TNJ - September 2002 - Feature Story -Time to Strengthen And Rebuild By Rosalind McLymont

September 2002

Time to Strengthen And Rebuild

Black Professionals, Entrepreneurs Get Creative
To Neutralize 9/11 Fallout

By Rosalind McLymont

One year after the September 11, 2001 terrorist attacks that pulverized the World Trade Center in New York and ripped a gaping hole in the Pentagon, Black professionals and business owners are fielding new strategies to neutralize a fallout that appears to be especially harsh for them.

Compounding that fallout is the growing epidemic of corporate wrongdoing that has stymied corporate expansion and general operations. This has led to even more job losses, job shifts and reduction in supply contracts.

“I have never seen this many of my members affected so dramatically by unemployment. And these are sharp people who are definitely employable, with a high level of experience,” said Chandira T. Hickson, immediate past president of the Westchester/Greater Connecticut chapter of National Black MBAs.

“Those who were already seeking employment are still in the process of looking for a job. They have not been able to secure anything since the event. Those who might have been affected due to downsizing, some of which might be attributable to 9/11, are also looking,” she added.

Outlook Cloudy

The picture is just as grim for entrepreneurs. Black businesses contracted through supplier diversity programs to provide products and services to federal, state and local government agencies and to large corporations already have seen contracts shrink, delayed, or altogether cancelled as budget priorities shift under post-9/11 recession and security pressures.

“With African-American businesses being just about the weakest link in the chain, a lot of people caught colds but we got the flu,” says Harry C. Alford, President and CEO of the National Black Chamber of Commerce in Washington, D.C. The energy industry is a case in point.

“That mix (of 9/11 and corporate wrongdoing) has affected our entrepreneurs to some extent because when the big corporations have been shaken it really shakes their base of operations since often they depend on the big corporations for either producing or distributing the products within the energy industry that they are working on,” says Robert L. Hill, executive director of the American Association of Blacks in Energy in Washington, D.C.

Access to capital, which has long been the biggest frustration for black and other minority-owned companies, has become even more difficult as investors grow more averse to taking risks, says Wilford Adkins, managing director of Oasis Capital, a New York City firm that raises money for emerging growth companies. Companies that were financed last year would not be financed at the same levels this year, he said.

“We work in the private-equity marketplace. Certainly following 9/11 most companies pretty much pulled back because no one knew when the other shoe was going to fall,” he says. “The investors are out there, but for the most part they have raised the bar on the kind of companies they’re investing in, so it has made it much more difficult to get companies financed within this environment.”

Opportunities Available Overseas

Some black professionals and entrepreneurs inevitably will benefit from the billions of dollars expected to be spent collectively by private corporations on such areas as systems and facility security and by the federal, state and local governments on homeland security, defense, rehabilitation of 9/11-damaged infrastructure and buildings, and even rebuilding overseas war-on-terrorism targets like Afghanistan.

Clearly, however, it will be impossible to satiate the entire black professional and business community with employment and contracts generated by these activities. Consequently, many are developing strategies that will increase their chances of surviving today’s brutal business environment on their own. These strategies range from scouting out opportunities overseas and bolstering skill levels to fine-tuning operations and starting or diversifying businesses. The National Black Chamber of Commerce, for instance, is turning to opportunities in Africa and the Caribbean.

“What 9/11 has taught us is that only 15 percent of the business done in the world is done in the United States, so Blacks had better start looking beyond the Atlantic and the Pacific Oceans,” says Alford. The Chamber already has signed a Memorandum of Understanding with the Uganda Chamber of Commerce and Industry and plans to lead a trade mission to Uganda in November and to Ghana in February.

“We’re coming at this in a very pragmatic way. It will be ongoing and will start to develop something that’s going to improve the quality of life in Africa and the status quo in the form of growth in African-American business,” Alford says.

Hill also sees an expansion into Africa as a viable growth, even survival, strategy for Black energy professionals and entrepreneurs. Myriad opportunities lie in the development of Africa’s oil resources, particularly on the continent’s west coast, he says. He adds that the American Association of Blacks in Energy envisions projects to develop electrical generation and alternative energy sources.

“We are proposing to do capacity-building in these African countries with training and mentoring programs. We want to match our own small minority businesses with small businesses in the African countries. We have new technologies like distributed generation where we can light up small villages and run clean water wells. These are the opportunities our organization hopes to get into,” says Hill.

It’s a non-traditional approach to energy development to which African leaders are receptive, he says. “They are so used to the large corporations from American and Europe coming in and taking their resources and developing them, but it hasn’t really spread out to the people, particularly to those in the outlying communities.”

The overseas option is especially attractive to young Black MBAs in the current employment climate, says Hickson, noting that one member of the Westchester/Greater Connecticut chapter recently left for Italy for a job interview.

Addressing unemployment is a priority for both the national organization and its chapters, Hickson says. “Locally we’ll host employee seminars where we will offer information on how to break the glass ceiling and information on entrepreneurship as an alternative to corporate employment,” she says.

Indeed, black professional organizations like Black MBAs and Blacks in Energy are telling their members that starting a business is a strategic option in a landscape troubled by corporate shakiness. And while current economic conditions may seem tenuous for start-up businesses, networking and collaboration among these businesses will assure their success and the overall economic wellbeing of the Black community.

“We point out that there are a number of services that corporations need, which they are outsourcing and since so many of them (the members) are experts, they may want to consider starting their own business to make these contracts with their former corporations,” said Hill. “We were among the last to get into these professional jobs so the whole idea of ‘the last hired and first fired’ takes a bigger toll on us.”

Capital Concerns
In the financial sector, Oasis Capital, whose clients typically require a minimum of $2 million in financing, is scaling back on the dollar amounts it is seeking to raise for clients. It is staying away from figures like the $9 million it raised for one company last year and $11 million for another company the year before, Adkins says.

“Instead of going in with full-blown plans and financing companies at a significant level this year we’re scaling back and looking at $2 million.

He advises business owners to use the current lull to fine-tune their operations and focus on the long haul and to make appropriate cuts however painful.

“This is the time to be avoiding as much risk as possible. It is not the time to be expanding the number of employees, but rather to be looking at employees and determining who has multiple skill levels. This is really what this market requires to survive,” he says. “Those who need money must see if there is a way to do with less money. Do you need five million or can a million and a half help you?” he notes.

The key component of Oasis’s own strategy for the long haul is the creation of “an early-stage technology fund” to invest in minority- and women-owned companies that are either in the bio sciences, telecommunications, software or material sciences.

“When the entrepreneurs dry up you can’t buy milk, so we really have to have our own fund and become direct investors,” Adkins says.

Some contend that September 11 has become a convenient excuse for corporations and government agencies to roll back diversity programs. Others argue that changes in these programs already were under way prior to September 11, but concede they were exacerbated by the attacks.

Minority professionals and business organizations are monitoring the programs while urging their members to move forward with strategies built on discipline and creativity.

“If you’ve got savvy entrepreneurs that know how to hold on to a dollar they will come out good. It’s like a spring being pressed down and when the market turns the other way those guys that were able to weather the storm are going to do very well,” concludes Adkins.

Send a Network Journal Greeting Card With Music to a loved one or friend. In preparing to celebrate Black History Month (February) here in America, the theme of our greeting cards for the next two months will feature famous people of color from the last century.

The music to accompany the cards are Motown and Reggae songs.