Black in the Red

Everyone expected Charles Howze's Z Mart to be a model for minority-run businesses in Dade. In a sad way it was: It went bankrupt.

A shortage of money meant shelves couldn't be adequately stocked. Howze admits Z Mart was too big when it opened; 20,000 square feet was probably all that was needed from the start. "We intended to have roughly $1.3 million worth of inventory, but we actually opened with $700,000," notes the owner. "We could never build up the inventory across the board."

This shortcoming may have contributed a deleterious psychological side effect, says Elaine Black, executive director of Tools for Change, a Liberty City-based organization that provides technical assistance to fledgling businesses in predominantly black Dade neighborhoods. "People like to see well-stocked shelves," Black asserts. "You feel good about it, even if you're only going to buy one ink pen. People want to walk into a department store and think they can get everything they want."

Money wasn't the only factor. A full year elapsed between the time Ames closed and Z Mart opened. Some, Howze included, conjecture that the delay eroded much of the loyal customer base Z Mart had hoped to capitalize on. Simultaneously, a powerful commercial force was sucking customers away from stores like Z Mart: a boom in giant discount and wholesale stores, including Wal-Mart and Kmart. Competing against these megacorporations, particularly in the realms of advertising and inventory, was virtually impossible for a relatively minuscule operation.

That said, Howze doesn't fault the neighborhood for not supporting the effort. "Everybody wants to blame the consumers," he says. "If you can convince the world that the community won't support its own organization, what better excuse is there for banks and other investors not to invest in the community? The reason black businesses don't survive in Liberty City is that we don't have enough resources to compete."

The Z Mart president faults the various lenders and community-based organizations for refusing to commit more money in the beginning, then failing to support his revised business plans. "They talked about doing this shopping center, there was a lot of lip service. But they never came through," Howze grumbles, adding that Z Mart never should have opened without a grocery store alongside it.

The fact that the store opened at all says a great deal about how emotion dominated logic when it came to financing Z Mart. Many observers and some participants say the desire to open Miami's only black-owned department store prevailed over the meticulous strategizing necessary to open a financially healthy black-owned department store.

While reliable statistics are hard to come by, business leaders generally agree that blacks own disproportionately few businesses in Dade. According to the U.S. Census Minority Business Enterprise Survey of 1987, the most recent available, blacks accounted for twenty percent of the county's population, whereas less than six percent of Dade businesses were black-owned. Of those firms, less than fifteen percent (981) had employees. The average black business employed between two and three people, far below the county average, which fell between seven and eight. (Leaders in the black community say the numbers probably haven't changed drastically since 1987.)

"This was a chance you don't see too often among African-American entrepreneurs," observes Roderick Petrey, the Holland & Knight attorney who helped put together Z Mart. "They came forward with this plan and banks thought it would be a good thing to be involved with. It became a self-reinforcing thing. And it had symbolic importance way beyond its economic importance."

Adds Tools for Change's Elaine Black: "I think a lot of people realized going into it that there wasn't enough money. But do you kill the business because you don't have enough money? Everybody wanted it so much. We did a lot of soul-searching and we decided to take the leap of faith."

Some feel the store was doomed the minute shrewd business judgment took a back seat to passion. "It's not true business assistance, it's charity," argues George Knox, a black lawyer who is a member of the board of directors of Barnett Bank, one of the institutions that loaned money to Z Mart. "The concept has to be changed from charity to sensible investment."

T. Willard Fair, president and CEO of the Urban League of Greater Miami, believes too much of Z Mart's hope depended on the hollow assumption that blacks would shop at the store simply because it was black-owned. "Anybody who gave an impression to the Z Mart owners that they could make this project work were doing a disservice," Fair says. "I think politicians, especially, got caught up with being part of the announcement rather than the understanding."

The result, Fair warns, is that Z Mart's collapse may do more harm than good to ongoing efforts to develop black businesses in Miami: "It was destructive to the participants and destructive to the image-building we have to do in the black community. We can ill-afford to continue not to be successful."

While money alone might not have been the answer, it may have given Howze some time to redirect the business when it began to fizzle. Unfortunately, there isn't much flexible working capital in the black community. "For a long time, African Americans have been locked out of traditional sources of financing," observes Gregory Hobbs, president of the BAC Funding Corporation, another entity that loaned Z Mart money. "And we don't have 'rich uncles' -- wealthy individual private investors, venture capitalists."

« Previous Page
Next Page »
My Voice Nation Help
Miami Concert Tickets