Supporting Minority-Owned Businesses in the U.S.
The United States is a melting pot of cultures, beliefs, and backgrounds. It’s a country that was built on the strength of people from diverse backgrounds, including immigrants and enslaved people.
Following this indisputable fact, supporting minority-owned businesses is crucial to realizing the American dream and our nation’s founding principles of equality, justice, and opportunity. Importantly, it is only through equity and intentional support of those in our society who have the least access to these principles that the phrase “for all” can be appended to these principles with any real conviction or integrity. Beyond the moral imperative, investing in minority-owned businesses provides a safety net for the economy as these groups continue to form an important economic driver. As of 2020, minority-owned small businesses provided jobs for nearly 9 million workers, producing over $1 trillion in gross domestic product annually.
Calling for support for minority-owned businesses is especially important because they’re far less likely to get the same level of support as their white counterparts from the government and other institutions of influence.
For example, in 2018, the Brookings Institution uncovered a startling gap in loan approval rates for small-business owners of different ethnicities. According to the report, large banks are more likely to approve loans for white small-business owners at a rate of approximately 60%. In contrast, Hispanic or Latinx small-business owners are approved at a rate of roughly 50%. Shockingly, Black small-business owners are approved at a mere 29% rate. This is an indication of significant structural challenges for minority-owned businesses.
What Is A Minority-Owned Business In The U.S.?
Minorities in America are not a monolithic group. There are many racial and ethnic groups, each with its own unique history and culture. The concept of “minority” is, therefore, very broad and can include anyone who is not a member of the majority group in society.
For the purposes of this article and the services provided by CP Jones Consulting, LLC, a minority-owned business is a company that is at least 51% owned and operated by a person who identifies as a woman, person of color, member of the LGBTQIA community, or living with a disability.
3 Key Elements for Minority-Owned Businesses to Succeed
Despite their significant contributions to our economy, minority-owned enterprises face significant challenges when starting up, growing, and expanding their operations.
To help these entrepreneurs overcome these obstacles and grow their businesses, three essential supports should be available.
1. Government Assistance
Despite the debates surrounding government assistance, it remains a vital safety net for many vulnerable populations. Government funding programs can provide minority businesses with the financial resources necessary to help them succeed. These programs can also support the development of new products, services, or technologies that meet unmet needs.
Time and again, the U.S. government has pledged to invest in minority-owned businesses by supporting them financially through grants and loans. The Department of Commerce, for example, has a program called Minority Business Development Agency that provides resources and support for small businesses owned by people of color, women, and other historically disadvantaged groups.
Despite having well-intentioned programs and policies, many of these initiatives have failed to reach their intended beneficiaries due to bureaucratic inefficiencies, inadequate funding, and limited outreach efforts.
One way to make these programs more effective is by strengthening communication between federal, state, and local governments and minority-owned businesses. This can be done through better partnership initiatives, such as engagement with civil societies and trade organizations that understand the nuances of minority-owned businesses’ challenges. Increased advertisements on government websites or social media pages may not do justice.
In addition to improving communication, governments should simplify application processes so they are less burdensome for applicants. They should also increase funding levels so that more entrepreneurs can access the funds they need to start or expand their businesses.
An African proverb states, “If you want to go fast, go alone. If you want to go far, go together.” Too often, minority-owned businesses operate in silos or otherwise small networks, limiting the scale and lifespan of these companies. Unlike their peers, minority-owned businesses are less likely to have access to the formal and informal relationships needed to remain profitable, competitive, and sustainable for the people who run them. This is why creating and amplifying networks that provide community and resources for minority-owned businesses is so essential to their success.
Strong networks provide many benefits to companies, especially minority-owned businesses. These relationships unlock partnership and knowledge transfer opportunities to capitalize on market trends, find funding, acquire customers, and gain internal efficiencies. Additionally, they offer connections with other founders who understand the stressful and isolating nature of starting and growing businesses. Having this safe space for connection, accountability, and feedback is important for leaders and businesses alike because companies can only be as successful and resilient as the people who power them.
Improving access to networks for minority-owned businesses requires a two-fold strategy. First, existing networks and institutions of influence must improve their outreach and recruitment of underrepresented people. This includes partnering with professionals specializing in diversity, equity, and inclusion (DEI), and sourcing and redesigning application tools and processes to make them more equitable. Second, those with power and access must embrace that the people closest to the problem are also closest to the solution. This means providing capital and resources for minority-owned businesses to form their own networks and design solutions that meet the unique needs of their members – even if solutions look and operate differently from what has traditionally existed. Together, these approaches of corrective integration and intentional congregation can help address the limited scale, under-resourcing, and leader burnout that undermines the growth of minority-owned businesses.
3. Consulting Services
Access to qualified professional advice is essential for any business owner.
Consulting services can help minority-owned businesses become more competitive by providing resources, training, and technical assistance in areas such as business development and marketing. At CP Jones Consulting LLC, for instance, minority entrepreneurs can leverage best-in-class business talents from Silicon Valley and Fortune 500 to get tailored advice and resources they might not otherwise have access to.
In general, consulting services can also provide essential assistance related to procurement, legal, as well as financial, and tax planning.
Procurement Assistance: Minority-owned businesses need procurement assistance to navigate the often-complex process of securing contracts with government agencies and large corporations. Skilled consultants can assist with identifying potential procurement opportunities, securing necessary certifications, developing proposals, and negotiating contracts to maximize the chances of success.
Legal Assistance: This service offers vital guidance to minority-owned businesses in understanding and negotiating the terms of their contracts and complying with government- and industry-specific requirements. Effective consultants can review contract language, identify potential risks, and help ensure the contract terms are favorable to protect the business’s interests.
Financial and Tax Planning: Put, money matters. Whether a company is for-profit or non-profit, understanding how cash flows in and out of your business is essential to staying in operation. Financial planning helps minority-owned businesses identify how revenue and costs impact their profitability and sustainability. A good financial planner helps clarify which products and services generate the highest return so minority-owned businesses can prioritize those revenue streams for growth. Additionally, working with a tax professional to proactively identify business tax incentives can help minority-owned businesses manage expenses throughout the year to minimize annual tax liabilities.
CP Jones Consulting LLC offers a comprehensive suite of services that are specifically designed to support and empower marginalized groups in white-dominated spaces. The mission of CP Jones Consulting LLC is to strengthen minority businesses and promote economic prosperity for minorities, women-owned small businesses, and entrepreneurs. So book a call with us today.