Fred McKinney, president and CEO of the Greater New England Minority Supplier Development Council.
The recession that started in 2008 has not been declared officially over by the Obama Administration for political reasons. It is bad politics to declare it over when unemployment is still over 9 percent nationally and substantially over 15 percent in urban communities across the country. However, GDP is no longer declining and the prospects for further growth are good according to most economists.
The question raised here is: How are minority businesses (MBEs) doing in the current economic climate? For the past two years, I have conducted a survey of certified minority businesses in the Greater New England Minority Supplier Development Council. Last year was an unmitigated disaster for MBEs. MBE sales and profits were down. MBE employment was down. MBE business closings were up and MBEs were very pessimistic about their prospects.
Last week we completed the second annual version of the survey to see if things have gotten worse, improved or stayed the same. I am happy to report that based on the survey of MBEs, it appears that MBEs are more optimistic about their prospects and adding jobs as opposed to shedding jobs as they did last year. A full 79 percent of MBEs expect their sales to corporations to increase in 2010 compared to 2009.
Last year when we asked MBEs to tell us how optimistic they were on a scale from 1 to 7, where 1 was terrible and 7 was highly optimistic, MBEs on average reported a 5 or “barely optimistic”. This year MBEs had an average rating of 5.5 which was midway between “barely optimistic” and “moderately optimistic.” While not great, it does show improvement.
In addition to questioning MBEs about how they feel about their prospects, the survey helps develop additional information about MBEs. We know from the survey that 50.7 percent of MBEs in the GNEMSDC are African American owned businesses, 30.7 percent are owned by Asian Americans (primarily from India) and 13.4 percent are Hispanic businesses. The Asian American business community is perhaps the fastest growing sector in New England which comes as somewhat of a surprise when you consider the much greater population growth of Hispanics in the region.
We also know from the survey that 36 percent of MBEs had annual revenues under $1 million and 44 percent had annual revenues between $1 million and $10 million. The overwhelming majority of MBEs are small businesses.
From the industry analysis, we know that 19.4 percent are in some form of distribution, 15 percent of MBEs are in manufacturing, 10 percent are in IT and 10 percent in marketing. MBEs in construction services are under-represented. We know that there are many minority construction firms, but they are not currently certified with the GNEMSDC. This partially explains why there are so few MBEs who reported receiving a stimulus related contract in 2010. Only 14 percent of MBEs reported that they have received a stimulus related project this year. While this number is low, it is better than last year when fewer than two percent of MBEs reported receiving a stimulus related project.
So minority companies in the business to business world are looking better than they did last year. However, there is still a long way to go to ensure stability and growth in this important and often overlooked business sector. Minority business conditions are leading indicators of economic problems and lagging indicators of economic expansion. Consequently, current improvements in MBE optimism bode well for all businesses, consumers and workers.
Now is the time to convince more corporations and others to consider MBEs when they are looking to contract with high quality, competitive firms. We have some great MBEs in the GNEMSDC. In 2009, we had 400 certified MBEs who had combined sales of $12.2 billion and employed 48,000 workers and more than 55 percent of these workers were a minority! Supporting minority business development creates jobs and income where they are needed most. To find out more, visit us at www.gnemsdc.org.
About GNEMSDC
The Greater New England Minority Supplier Development Council is a 35-year-old agency of local and national major corporations. The GNEMSDC is an affiliate of the National Minority Supplier Development Council and is controlled by 33 Board of Directors. It is the mission of the GNEMSDC to foster business relationships with certified Minority Business Enterprises (MBE’s) and corporate members. To find out how to become a member please visit our website www.cmsdc.org/about_gnemsdc.html
