The news is goodand badfor minority business. According to a recent report issued by the U.S. Commerce Departments Minority Business Development Agency (MBDA) and the U.S. Census Bureau, the number of minority-owned firms increased by 46 percent to 5.8 million between 2002 and 2007. But while the numbers have increased, the economic parity remains elusive, said MBDAs National Director David A. Hinson in a press statement. While the number of minority-owned businesses continues to grow, they are still smaller in size and scale compared to non-minority-owned firms. The study found while in 2007 average gross receipts for minority-owned firms increased to $179,000 from $167,000 in 2002, it was still below gross receipts for non-minority-owned firms, which had average gross receipts of $490,000.
In fact, Black, or African-American-owned businesses jumped 61 percent from 2002 to 1.9 million firms in 2007– the largest increase among all minority-owned companies; and generated $135.6 billion in gross receipts, up 53 percent from 2002.
Michael D. Brown, author of Fresh Customer Service (Treat the employee as #1 and the customer as #2 and you will get customers for life) and founder of business consultancy firm The Michael D. Company, Inc., is not surprised by the increase in black businesses, even in a depressed economy. This economic tsunami and corporate job watershed has left many individuals with only one choice and that is to start a business. Many of my clients have seen this as the quickest and most viable way to keep and/or gain some level of economic security as they weather what is turning into a relentless economic hurricane, he notes. Brown is also not surprised by the economic parity, which he says is due to a lack of capital, planning, and experience on the part of many minority business owners. Many minority entrepreneurs are painfully discovering that an ill-prepared, naïve entry into the world of entrepreneurship can cause great economic, personal and business loss and set the individual back for years, he points out.
According to Hinson, the MBDA hopes to close the economic gap. The data on minority business growth clearly shows that minority-owned and operated firms are a significant contributor to the long term health of the United States economy, he said. We must aggressively grow minority-owned firms and assist them in contributing to President Obamas goal of doubling exports over the next five years. Earlier this year, Obama launched the National Export Initiative to support export and domestic jobs. He also established the Interagency Task Force on Federal Contracting Opportunities for Small Businesses, which will make recommendations to the president on how to increase government contracting opportunities for small and minority-owned businesses.
Brown says he feels the MBDA can do a great deal to help minority businesses increase their gross revenue. As minority entrepreneurs play a critical role in our economic and jobs recovery, it is imperative that the U.S. Commerce Departments Minority Business Development Agency apply a laser focus on helping entrepreneurs get access to robust training, capital, coaching and consultancy (at a reasonable cost) early in the process, he says. A level of support should continue to be made available after the minority entrepreneur has started his or her business as the first year is critical to long term financial health and stability.
But Brown also says minority businesses have to play their part. I advise my clients to take a moment and focus on their passion, ability to deliver a world-class customer service experience (the lack of this is the number one reason why businesses fail), skill sets, network, access to capital, consumer demand and industry trends before investing their limited financial resources into a business, he explains. The lack of doing the above will leave the entrepreneurs with a losing business, damage to their personal and professional brand and a setback that can be difficult to recover from.