The missing frontier for minority business associations and the minority business sector — Intra-Minority Community Procurement

Eric Foster
Jul 30, 2017 · 4 min read

I started a series on the value of and potential minority business and trade associations. There is a tremendous need and opportunity for these associations to have an impact on communities of color. The primary focus of advocacy and business contracting growth is opening up contracting opportunities with either the corporate sector or the various branches of Government. The opportunities, if afforded, can be game changers for a growing business of color so the risk is valued and central. My thoughts however, lean towards a missing area of business growth, Intra-Minority Business procurement. Some tend to think of business commerce inside of one’s specific ethnic minority community (African American to African American, Asian American to Asian American, etc.) but I’m speaking of Latino American to Native American or Asian American to African American, the opportunity to build the dual capacity with communities of color. This is the fourth wall of minority business procurement initiatives.

I served on the board of two minority business organizations, was active via my sales positions within the Minority Business Exchanges, Associations & Supplier Diversity Councils and my corporate career started with two significant African American businesses (The Wellness Plan & The Bartech Group, both generating annual sales of $120 million + during my time of employment). One thing that I experienced in the 15 years’ worth of professional interaction demonstrated a lack of initiatives to help businesses of color to procure goods and services from each other. It always felt like a missed opportunity due to the size, scope and shared challenges experienced in attempting to gain opportunities with majority corporations, Federal, State & local governmental organizations. There is significant economic value in this area. Some stats regarding the potential opportunity:

Per The U.S. Department of Commerce’s Minority Business Development Agency:

· There are more than 7.9 million minority businesses in America, contributing $1.38 trillion in revenue and 7.2 million jobs to the economy

From 2007 to 2012, minorities increased their share of overall business ownership from 22% to 29%. Further minority-owned businesses represented an additional $335 billion in sales and 1.35 million in employment.

Now, according to findings from the U.S. Census Bureau’s 2014 inaugural Annual Survey of Entrepreneurs,

· 949,318 minority-owned firms with paid employees, comprising 17.5 percent of all employer firms. These minority-owned employer firms generated $1.1 trillion in receipts (approximately 3.3 percent of the receipts for all employer firms). These firms employ 15.36 million people, roughly 13.5% of the total population employed

· There are over 4.5 million U. S. white owned businesses with paid employees, employing 99.74 million people and generating 31.9 trillion in receipts

· There are 5.4 million U.S. firms with paid employees. These firms employed 115.1 million people and generated $33.0 trillion in receipts. Annual payroll totaled $5.6 trillion, or approximately $48,997 per employee.

Of the 949,318 minority-owned firms with paid employees, their break out across the following demographic lines:

· 506,595, or 53.4 percent were Asian-owned;

· 108,473, 11.4 percent were black or African-American-owned;

· 26,757, 2.8 percent were American Indian or Alaska Native-owned;

· 4,701, 0.5 percent were Native Hawaiian and Other Pacific Islander-owned; and

· 298,563, or 31.5 percent were Hispanic-owned. The owner of a Hispanic-owned firm may be of any race.

Women owned approximately 1.1 million employer firms, or 19.4 percent, with receipts totaling $1.3 trillion, or 4.0 percent.

The procurement opportunity is necessary when you consider that only 10% of the businesses of color have grown to have employees but they generate 85% of the gross receipts produced by businesses of color. This is an important market opportunity for this sector, as there could be an estimated $600 billion in procurement spending by minority owned businesses. Here are some tangible action items that business leaders across the various ethnic minority communities must start working on if you’re going to expand the revenue opportunities for the communities that you represent.

Minority to Minority procurement programs

· Each national, statewide and regional MB Association & trade group needs to establish a comprehensive minority to minority procurement program to help businesses of color find and establish supply chain programs.

· Development of peer to peer procurement directory to increase identification & purchasing fulfillment assessment would encompass Local, Regional, statewide and national identification of minority suppliers across industry, market segment, supply chain and purchasing needs.

· The implementation of minority to minority tier one, tier two, tier three and tier four supply chain spending within the Corporate supplier diversity programs and external of these programs to increase B2B spending and revenue circulation inside of African American, Latino American, Native American, Arabic American and Asian American communities.

· Procurement Training & Applications development to encourage communication across ethnicity channels and industry channels.

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