Rachel Lutz opened her first store, the Peacock Room, in 2011. The spot had traditional selling points — foot traffic, original 1920s architectural details and a spacious window for displaying her wares — but what sealed the deal was an unusual perk: a private security force. CreditJoshua Lott for The New York Times


Ask business owners what it is like to operate in Detroit and you will hear comparisons to the Wild West or a third-world country. They often mean it as a compliment.

“You can do things here that would be impossible in a more functional city,” said Andy Didorosi, 27, an entrepreneur who housed his first business, a car repair shop, in a vacant airport hangar that he rented for $300 a month. The arrangement ended when the Federal Aviation Administration caught on that Mr. Didorosi, then a teenager, did not actually own an airplane.

An urban area filled with empty buildings and an underused labor force offers some powerful advantages for entrepreneurs. The cost of starting here is a fraction of what it would be in other large American cities, which is one reason Mr. Didorosi’s ever-changing collection of enterprises includes successful ventures like the Detroit Bus Company, a fleet of biodiesel-fueled tour buses, and whimsical ones like the Thunderdrome, a motorcycle-racing series held at an abandoned velodrome.

But Detroit also poses daunting challenges. Crime is a constant problem, the city cannot afford to repair its aging infrastructure, and banks are not eager to work with businesses in such a troubled location. One owner speaks casually of the arsonists he regularly chases from his manufacturing building. Another simply laughs when asked how he financed his company’s expansion.

“You can’t get bank loans in this town,” said Matthew Naimi, 40, who acquired a 260,000-square-foot warehouse from the city by paying off the building’s $128,000 tax bill and then created a hodgepodge of businesses to fill it. “We’ve basically been growing out of profit and a bit of float from our accountant. When your accountant is your banker, you know your business is on solid footing.”

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