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The chief executives of the Black Enterprise 100s, the nation’s largest conglomerate of black-owned businesses, have moved their companies into the fast lane toward profitability and growth. Not mere passengers on the economic highway, these entrepreneurs have firmly taken the wheel, steering their concerns toward new markets and, at the same time, revved up their operations.
So what’s driving the BE CEOs? Call it “strategic vision”–the push to maximize profits and gain today’s competitive advantage while positioning their companies to take full advantage of tomorrow’s opportunities. They’re putting their pedal to the metal and not spending much time looking in the rear-view mirror.
Even though the economy has entered its sixth year of expansion–the gross domestic product has grown at a 2.5% clip while the rate of inflation stands at roughly 2.1%–the BE 100s see no reason to put their companies on cruise control. Significant shifts within the economy and business environment will keep them focused on the road ahead.
The following are some of the more recent economic and business developments:
Concerned about an overheated economy, the Federal Reserve recently increased the federal funds rate–the rate at which banks lend to each other overnight, to 5.5%–and may lift it higher in the coming months. The banks have followed suit by raising their prime-lending rates. Such moves will increase the cost of capital for businesses and, in turn, hamper expansion plans.
The information-technology sector, which now represents more than 33% of GDP growth, has proven to be more volatile than such traditional business cycle indicators as the automobile and housing industries. A sour high-tech sector will adversely affect the outlook for employment, investment and growth.
In March, the Conference Board, a private research group, indicated that consumer confidence had grown from last year. But even though spending on goods appears strong, much of it is being done with credit. Many business owners worry that eventually consumers will cut back on their purchases to significantly reduce debt levels.
Fortune 500 companies continue to tighten their belts, shrinking their pool of vendors. Industrywide consolidation of suppliers has resulted in the elimination of smaller companies and the radical restructuring of others.
The retrenchment of affirmative action and diversity programs in the public and private sectors continues to present roadblocks for a number of African American firms. Over the next few years, however, some black firms may gain contracts because of discrimination lawsuit settlements. But, on the whole, black entrepreneurs will still have to swerve around barriers to gain lucrative corporate contracts.
The BE 100s are not waiting to be road-killed. Last year’s annual report was marked by a new emphasis on innovation and brand development. These companies leveraged their trademarks and track records to create strategic alliances, expand product lines and capture new markets. Such activity continues in this year’s report. As one BE 100s CEO puts it, “We increasingly find that we need a wide-angle lens to survey all the possibilities and a rifle scope to pinpoint specific targets.”
It’s only fitting that the 25th anniversary of the BE 100s should