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James H. Lowry

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The Onus Is on Large Companies to Help Minority-Owned Small Businesses Get Bigger: It's in Everyone's Interest

Posted: 09/12/11 07:16 PM ET

Small businesses generate over two-thirds of the new jobs in our economy. Importantly, black-owned small businesses have the fastest growth rate, according to the Department of Commerce. Still, fewer than 5 percent of black-owned businesses employ more than five people. I believe that fact -- the smallness of black-owned small businesses -- is as much a wake-up call for large corporations (and the country's leadership) as it is for black entrepreneurs themselves.

Because minorities will be the majority in the U.S. within the next 30 years, larger black and minority businesses have to be developed to serve the needs of the country's private and public sectors. In other words, without a significant number of high-quality, fast-growing black and minority-owned businesses, innovation and choice in terms of supply chain partners will be limited.

Upping the ante on small black and minority-owned businesses -- turning them into fast-growing powerhouses -- won't come naturally or easily. Consider this: Over the years, major corporations, confronting stiff competition globally and domestically, have consolidated their supplier pool. They're reducing the number of companies they do business with, and the ones they do trade with are themselves large, highly sophisticated, well capitalized and experienced. In lots of cases there is an "old boys" network established with these suppliers. Stated another way, the big supply chain participants and suppliers don't include enough -- and don't seem on the path to include enough -- growing black and minority-owned businesses. (This is certainly true when viewed in the context of demographic shifts.)

That said, a number of enlightened corporate leaders have taken a harder, more proactive look at reality and the challenges of the future. They have designed outstanding programs to increase the number of minority suppliers, ones that have the potential to fill key supply-chain roles. Exxon Mobile, AT&T, PepsiCo, Toyota, Microsoft and Boeing, among others, have pushed the envelope, challenged old paradigms and opened the doors for the development and participation of qualified, sophisticated and forward-thinking black and minority-owned businesses. Each of these multinationals has...

  • Established minority and women business enterprise development as a company priority.
  • Placed the responsibility for the success of the program on the chief procurement officer (CPO).
  • Adequately financed the office of minority business to get the job done.
  • Established a sophisticated monitoring process to evaluate success and identify major barriers to increase minority procurement.
  • Provided ongoing training for key buyers in how to effectively utilize minority-owned businesses.
  • Granted scholarships to outstanding minority and women entrepreneurs to attend the top business schools in the country.
  • Focused on the need to develop minority and women entrepreneurs through effective and comprehensive mentor-protégé programs.
  • Ensured that minority-owned suppliers are paid on time or sooner.



In turn, a number of first-tier minority suppliers -- companies that are fast-growing -- are encouraging other larger businesses, irrespective of color, to establish their own mentor-protégé programs with the smaller, minority-owned firms.

There are now 18 U.S. companies that are each procuring annually over a one billion dollars with minority firms. As a result, these big companies are creating jobs in black and other minority communities across the nation, developing new leaders and role models and fostering a new dialogue between blacks, Hispanics, Asians and whites. This makes the U.S. stronger, and these companies should feel proud. The overriding question, though, is why aren't more big companies doing this? If there were, our country would be stronger.