The Profitability Gap - Minority businesses at the forefront of growth
Business experts are calling for immediate preventive measures to address the growing disparity between minority-owned businesses and those owned by non-minorities. Too many minority-owned businesses are struggling to be profitable, they said at a National Urban League “economic power summit” held in June.
The two-day summit, split between New York City and Newark, N.J., featured a host of small business experts, panel discussions and networking forums. Among the speakers were NUL President Marc Morial and Newark Mayor Cory Booker. “Economic power is at the core of the twenty-first century civil right movement,” Morial said. “The final challenge our community faces in achieving equality in the U.S. is improving our bottom line and closing the economic divide existing between us and mainstream America.”
According to figures from the U.S. Census Bureau, revenues generated by the nation’s approximately 1.2 million Black-owned businesses increased by more than 25 percent between 1997 and 2002. Census data also show that the New York metro area, including New Jersey, has the greatest number of Black-owned businesses in the country. Such statistics testify to the potential economic power that minority-owned businesses can wield in their local communities as well as nationally. Others, however, show a troubling profitability crunch for small businesses in general and minority enterprises in particular. “The need for economic empowerment is not exclusive to the African-American community,” Morial said. “[Everyone] is feeling the pinch of the ever-widening gap between the haves and have-nots in this nation.”
In Newark, Mayor Cory Booker discussed city-backed initiatives already in place and in the pipeline to fuel economic and small business development. Part of the economic development plan, Booker says, is to reclaim hundreds of acres of city-owned land sold at a cut-rate price by the administration of former Newark mayor, Sharpe James. The federal government indicted James in July on more than two dozen corruption charges. Investigators contend that under the James regime, more than 5,000 city lots were sold at well below market prices to friends and relatives of the embattled former mayor.
“In order for Newark to develop successfully, there must be a level playing field for all,” Booker said. “In the past, development projects were approved and [given] without a larger vision for Newark’s future growth.” Booker noted that too many Newarkers are facing financial hardship and severe economic distress and that businesses are shutting down and moving out of the city. “Some communities have priced their residents out or forgotten whole populations in the midst of enthusiastic gentrification,” he said.
While small business owners applaud the efforts of the National Urban League and the Booker administration for bringing what they see as much-needed attention to the issues surrounding economic development and entrepreneurship, they stress that business owners themselves must do their part to enhance their business performance. “Operate like a big business and know the needs of your customers and develop a business strategy that will achieve your goals and the goals of the customer,” he advises fellow entrepreneurs,” says William Parrish, owner of Noble Strategy, a construction management firm in South Orange, N.J.
Parrish argues that developing a strong and secure economic business presence in the metro New York/New Jersey area starts with the creation of solid minority businesses. He should know. His company posted revenues of about $750,000 last year and will top $3 million this year, he says. And it recently signed a three-year, $142 million contract with the city of East Orange in New Jersey.
By Glenn Townes