White Paper: The changing face of American business owners

The face of the American business owner has evolved over the last few decades to become more representative of our nation’s population. Minority-owned businesses have grown at an unprecedented rate since the civil rights movement in the 1960s and the advent of public and private efforts to identify resources to build opportunities for those of all backgrounds.

According to the U.S. Census Bureau, minority-owned businesses (those owned by African-Americans, Hispanics, Asian and Pacific Islanders, American Indians and Alaska Natives) grew at a rate more than four times that of American firms overall from 1992 to 1997 , increasing from 2.1 million to about 2.8 million firms, according to a report released by the Commerce Department's Census Bureau. The 30 percent growth rate exceeded the 7 percent increase for all U.S. firms, which jumped from 17.3 million in 1992 to 18.4 million in 1997 . Revenues for more than 3 million minority-owned businesses increased more than 60 percent in that time frame, compared to a 40 percent rise for American firms overall . With revenues and sales increasing, minority-owned businesses have also been able to diversify and expand their skill sets and services.

Minority Businesses Face Challenges

However, operating a business can be a difficult proposition for anyone. Minority-owned firms continue to face several challenges that also affect small and large businesses to varying degrees, including securing capital, acquiring technical assistance and competing with established non-minority firms. That is where federal, state and local governments come in. Agencies such as the Fairfax County (Virginia) Economic Development Authority (FCEDA), the Virginia Department of Business Assistance, Virginia Department of Minority Business Enterprise, the U.S. Small Business Administration and the Minority Business Development Agency of the U.S. Department of Commerce and institutions of higher learning such as Fairfax-based George Mason University often can help minority business owners with information and resources.

Minority-owned businesses in Fairfax County, for example, have access to a number of resources and services designed to assist their development and growth. Contributing to the success of minority-owned businesses in Fairfax is the FCEDA’s Small, Woman- and Minority-Owned Business Development Program. The FCEDA, the Virginia Department of Business Assistance and the U.S. Small Business Administration hold monthly workshops called “Entrepreneurship 101: Starting a Business in Fairfax County.” The FCEDA also created the Emerging Business Forum (EBF) to bring together minority business communities for sessions on working with established companies and government agencies.

 Minority entrepreneurs who recently immigrated to the United States encounter complicated obstacles that the majority of business owners rarely come across. The most obvious of these hurdles is the language barrier that non-English speaking immigrants often struggle to overcome.

Another of the many challenges for minority business owners is learning how to conduct business in the US, especially for its new arrivals. According to Alba Aléman, who is founder, CEO and president of Cairo Corporation, an information technology integration firm in Fairfax, “It’s difficult for people from other countries and cultures to learn and understand the laws and requirements for operating a business here. They have to learn the cultural differences in business as well.”

Also, with increased government spending post-9/11, the need to understand how to conduct business with the US government, “the biggest buyer in the world,” is more crucial than ever. Aléman added, “Not prepping for the challenges of working with the federal government is often the biggest barrier (to success) for minority businesses.”

Aléman offered these suggestions to minority entrepreneurs:

• Use the educational resources offered to minority businesses by government agencies and institutions of higher learning. In her first two years of business, Aléman used programs offered by the FCEDA and federal agencies, and those at George Mason University. Aléman singled out George Mason University ’s Center for Entrepreneurship and Public Policy and its Procurement Technical Assistance Program which offer free or inexpensive training programs that teach beginning entrepreneurs how to run a business. Courses typically also identify banks that work with small and minority-owned companies. They also help organize materials needed to secure a line of credit.

• Take advantage of financial resources afforded to minority entrepreneurs. “You have access to federal procurement of up to $3 million if you can sell your idea, have a business plan, and convince [government] agencies to give you a loan,” Aleman said. “This is a contract vehicle to conduct business once a client is obtained. Also, there are outstanding networking opportunities for minority business owners and their families because of Fairfax’s location near Washington, D.C.”

• Do what’s in the best interest of your business at all times. To save money, Aléman operated Cairo Corporation from the basement of her home for 2 1/2 years until she could afford office space. “Do what you have to do to adhere to your growth objectives and keep your employees employed. Do what you can when you can in order to ride out the tough times.”

Faring well in Fairfax County

Fairfax is home to one of our nation’s most diverse, multi-ethnic populations and its residents are among the most well-educated and affluent in America. In 2004, seven of the 100 largest African American-owned companies were based in Fairfax County, as were five of the 100 largest Asian American-owned companies and 12 of the 500 largest Hispanic-owned companies. Fairfax County’s location near Washington, D.C., and Washington Dulles International Airport, its well skilled workforce, pro-business government and top-ranked public school system often are cited as reasons it is one of the leading business locations in the U.S.

“We are working hard to make Fairfax County known as the best place in the nation for minority-owned businesses, but the truth is that our minority-owned business community is one of our strengths,” said Gerald L. Gordon, Ph.D., president and CEO of the FCEDA. “Just as a diversified industry base makes a local economy stronger, so does a diverse business community help by making a community more cosmopolitan and more open to new ideas and energy.”

The agency also regularly provides several services to minority entrepreneurs, including:

• Identifying possible Fairfax County sites or offices;
• Providing information and identifying resources for small and minority-owned businesses and start-ups such as the Minority Supplier Development Council;
• Serving as a liaison with the planning and development agencies of the Fairfax County government;
• Providing current demographic and economic information; and,
• Conducting seminars.

Reason for Optimism

More resources are available to U.S. minority entrepreneurs today, and more business opportunities too. But as with any business person, minority business owners need the proper preparation and a clear set of goals, strategies and tactics to avail themselves of the opportunities and be a successful part of the economy.