Just a few years ago, Tonnie Rozier ran a Boys and Girls Club in Jersey City while baking cakes at night for wholesale clients. Demand for his products grew quickly, pushing him to open his own bakery, Tonnie’s Minis Cupcake and Coffee Bar, in 2006—but its West Village storefront was so small that cakes took up too much space. To adjust, Rozier switched to cupcakes.

Tonnie’s Minis became an NYU hot spot. Celebrity awareness soon followed, catching the attention of people like Jay-Z and Kimora Lee Simmons. Now, Rozier is expanding with a bigger Harlem location on Lenox Avenue.

The new store had its grand opening last week. It is a precarious time for small businesses to expand, but the new Harlem location has had a steady stream of customers since it opened. Rozier still has some technical glitches to smooth out—hiring enough staff, training—and he occasionally runs out of certain flavors because he is gauging demand, but the customers don’t seem to mind.

Mike Santiago serves customers at Muddy Waters' grand opening. (Photo by Rachael Horowitz)

Muddy Waters Café on Adam Clayton Powell, Jr. Boulevard looks more like a living room than a coffee shop, with facing leather couches and coffee tables creating a familial atmosphere. Owner Ntozake Lundy talks with every customer who comes in an attempt to provide a sense of community. But what makes the café even more distinctive is the kind of staff she hires.

Lundy found an employee – just one so far – through recommendations from the Fortune Society, an organization that supports convicted felons after they’ve been released from prison. She began hiring former inmates as a favor to a friend, and has employed about five Fortune Society workers during her years as a café owner.

Lundy hosted Muddy Waters’ grand opening earlier this month. “We went through contractor, permit and electrical hell,” said Lundy, who acquired the space in July 2008. “It’s over now. It’s kind of like pregnancy pains, but I’m happy with the finished product.”

After operating cafés in Brooklyn and the Bronx, Lundy began looking for a new location last year. “I pounded the pavement,” walking streets and riding buses in search of an open space, “and got really lucky.”

Lundy doesn’t like to overemphasize her hiring practices. “Someone is not gonna dig a felon making their sandwich,” she explained. But she has had good results with people who need a second chance, she said, and that’s why she continues to hire them. “I have better experiences with former felons than with college students,” she said. “I found them a little more tenacious and hard working.”

Mike Santiago has been out of jail for nine years, but said that having a felony conviction has made it difficult for him to find work. “Off-the-book jobs would accept me, no problem,” he said. Before joining the Fortune Society, he mostly did plumbing, electrical work, drywall and flooring jobs for employers who kept no records, and he had scant hopes for career advancement. He didn’t have a real future in this type of work, he decided.

New York state law prevents companies from using a felony conviction as grounds to avoid hiring someone, but Joelle James, senior director for career development at the Fortune Society, said that it often happens, yet is difficult to prove. She coaches members to apply to businesses known to be “former offender -friendly.”

Santiago’s connection to the Fortune Society brought him to Muddy Waters, where he has so far found satisfaction in his work, and is enthusiastic about becoming a barista. “It’s important to be happy with your job,” he said.

As for the café, “it’s what we need,” said Julius Clay, pastor of Williams Church on Adam Clayton Powell, which has not yet seen the kind of commercial development sprouting on nearby Frederick Douglass. He added, “You can’t stop change.” Since the café’s opening, Clay has been a daily customer.

Kevin Walters owns Creole Restaurant in East Harlem. He wants help with growth so he enrolled in a free, specialized small business program at Columbia Business School. (Photo by Tim Kiladze)

After years of impressing his bosses at financial institutions, Neil Caesar said he was “used to being a superstar.”

Then he left the corporate world, where he worked under established business plans, to run a small business, where he has minimal structure.

Caesar is now the chief financial officer and general manager of Digiwaxx LLC, a Harlem-based music marketing and promotions agency founded in 1998. Despite success in such corporations as State Farm and MetLife, where career progression follows a defined path, Caesar admits that he was ill prepared to be an entrepreneur. “You get in this environment and there’s not a lot of training for it,” he says, adding that he doesn’t have an experienced boss to consult for difficult decisions.

To help people like Caesar, professors and administrators at Columbia Business School last year created the Columbia Community Business Program.

It’s run out of the school’s Eugene Lang Entrepreneurship Center and provides a group of small businesses in upper Manhattan with free advice from both professionals at the school and a seasoned small business coach. The group meets 10 times a year but has unlimited access to Columbia’s professors who can connect participants to professionals in other faculties, like law and engineering.

The participants include 11 businesses and one not-for-profit organization that have been around for at least three years and bring in annual revenues of at least $250,000. This peer group represents one of the program’s key features; typically, business schools deploy their relatively inexperienced students into communities to work with organizations that need business advice. In this program, participants learn from peers going through similar problems and are in constant communication with seasoned professors.

Each of the organizations agreed to a two-year commitment. For Caesar, this requirement was one of the biggest lures. “It forced me to carve out time and drill down on how I’m going to improve the business,” he said.

For participants, like Princess Jenkins, the minimum annual revenue was a major attraction. Jenkins owns the Brownstone, a clothing and accessories store on 125th Street just east of Fifth Avenue. The Brownstone has been around for 10 years and is well known in Harlem, but Jenkins wants help “growing the business and taking it to the next level.” She runs the store by herself (she used to have two business partners), and is trying to launch a mail-order catalogue.

Jenkins treats everyone who enters the store like a friend, ending many of her sentences with “baby” – “thank you, baby,” “told you, baby.” She is well connected in the community, but her network lacked people running businesses of the same size, making it hard to find advice.

“A lot of the time, small business development information is developed toward startups or businesses making over a million,” she said. While she has cleared the hurdles new businesses face, she can’t yet relate to big firms’ problems.

Princess Jenkins owns The Brownstone on 125th Street in Harlem. (Photo by Tim Kiladze)

She applied to the program after hearing about it at a Harlem Business Alliance meeting. Entering with almost no expectations, she simply assumed that she would learn a great deal because of the business school’s reputation.

Looking back on the project’s first year, marked by the greatest economic disruption since the Great Depression, Jenkins acknowledges that she learned a lot – particularly such small, concrete skills as online social networking.

A year ago, the Brownstone wasn’t on Facebook. The program changed that. It also set her up with Google Analytics, which allows her to track who visits her web site and how often, and connected her with Columbia engineering students who will help improve the Brownstone’s search engine results.

Jenkins also praises Columbia’s flexibility. “They’re not trying to give you a road map for success,” she said. “They’re saying, ‘What’s your map and how do we get there?’”

Kevin Walters owns Creole Restaurant in East Harlem; he has spent the past few years finding nightly entertainment and connecting with local artists exhibited in the restaurant, and is only now focusing on promotion.

Aside from learning from his peers, who run the gamut in age, gender and ethnicity, Walters is particularly appreciative of working with the business coach, Barbara Roberts.

“She has academic training,” he says. “She also has tons of hands-on experience, so she’s in it. She’s hot. She’s a rainmaker.”

Roberts’ resume includes being the first woman on the board of Dean Witter. She also ran Acoustiguide, offered in museums and galleries, and FPG International, which sold for $80 million and became part of Getty Images.

Roberts’ experiences have taught her that small businesses drive economic growth and that helping them expand “is a lot easier than sorting out GM and would be a much quicker fix for the economy.”

She agreed to join the program at the height of the economic boom last year, but altered her advice when the economy turned sharply downward last fall.

“The first half of last year was very much on survival: cutting costs, making sure you didn’t lose a client, cash flow,” she said.

But she isn’t surprised to hear that most participants made few references to the recession — she says they’re typically so overwhelmed with detail that they tend to be myopic and “don’t appreciate their own evolution.”

This year, Roberts said, the program will focus on growth in the recovering economy.

Not everyone finds the advice useful. John Lowy runs the River Room, a restaurant and jazz bar in West Harlem, and has been an entrepreneur for 30 years, much more experience than most participants. He learned a few things from his peers, but nothing substantive. He would, however, advise other entrepreneurs to jump at the free opportunity.

The program also failed to keep all of its participants afloat. The Morningside Bookshop closed after the group meetings started last fall. Still, the project earned rave reviews from most business owners interviewed.

Columbia Business School has committed to running two more two-year program sessions, the next round starting in fall 2010.

Antonio Bruno’s Covo, huge by Manhattan standards, is ViVa’s anchor eatery. (Photo by Sonal Shah)

Whipping up from the Hudson River, wind funnels through the cross streets between 125th and 138th Streets. Up on the Henry Hudson Parkway, traffic inches toward the George Washington Bridge. On the other side of 12th Avenue, which disappears under a stone bridge, Riverside Park rises out of a steep embankment. A handful of restaurants nestle in this unlikely spot, under the spidery arches of Riverside Bridge.

ViVa, or Viaduct Valley, is the latest contender for Manhattan’s next big entertainment district. Yet, despite several successful launches, scattered news references to the “new Meatpacking District” and a few celebrity sightings, Harlem’s waterfront restaurants still face many obstacles.

“It’s like a hidden valley,” said Fernando Mateo, an entrepreneur and activist whose wife, Stella, co-owns Talay, one of ViVa’s uptown upstarts. “This place is so beautiful but so uninhabited. We’re still waiting for a Christopher Columbus who can come and discover us.”

ViVa’s earliest pioneer was the 35,000 square foot Fairway Market, sprawling across several blocks around 132nd Street. Fairway, which opened in 1995 in an area that some people considered unsafe, remained the sole draw for years. “You couldn’t walk down here,” Mateo said. “You would run from one block to the other.”

The area’s three most visible restaurants – Talay, Covo Trattoria and Body Bar & Grill –operate in an old meatpacking warehouse at the end of 135th Street. Building owner Peter Skyllas originally considered relocating his plumbing business there. The neighborhood “was infested with drug dealers,” Skyllas said. “You couldn’t come within 10 feet because of the stench of garbage.”

In late 2004, however, Dinosaur Bar-B-Que, fired up its grills on 131st Street, just opposite Fairway. Dinosaur’s popularity made Skyllas reassess his property’s value. He knew that the Parks Department was developing the nearby Harlem Piers waterfront and that – eventually – Columbia University would expand into the area with its Manhattanville Campus.

“My whole idea was to bring the Meatpacking District to Harlem,” Skyllas said, acknowledging that urban planners have been talking about developing the 12th Avenue waterfront for at least 20 years.

Skyllas recruited Antonio Bruno, owner of the Morningside Heights restaurants Max Soha and Max Caffé, whose Italian menu he thought would make a good “anchor” for the area. Bruno needed a little more convincing. “When I first saw this place in 2004, I ran away,” he recalled at his airy, wood-oven-warmed restaurant Covo.

Skyllas found two other groups of tenants to open Talay, a Thai-Latin restaurant and lounge, and Body, a large restaurant and nightclub. As construction began on Skyllas’ warehouse, restaurateurs Hamlet Peralta and Max Piña opened Hudson River Café, just north of Fairway. Meanwhile, Skyllas successfully petitioned the city for permit parking, a sidewalk and a green island in front of his building.

In June 2008, just after Talay, Body and Covo opened, the Harlem Piers park opened. Further development seemed imminent and property prices rose. Warburg Realty, which managed Skyllas’ property in 2006, listed an asking price of about $85 per square foot per month on its web site – double what the realtor listed for the previous year. Still, ViVa rents were reasonable compared to similar locations along Broadway, which had no waterfront access.

Now shuttered and stripped of signage, Body Bar & Grill once hosted Shaquille O’Neill’s birthday party. (Photo by Sonal Shah)

As various owners, diners and critics recount, ViVa’s restaurant row enjoyed early success. Body caught on with well-heeled Harlemites and partygoers from further afield, who lined up outside on weekends. Shaquille O’Neill celebrated his birthday there and several cast members of “Harlem Heights,” Black Entertainment Television’s reality show about young, black professionals, counted Body among their favorite Harlem hangouts. Cast member Brooke Crittendon, Kanye West’s ex-girlfriend, wrote on the show’s web site that Body “could possibly be the crunkest club in the city right now.”

The splash didn’t last long. Body regulars were surprised to find the club’s signage stripped in late August. Sam Benjamin, who organizes a black/Latino social networking group, arrived at the club for a September event and found it closed. Body’s owners, Rigo Herasme and Joe Robles, had given him no warning, he said.

The owners did not respond to calls, but earlier this year, Body’s chief financial officer, Felix Parache, said he departed after a “falling out” with the owners. “I’m guessing these people invested $1.5 million or more to fix the place and believe in my dream,” Skyllas said. “Running a restaurant is a difficult job. I personally wouldn’t get into it.”

The current economic climate makes running a new venue difficult. The trade magazine Nation’s Restaurant News runs an online Restaurant Index; it plummeted between September 2008 and March 2009 and remains 30 percent below mid-2008 levels. Skyllas estimated that restaurant earnings, including tips, have fallen by as much as 60 percent. Bruno confirmed that the area had faced difficulties, though Covo makes more money than his Morningside Heights eateries.

Mateo acknowledged that ViVa is “definitely not coming up roses. Anyone who tells you that they’re making so much profit – it’s just not true. We’re barely breaking even.” Still, he remains optimistic.

Getting foot traffic is still the area’s biggest challenge. The restaurateurs want to dedicate the traffic island to Muhammad Ali, to include “a big statue – then it becomes a tourist attraction to bring people down,” Mateo said.

Though Harlem’s facelift continues, catering to the community’s changing clientele has proved a tricky business. In early September, Talay shut down briefly to turn its downstairs section into Pancho Gringo, a Mexican restaurant with a more “familiar” menu. But Body remains closed.

Visitors may be reluctant to walk from the 135th Street Subway station through Riverside Park. “There’s still that myth about Harlem – that it’s dangerous and people are scared to come down,” Mateo said.

Representatives at Costco's pre-opening office, near the site at 325 Pleasant Avenue, screen job applicants and offer membership packages. (Photo by Joshua Tapper)

In a neighborhood dotted with tiny Hispanic groceries and 99-cent stores, the opening of a Costco Wholesale superstore might be expected to cut into the income of smaller businesses. But East Harlem shopkeepers and residents are embracing the mid-November arrival of the North American chain despite the traffic and potential competition it will bring.

“It’s a good idea,” said Sammy Sey, who works at El Grocery, a 24-hour bodega on Second Avenue at East 124th Street. If anything, the increase in visitors to East Harlem can mean only more business, said Sey, a Yemenite who has lived in the neighborhood for 20 years.

Costco’s arrival will have “no effect,” said Yusef Zindani, as he wrote down stock items behind the counter of a 99-cent shop on East 125th Street. He is confident Costco poses no threat. “Even if Costco opens across the street, it’ll be fine,” he said. “Even the supermarket doesn’t bother small stores.”

Many local residents can’t afford the wholesale chain, slated to open on Nov. 12, Sey said. “Everyone here is on welfare,” he said. “If you only have two dollars you’re going to come here, not Costco.”

Costco will join a host of big box stores—including Target and Best Buy— opening at the nearly completed East River Plaza off FDR Drive between 116th and 119th Streets. Costco assumed the lease of space that Home Depot had intended to use before it was hit by economic troubles. The East Harlem Costco will be Manhattan’s first.

While Sey and Zindani exuded unbridled enthusiasm, some businessmen, like Francisco Garcia, owner of Mexico Lindo Grocery on Second Avenue and 116th Street, sounded less optimistic. Garcia, who has run his bodega for 19 years, acknowledged he’s going to lose business, but there is “nothing we can do,” he said, adding that if he can’t keep paying his rent, “we have to move out.”

In all likelihood, Costco’s arrival will not be wholly positive or negative, but a “combination of both,” said James Pisacano, president of Pisacano Management Group Inc., a local realty group. “Property value is going to be positively affected” and the store will “bring an influx of new blood via foot traffic,” said Pisacano, whose firm owns 30 properties in East Harlem.

The traffic, however, may be a double-edged sword, Pisacano said. Pollution and noise from supply trucks could pose a problem. Costco has offered noise-reducing double-pane windows to businesses along truck routes, he said. Costco is also offering new air conditioners to businesses that need to keep their windows closed to block noise.

Still, he said, “Costco is a plus. It’s bringing more people into the area.” Pisacano predicted that Costco shoppers from outside the neighborhood will also pop into local stores while they’re in the area.

An increase in traffic into East Harlem is expected from the Willis Avenue and Triborough Bridges, as well as from FDR Drive. Hector Quiroz, owner of Lechonera La Isla, a Puerto Rican restaurant on East 125 Street and Second Avenue, was unfazed by the likely traffic snarls. “It’s New York,” he said.

Ernest Johnson, a senior director at Strive Inc., an East Harlem-based non-profit that assists the chronically unemployed, concurred with storeowners that Costco will have a minimal financial effect on local businesses. “People will still shop at local stores,” and Costco “will allow small area businesses to exist,” he said.

“We intend for them to be our customers,” said Justin Callaghan, Costco’s assistant vice president of human resources, Eastern Division, referring to local businesses. Shopkeepers “are going to recognize immediately that they have been paying too much money for soda and they’re going to recognize they can become business partners.”

Local businesses can buy goods wholesale from Costco. The company has already distributed information booklets to such neighborhood shops as Zindani’s 99-cent store. “If Costco has it, and we can get a deal to sell it, we’ll get it,” Zindani said.

“There’s so much opportunity for small bodegas,” Callaghan said. “They’re going to be able to sell at the same price, but pay a lot less.”

“It’s just great that Costco’s coming to this location,” said Jeffrey Feiner, an adjunct associate professor of marketing, with a specialization in retail, at Columbia Business School. “Costco has prices that will allow people of all income stratums to shop there. I think Costco will be affordable enough for a large percentage of the local population.”

Moreover, Costco understands differential marketing, Feiner said. “They just don’t come into a market and plop down a store, they really study it. Costco is very aware that it has to provide different kinds of merchandise, different kinds of pricing for the different markets it goes into.” When Home Depot first opened stores in the borough, Feiner said, it avoided impractically large products in favor of merchandise a Manhattan apartment-dweller could handle.

“It’s going to be slightly smaller than our other buildings,” said Callaghan, referring to the East Harlem location. “The item selection will have a lot to do with the market we’re in.”

The store—the “most unconventional Costco in the world,” said Courtney Stern, assistant funding manager—will be structured like a supermarket, specializing in fresh food.

A traditional knock against big-box chains is the tendency to consume the market by offering one-stop shopping, capturing as many consumer dollars as possible, said Stacy Mitchell, author of “Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America’s Independent Businesses.”

Mitchell, a senior researcher at the Institute for Local Self-Reliance, a national organization that supports local business ownership, argued that Costco leaves little for a consumer to purchase elsewhere. “People don’t have to venture out of the East River Plaza,” she said. “If you had something integrated on the street, that might be a synergistic relationship.”

The losses will outweigh the gains, Mitchell predicted. While Feiner was confident that Costco’s annual membership costs will be “offset by savings,” Mitchell was “disturbed” by officials’ bringing in a big-box chain. “The resulting closure of small businesses is going to result in long-term vacancies, more job losses than job gains and more tax revenue losses than gains,” she warned.

Nevertheless, East Harlem residents and shop owners are welcoming the store with bulk-sized gratitude. “Costco, when coming to the East River project, wanted to make sure the community was involved,” said Johnson of Strive. “Most people are pretty appreciative.”

Marcela Xavier has opened Inwood's only yoga studio at 207th and Broadway.

Inwood’s yoga studios have historically had a short shelf life. The opening of Bread and Yoga, at 207th Street and Broadway, provides a home for the neighborhood’s nomadic yoga community for the first time in more than two years.

Local resident and studio owner Marcela Xavier spent two years hunting for a space and three months renovating before she could finally open her doors.

Xavier began her quest after Inwood Peace Yoga lost its lease in a church in 2007. Eclectic Yoga, the next closest major studio, 30 blocks south, closed the same year. Eclectic Yoga’s displaced teachers nicknamed themselves the “nomads” and began teaching mostly in apartments, said Alyssa Snow of MindBodySoul Yoga in Washington Heights.

Trying to fill the void, Xavier canvassed Inwood, encountering “downtown prices but with less foot traffic,” she said. “This is still Manahttan.”

For small businesses, “the rent is what’s killing them,” said Daniel Ramos, senior business counselor at Washington Heights and Inwood Development Corporation. A small space here might run $5,000 a month, according to Xavier and Snow. “It’s impossible to run a business like that,” Ramos said.

“I don’t make money doing this,” said Snow who opened MindBodySoul Yoga in March 2008 at 170th Street and Fort Washington Avenue. Snow expects to turn a profit eventually, but currently must work a second job as controller at Tricycle Magazine.

“We are accustomed to getting less in this neighborhood,” said Xavier. To make ends meet, she plans to charge elevated prices for what she vows will be premium services. Walk-in classes will run $18 apiece, the same as in ritzier downtown neighborhoods, although buying class packages brings the average price down.

Two days before the studio’s opening, Bread and Yoga was still a construction site with a gaping hole in its ceiling. On opening day, a handful of stray wires remained, showing where lights would be installed; construction and cleaning supplies were stacked neatly inside the lobby.

The rough edges did not prevent classes from filling nearly to capacity. Word of mouth pushed traffic on Bread and Yoga’s website to more than 100 people per day in the weeks before opening, said Xavier.

“I told Marcela, ‘Thank you for having the courage to open this space,’” said instructor Shawna Emerick, who will lead Bread and Yoga classes with about seven other teachers. Opening the studio was a service to the community, she said.

Jeannie Kim, arriving for the 5pm class, found the studio through an online discussion group. “It will be so much easier to keep up a regular practice,” said Kim, who has not practiced regularly since Inwood Peace closed. Nada Khodlova learned about the studio from one of the “nomads” she studies with in an apartment.

“I believe in supporting small communities,” said Xavier. Bread and Yoga currently has a limited schedule but will eventually offer a broad range of classes including prenatal, family, kids, and mainstream yoga as well as pilates, tai chi, cooking classes and after school programs.