Wade Preston has a problem.
It’s not the tight labor market, or the pandemic, or inflation. None of that stopped his Montgomery-based Prevail Coffee business from hiring enough staff to open new locations in Birmingham and Atlanta over the past two years.
Waves of tourists stream into his showcase café on Dexter Avenue, blocks away from the roastery, where they sit beside locals to sip craft coffee under a phrase on the wall: “Together we prevail.” But in a city built on institutions, Preston says local investors are pouring their money into things like real estate, government bonds and legacy businesses.
That means too much opportunity and not enough capital for him to take advantage of it, even during a tourism boom that has kept restaurants busy.
“We’re sitting on hundreds of millions of barrels of oil, and no one’s willing to drill,” Preston said. “… We’ve bootstrapped the hell out of this thing. A lot of this was built on loans from friends and family.”
The city’s lodging tax revenue rose 38% year-over-year in July, according to the Montgomery Area Chamber of Commerce. That was part of an arc of growth that has continued for months.
A $50 million whitewater park on the outskirts of downtown opens next summer. Tourism officials expect crowds to extend their visits to Equal Justice Initiative’s Legacy Museum, its Memorial for Peace and Justice and other civil rights sites. New hotels are coming, even as some downtown restaurants have been forced to close their doors.
The level of private investment doesn’t make sense to Preston, not when hospitality should be a signature business here. Instead, he sees people around him mostly doing it themselves, like the Kyser family and the Blount family.
“It’s all self-deployment at this point,” Preston said.
Montgomery Mayor Steven Reed said he’s heard similar stories from many other small and minority business owners here. As a former small business owner, he’s seen first-hand the struggle to find capital. “The real key to our long-term growth is the viability of entrepreneurs to grow their ideas … in your market,” he said.
So, Reed has been looking beyond the area. He said he’s had conversations with foundations, philanthropic groups, private equity firms and Wall Street investors, among others, and that those conversations have picked up recently because of an interest in the area’s entrepreneurial talent.
“There’s a certain grit about many of the small business owners that we have here,” he said. “We do have some good success stories. People have to see success to believe sometimes that it can take place.”
The Chamber’s destination and community development chief, Ron Simmons, said the city has to stop operating “in silos” to make that happen more consistently. The city and county took a step toward that when they agreed to pool a total of $87 million in American Rescue Plan Act funding and collaborate on how to best use it through an initiative called Montgomery Thrive. Simmons said one of those ideas is to commit about $5 million to focus on small businesses. He mentioned other partnerships that could mean up to $2 million for individual investments.
He said he’s hopeful that will lead to meaningful change that will “move the needle” in helping them scale as well as recruit and hire here. “The more we can partner with other organizations, the more we can help. It doesn’t need to be a one-and-done. I’m talking sustainability,” Simmons said.
“… We have a lot of minority businesses. We have a lot that’s in tech. Once they start to scale, if they can’t get the support that’s needed here, they go elsewhere. And that’s happened before.”
The Lab on Dexter, a downtown startup hub and co-working space that’s focused on tech and innovation, marks its first anniversary Monday along the same street as Prevail. It will celebrate by forming a partnership with the Catalyst Center for Business and Entrepreneurship in Clanton, which helps provide connect small businesses to capital, among other missions.
It’s been the connection point for some of the area’s most innovative ideas over the past year, even hosting the planning sessions for what comes next in downtown’s evolution. But what’s happening today in the blocks around the building is just as important to “the new Montgomery,” Lab Executive Director Nichole Thompson said.
“We can elevate our tourism approach all day long, but if we’re going to bring them here we have to have a viable downtown,” she said. “… You don’t want them coming to a ghost town. You want them coming to a vibrant city.”
Thompson said she’s committed to being a part of that evolution. “I’ve had people tell me ‘I can’t believe you’re still here.’ I see the potential,” she said. “I also see that I’m in a position to help fuel that change in my lifetime.”
Preston sees that potential, too. There’s the low cost of living, the city’s position at the intersection of two interstates, the fact that it’s within an opportunity zone and that the real estate is “stupid cheap.” He says he’s committed to being a “disruptor” here in how things are usually done. Because he thinks it can be so much more.
“I want to build a brand in Montgomery. Then everyone would start asking, ‘So what’s the next Prevail?’” Preston said.
“… We should be able to recruit young, hungry talent to build business.”
Contact Montgomery Advertiser reporter Brad Harper at firstname.lastname@example.org.
Wade Preston has a problem.