The state of minority business development in New England

10/5/2010, 9:02 p.m.
Fred McKinney, president and CEO of the...

Despite the success of these large minority firms they continue to require nurturing and support from corporate and public sector consumers. In the economic scheme of things, a firm with $10 million in annual sales in most industries is a very small player. Everything is relative. These large minority businesses are still small fish in a big pond filled with ruthless, rapacious carnivores. Without the support of corporations to continue to provide opportunities to these businesses, they may also fall victim to global competition that will wipe out the strongest source of indigenous economic support to a community.  

It is ironic that these large MBEs face the greatest challenge when it comes to government support. All state, local and federal programs that are “designed” to assist minority businesses are designed to assist only “small” minority businesses. This narrow, government focus on small size misses the opportunity to help the minority businesses that are in the best position to assist in the goal of community economic development.

For this reason I have often stated that the public sector does not have a minority business development program; they have a small business development program that occasionally helps some small minority businesses.   

Within the GNEMSDC, 39 percent of certified companies have sales of less than $1 million. Our MBEs are significantly larger than all MBEs nationwide.  These small MBEs are most vulnerable to not making the transition from an early stage enterprise to a sustainable and growing employer. The market for most goods and services that corporate America purchases has now become global. We are all familiar with the impact that big box stores have had on small retailers unfortunate enough to be in the same market. There has been a similar development in the Business to Business world where most of GNEMSDC MBEs compete. Corporations not only are sourcing globally, they are consolidating the number of suppliers that they are buying from in an attempt to lower their administrative costs. They are looking for suppliers to have the “bandwidth” to supply all of their far flung global needs.  Unfortunately, small MBEs are not in a position to defend their turf under these conditions. Courageous corporate leadership is needed to state in unequivocal terms:   “yes we will source globally; yes we will reduce our vendor base, but we will not do this at the expense of small minority businesses that are high quality, price competitive suppliers.” Without this commitment, small MBEs are in danger of losing more ground after this recession is over.  

MBE success still fragile

MBEs in New England, regardless of size, are facing difficult economic and business conditions. While economists debate whether the current recession is over, there is little doubt that for certified MBEs the recovery has yet to take hold. There will be some business that will never come back to the region as the pace of globalism shows no sign of abating.  But like all recessions, the survivors are in a great position to pick up the pieces that are left by those who did not survive. It is our goal as an organization, and it should be our goal as society, to keep as many minority firms in business and growing as we are able. It should be the goal of corporate leaders to continue to support MBE development by expanding their commitment to purchase from high quality MBEs and to support their continued growth and expansion. This requires more than lip service to goals of diversity. This requires that corporations put real resources into minority business development and make minority business development an important strategic goal.  

We need strong MBEs. We need growing MBEs.  And we need these not simply to create a class of wealthy entrepreneurs, but to create communities that can thrive and participate fully in the American dream. This is the responsibility of corporate leaders, political leaders, minority business owners and consumers in general. If we fail at this, the fears of  Jefferson and Adams will become a reality.