Minority business: the new wave - includes related bibliography - Cover Story

Nation's Business, Oct, 1995 by Sharon Nelton

She lauds the recent establishment of a national database of Indian-owned businesses, accessible by electronic mail, a project of the National Center for American Indian Enterprise Development. She sees the system and the referral process it provides as a means of channeling business to Indian-owned companies that are on or near reservations. That means "economic benefits are going back into the [Indian] communities," she says. "That's an essential part of maintaining the reservation environments and maintaining our opportunities to exist as sovereign entities and continue our rich culture and rich heritage and our practices as Indian people."

Despite the encouraging trends in minority-business development, significant problems remain. Revenues still fall short of those found in comparable white-owned firms, for example. And, as Rhonda Johnson points out, when you add up the revenues of all 100 of Black Enterprise magazine's industrial and service companies, that income still doesn't match the revenue of one Fortune 100 company.

Moreover, there is enormous anxiety in minority-business communities right now about the possible dismantling of affirmative action and the detrimental effect that might have on minority enterprises. (See the story on Page 24.)

The issue was raised at the highest level in early March, when President Clinton announced that the administration would review all federal affirmative-action programs to see if they work and are fair. When he reported the results of the review July 19, Clinton said the study "concluded that affirmative action remains a useful tool for widening economic and educational opportunity."

However, Clinton added, "we clearly need some reform." Affirmative action, he said, "should be changed now to take care of those things that are wrong, and it should be retired when its job is done." But, he said, "that day has not come."

Meanwhile, Pete Wilson, the Republican governor of California, has made ending affirmative action a core principle of his bid for the GOP presidential nomination. As a member of the board of regents of the University of California at Berkeley, he brought the issue to a head at the state level with a vote by the regents to end special preferences in student admissions decisions. Wilson has vowed to end all state affirmative-action programs in California.

Though he had long supported such programs as a public official, Wilson says his thinking has changed because the programs have evolved into rigid quotas when their original intent was simply to ensure equal opportunity for all Americans.

However, Harriet Michel of the National Minority Supplier Development Council (NMSDC) says that while many corporate members would continue their levels of minority purchasing, others would not if affirmative action was ended. "Public policy often drives private behavior," she says, and without government pressure, some corporations will "just walk away from the table."

Also at the top of the list of concerns is the problem that's always there: lack of access to capital. There appears to be more activity in the works to alleviate financing roadblocks. The NMSDC, for example, has created a $20 million Business Consortium Fund, a working-capital loan program to assist minority members who win contracts but who cannot get the money they need from banks to create the goods and services to fulfill those contracts. And sophisticated minority financiers are beginning to emerge in greater numbers; some of them concentrate on minority-owned businesses.