Views and News

Views and News

The African American Consumer Needs More Business Big and Small

It is encouraging to see the increased level of interest by state

delegates and legislators on matters of concern to African American and

other minority businesses. Recently, the Maryland Commission on Minority

Business Enterprise Reform began an excellent first step at investigating

problems that many small businessmen and women encounter and creating

solutions. The National Institute for Urban Entrepreneurship urges Commissions

such as this to also consider the disparity in African American small

business ownership, employment and profitability and assess the cause and

effects to the African American consumer.

According to a recent survey there is good news and bad news for
African American self-employed and small business. Robert W. Fairlie, a
professor at The University of California, Santa Cruz reported his findings
at a jointly sponsored event of the SBA, U.S. Small Business Advocacy
and the Kauffman Foundation on Friday, March 26, 2004 in Washington, DC.
Over a ten-year period, from 1990 – 2000, the self-employment earnings
growth rate for African Americans exceeded whites and other persons of
color. The self-employment earnings growth rate for African Americans
was 23%, whereas White, Non-Latino was at 18%.

Unfortunately, the bad news is that African American business ownership
rates lag at 4.26% of the African American population, the lowest rates
of any other ethnic group according to the 2000 Census. The highest
percentage was a 10.46% rate. African Americans earned $ 35,006 compared
to the highest average figure of $ 53,444. The most disconcerting
figure was that average sales and receipts according to the 1997 U.S.
Census was $ 86,478, only 17% of the average sales and receipts of White,
non-Latino businesses, $ 448,294. Also lagging, were number of employees,
0.9 for Average number of Employees of Minority Owned and Women-Owned
Business Enterprises, as compared to 3.1 for White, non-Latino Business
Enterprises.

So what should a Commission on small business consider? The first

suggestion is to investigate whether African American businessmen and

women are engaged in the business “programs” and “processes” and whether

consumers are being provided adequate choices of products, goods and

services. If not, do the state agencies have the capacity to ensure that

fair and balanced procurement and outsourcing decisions are occurring?

What consumers want is sound decision-making that starts with a broad

business focus as well as a better understanding of their needs.

Second, regulators and policy makers should continue to foster a
healthy environment for African American owned businesses to grow.
Regulations that negatively impact innovation, such as those designed by
licensing agencies headed by administrators without a proper understanding of
the specific innovation or the niche markets, unnecessarily narrows the
market. Also, rules created by the very people that compete in the same
consumer market as the emerging entrepreneur impact who may or may not
enter. What consumers want is integrity from the decision-makers.

Third, are community colleges, K-12 schools and universities
collaborating on the solutions? As an example, building math and science
educational skills most undoubtedly would help build entrepreneurs. It’s
clearly not just about English skills, since many successful immigrant
businesses in urban and rural communities don’t speak English as a first
language. Initiatives that enhance the understanding of basic business
principles, math, and business planning will help build a stronger business
community. What consumers want is collaboration with all institutional
resources.

Fourth, as Glenn A. Gladney, a small businessman from New Jersey and
owner of Access Optical Networks, Inc. has learned, “both capital and
market access are missing for African American businesses.” He says it
sincerely, “Bernie Evers, high school basketball coach can put an idea
on the back of an envelope and receive funding from various networks.
But why can’t a businessman with a Ph.D. and a team of advisors get
capital?” For this entrepreneur, there is no good or acceptable
explanation. What consumers want is fairness in obtaining capital.

More importantly, economic opportunities for African American

businesses will be created when consumers are offered appropriate choices

from which to pick. In states throughout the U.S., these choices have yet to

fully emerge. Just a few examples: the limited choices of African American

restaurants; the limited selections of hip-hop on the radio stations (where’s

the gospel hip hop?); and the county/state based system of awarding

contracts that may benefit say, a Rockville over a Silver Spring or one

geographical area over another. What consumers want is more

business – big and small.

Creating economic opportunities and jobs in the U.S. has a far better
chance of occurring when we begin to satisfy the African American
consumers’ needs.