The Stimulus Plan Must Give Minority-Owned Businesses and Minorities a Fair Shake

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Despite years of effort, minority-owned businesses are still drastically underrepresented in the U.S. economy.

According to U.S. Census Bureau’s most recent figures, compiled in 2002, blacks made up 11.8% of the population and owned 5% of all privately held businesses, but the share of business receipts belonging to black-owned firms was a mere 1%. That’s a near 12-to-1 under-representation. According to the same report, Hispanics, 13.5% of the population, owned 6.6% of businesses and earned just 2.5% of revenues.  White-owned businesses pulled in 92.5% of revenues.

The U.S. Small Business Association analyzed the “racial effect on business earnings” and concluded that for each dollar a white-owned firm made, a black-owned business made 43 cents while a Hispanic- or Asian-owned business made 59 cents.

Because the data from the Census Bureau’s 2007 business survey hasn’t been analyzed yet, we don’t know the direction of the trend since 2002.  But it wouldn’t be surprising if the recession is hitting minority-owned businesses, which are often more vulnerable, particularly hard.

There is a ray of hope.  The economic stimulus program, designed to jolt the moribund economy into life, also provides an unparalleled opportunity to help bring more minority businesses into the economic mainstream.  If the plan is carried out in a sound manner, it will be a win for both minorities and everyone else.

But some would argue that affirmative action of any kind is dated, and it’s time for minority business owners to stand on their own without special consideration.  We’re ready and able to compete with anyone, but that line of thought ignores two realities.

First, it doesn’t recognize that pervasive discrimination still is.  It’s often subtler than in years past, but it’s discrimination nevertheless.

Many minority-owned businesses are successful firms with top people and excellent long-term track records.  But far too many people think that a “minority-owned business” is  code for struggling firm housed in a shabby storefront–or that the business is making it only because of (nonexistent) government subsidies and set-asides. I often come across that misperception in my own business, which has been around since 1953.

Some minority business owners do indeed run tiny firms on a shoestring.  We should applaud their entrepreneurial spirit–it’s where almost all of us started.  But it is wrong to think that all minority businesses are at this early stage in their development.  Many are mature organizations that can compete with anyone–if they’re just given a fair chance.

Second, white business owners usually have better networks, connections, and visibility in the business and political spheres and in the more affluent white community.  This doesn’t have anything to do with discrimination, it’s just a fact.  As a result, minority businesses owners don’t learn of opportunities and are not on the radar screen of potential clients.  So even if we could magically abolish all discrimination and racism immediately, minority business owners would still be at a disadvantage.  Additionally, minority businesswomen face both racial and gender barriers.

While fairness demands that minorities get a piece of the stimulus action, economics is an equally compelling argument.

When all

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  • I am so proud of President Obama and his tenacity within the first few weeks of office. I really appreciated what he said “People have to continue to innovate, look for new customers, try to find creative ways to turn crisis into opportunity, retool for the future.” This is exactly how I feel! I believe that many of us Americans, especially those of us of color have a special opportunity to be part of the solution. I believe we can do exactly what our president wants us to do and be innovative. We can trailblaze our way into paving a whole new era of success and prosperity that will inevitably play a part in helping the country regain strength, stamina and healing.
    I am motivated as I have started a “Trailblazing” new company and am producimg an amateur play this coming August. Good job Mr. President. And I promise to make you proud by playing my part, participating in, and being part of the solution.

    Imani Olubajo,
    Registered Agent of:
    F.A.I.T.H. Unlmtd (Families Acentuating Inter-related Teamwork Harmoniously)

  • John Clarke

    The silence in the Black community on the issue of how much of the stimulus package will go to Black businesses has been deafening. What small portion of the stimulus that does filters through the various agencies into various set-aside buckets for tiny projects (e.g. et another janitorial project to sweep the VA building) will eventually spread among the various minority and front-minority companies with even less going to Black businesses.

    Someone once said that if Blacks got reparations, they wouldn’t know how to handle it. It seem the same may be true with the Presidency and the opportunity that hasn’t presented itself like this in the 500 years we been in this country.

    We need to make this our primary concern before they try to decide to portion out our rightful share of the stimulus package through another set of dependency-laden social welfare programs.

  • Eric S Williams

    As someone who will be launching several buisness endeavers in the next 15 months i understand the pressure and concerns of many minority business owners. One of the major facotrs that we find ourselves lagging behind in is the inside information of our specific areas of business. Often times we go into these projects with a try try again attitude and accept our first failures as a natural by products of being an enteprenuer. If we could make more of a community attempt to share trade secrets in our areas of expertise we will drasticly cut down on these critical mistakes. As a minority busienss owner we often only get one chance to succeed in any given field of businss. Lets be more cooperative in our willingness to help foster success so that we can build a legacy for our next genereations based on community success not individualized gains.

  • Struggling Enterpreenuer

    I am a Nigerian-American (one generation) and have lived in the country for 20 years! After graduating from college and earning my bachelors and masters degrees here, I worked for various companies and then started a marquis brand in IT security/forensics consulting.

    We have grown our business and succeeded because of direct networking contact and year-over-year business referral with so-called “Whites.” It’s been very difficult to get business from Black decision makers anywhere! I hope to change this as we continue to grow — that’s why I entered into business.

    So yes, I buy the idea that the stimulus should trickle down to everyone/business, but would every minority in position deal the stimulus to others???

    Here’s what I think the long-term solution lies:

    – Everyone should get highly educated and remain ethical, that way we can grow professionally and control certain areas of their careers — i.e. be a mover-n-shaker to some degree. I am not talking about Oprah Winfrey or other heavy weights. I go to all of these Federal buildings and I see a lot of brothers and sisters simply just having a job, instead of taking night courses to get a degree.

    – Learn to share wealth with others — not just your race but others period. Again, since our business inception, I have received no “viable” or “tangible” business opportunity from people of my “race.” Is this because Blacks aren’t decision makers? No No No! These people would rather funnel the business elsewhere — preferably other race. This’s got to change.

    I have stubbornly been reluctant to apply for 8(a) partly due to the connotation that your company would not survive without the program. This would change quick because there are a lot of 8(a)’s run and own by Caucasians.

    If anyone wants to debate this, let me know and I’ll provide a contact info.

    If I sound like I am bitching; sorry, but, we need to empower ourselves and others. Give other companies a fair chance. If you are a decision maker, then give businesses of different ownership a fair chance. You may not receive a quid quo pro, but your children or their generation may benefit directly or indirectly.

    Ranting off…

  • jody carter

    How can I receive a grant to expand my business?