New directions

Entrepreneur, Feb, 1999 by Cynthia E. Griffin

In sheer numbers, this market is just shy of 2 million people. It counts among its ranks the fastest-growing segment of the small-business community - Latinos - and its members often provide goods and services in neighborhoods others have long abandoned.

But like comic Rodney Dangerfield, minority entrepreneurs often feel they "get no respect."

Who are today's minority entrepreneurs? Unlike their predecessors, they tend to be better educated, younger and have more resources and expertise gained from working in corporate America.

"Traditionally, minorities owned businesses in retail, but in the late 1980s and the 1990s, we've seen a diversification into high tech, construction and the service industries," says George Herrera, president and CEO of the U.S. Hispanic Chamber of Commerce. Herrera credits this, in part, to the growth of government contracting in the high-tech arena and the globalization of the U.S. economy.

"Not a lot of minorities are doing work globally, but as corporate America goes global, it triggers opportunities for subcontractors," says Susan Au Allen, president of the U.S. Pan Asian American Chamber of Commerce.

While minorities aren't turning to international commerce in large numbers yet, Herrera thinks their unique cultural ties position them to have a significant future impact on emerging markets in Africa, Asia and Latin America.

SAME OLD BARRIERS

But they must first overcome some powerful challenges. One big obstacle is an old nemesis, says Harriet R. Michel, president of the National Minority Supplier Development Council. "There's a lack of adequate financing, particularly for African-American businesses. It goes back to an attitude that [minorities] might not be 'as good as'; and that dealing with them might somehow be the negative part of affirmative action."

"While there are those like Chase and NationsBank, which are very aggressive [in lending to minorities], there are too many local banks that want minority firms to be 'more than' to get the credit," adds Michel.

Native Americans face additional challenges, says David Beaver, executive vice president of the National Center for American Indian Enterprise Development. "Corporate America doesn't understand the legal environment in which Native Americans operate businesses on the reservations," he says. "There are sovereignty issues many outside the reservation don't understand."

BRIGHT FUTURE

Despite lingering misconceptions, minority business leaders are highly optimistic about the future. "I see nothing but opportunity," Beaver says. "I see minority entrepreneurs playing bigger roles in the economies of the United States and the world. And they'll get there through networking, education, mentorships and organizations like ours that are helping those who want to help themselves."

Michel sees joint ventures and partnerships as keys to future success. She also believes acquisitions will play a big part in minority business growth. "[Minority firms] are going to buy existing companies and recognized brands," she says. "There are minorities with the asset base and capital amassed to do this."

Like the rest of the small-business world, high tech growth trends will continue to play a pivotal part in business formation and growth among minority businesses. But more important, entities like the Internet, which only recognize the color of money, could conceivably level the playing field.