Reinvention through innovation: despite the sluggish economy, a number of B.E. 100s companies are winning the battle for market share and profits by retooling their enterprises - B.E. 100s Overview

Black Enterprise, June, 2003 by Derek T. Dingle

Surprisingly, some companies prospered. Among the list's top performers were the independent boutiques SWG&M Advertising Inc. in El Paso, Texas (No. 8 on the BE ADVERTISING AGENCIES list with $36 million in billings), and Equals Three Communications Inc. in Bethesda, Maryland (No. 6 on the list with $80 million in billings), which posted increases in billings of 44% and 17.6%, respectively.

BRAVE, NEW FINANCIAL WORLD

Black-owned financial services companies, which includes our rankings of insurance firms, banks, asset managers, investment banks, and private equity firms, continue to expand and contract in a sluggish economy and deregulated environment. New Orleans-based Liberty Bank & Trust Co. represents the type of innovative institution that will stay competitive in the future. Last year it focused on selling consumer credit cards as well as adopting an austerity program. All told, these measures helped the bank earn a profit of $2.15 million, up from $1.62 million in 2001.

A more ingenious maneuver by CEO Alden J. McDonald Jr. was partnering with the Minority Capital Alliance--a joint venture between City National Bank of New Jersey (No. 8 on the BE BANKS list with $215 million in assets), First Independence National Bank of Detroit (No. 12 on the BE BANKS list with $165 million in assets), and GE Capital--to provide equipment lease financing and advisory services to major companies. The Alliance is expected to generate $30 million to $100 million in the first year. "The alliance is significant because we can cross-sell our banking products--whether it's a municipality, school district, or another type of institution--to new clients as it grows," says McDonald.

To diversify income streams, old-line insurers and investment banks are treading on the turf of asset managers--dominated this year by John Rogers' equity-oriented Ariel Capital Management (No. 1 on the BE ASSET MANAGERS list with $10.3 billion in assets under management). For example, Atlanta Life Financial Group Inc. (No. 3 on the BE INSURANCE COMPANIES list with assets of $99.9 million) has completed its transition into asset management by offering several equity products.

As for the private equity market, investors continue to hold on to their wallets because the lackluster merger and acquisitions and IPO activity are not providing the quick and profitable exits they witnessed a few years ago. Firms such as Fairview Capital Partners Inc. (No. 1 on the BE PRIVATE EQUITY list with $850 million in capital under management) and Smith Whiley & Co. (No. 4 on the BE PRIVATE EQUITY list with $213 million in capital under management), however, managed to raise additional money on the strength of new funds in what Smith CEO Gwendolyn Smith Iloani calls "the worst fund-raising market that I've seen in the history of private-equity investing."

For BE CEOs, the watchword will continue to be innovation. Whether the economy crawls, skips, or sprints in coming years, they will have to streamline operations, create partnerships, and remain customer-obsessed. If the strategy works, these entrepreneurs must stay focused. And if it doesn't, they will have to tear up their old plans and build a better business model.