Entrepreneur, MSNBC and Money.
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