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VOL. 127 | NO. 181 | Monday, September 17, 2012

Building Business

Community, business leaders discuss what's needed to grow minority businesses as demographics shift

By Andy Meek

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Dr. Leonard Greenhalgh brought a wake-up call with him to Memphis at the end of August, when he came to the city as one of several featured speakers for the Memphis Minority Business Council Continuum’s 2012 Economic Development Forum.

Cedrick Sparks, executive director, Youth Services Office of the Mayor, City of Birmingham, speaks at the recent 2012 Economic Development Forum at the Memphis Cook Convention Center. The forum was produced by the Mid-South Minority Business Council Continuum and the U.S. Department of Commerce.

(Photo: Lance Murphey)

The event included scores of prominent speakers and CEOs from around the country, and Greenhalgh – professor of management in the Tuck School of Business at Dartmouth University – focused his presentation on a seismic demographic shift under way in the country. His presentation was titled “When Minorities Become the Majority – the Vision for 2050.”

The big takeaway was just what the title says – that by 2050, minorities will be the new majority in the country. Based on U.S. Census Bureau data, Greenhalgh said the number of blacks and the number of Hispanics will exceed the number of whites in the country. And more importantly, he believes that as a country enough is not being done to prepare for that shift.

Greenhalgh, who also is the director of programs for minority owned businesses at the Tuck School, went on to assert his belief that minorities are not getting the education they need to staff the broader workforce in the service economy. The dropout rates in urban schools don’t help.

“Today's minorities are not getting the help they need to fully participate in the entrepreneurial economy,” said Martha Perine Beard, the Memphis regional executive for the Federal Reserve Bank of St. Louis and who introduced Greenhalgh to attendees of the forum before he spoke. “Many challenges continue to face small minority owned businesses. In the procurement process, for example, it is difficult for small minority business owners to compete with larger companies.”

The owners of Memphis Chemical, a minority owned business that was founded in 1968, employs 17 people and was bought by its current owners in 2000, understand that challenge. Co-owner George Brown cited one of the challenges his business faces as having the resources to compete on a large scale.

Memphis Chemical is a distributor of janitorial supplies, cleaning equipment, chemicals, paper goods and related products. Its product offerings have expanded to include office products, office furniture, industrial supplies and safety products. The company mainly focuses on business-to-business activity in all market sectors including private companies, some federal government customers, education and public companies.

Participants from area high schools attend the 2012 Economic Development Forum. The forum was produced by the Mid-South Minority Business Council Continuum and the U.S. Department of Commerce. Attendees learned about shifting demographics and the business vision for when that occurs.

(Photo: Lance Murphey)

“Someone could go into what we’re doing and look at the glass half full or half empty, and we’ve always looked at it half full,” Brown said. “And we understand that at the end of the day, we’re going to have to compete. At the end of the day, we’re going to have to be able to provide a value proposition to the customer as any other business has to do.”

Zooming in to a more narrow and local view, the importance and timeliness of Greenhalgh’s presentation to Memphis as a community can’t be understated. In Memphis, which has for the last 20 years had a black mayor and a significant amount of black leadership, black business revenues nevertheless have been small. The percentage of business revenue in Shelby County generated by black businesses is in the single digits.

Taking recent census data, the average business in Shelby County in 2007 generated slightly more than $871,000, while the average black-owned business generated about $20,000.

Roby Williams, president of the Black Business Association of Memphis, put it bluntly: Earlier this year, he told The Daily News that black businesses are doing “woefully poor” in terms of revenue.

Despite that, however, the issue is at least not being ignored in Memphis.

There are a host of resources in both the public and private spheres available for minority business owners to tap. And local political figures speak loud and often in making a point to strap defined minority participation expectations onto deals for development projects.

“How could you not have that in the contract?” Memphis City Council member Harold Collins asked local economic development officials during one meeting about local incentives that are funding a plant being built here by Electrolux North America Cooking Products.

Collins was pressing for more minority involvement for the Electrolux deal.

According to Memphis Mayor A C Wharton Jr., there is generally good minority participation in things the city has control over, partly because the city can mandate it as part of the deal. A multimillion-dollar sewer realignment for Mitsubishi Electric Power Products Inc.’s new plant in Memphis, for example, had total minority participation, Wharton said.

He said the redevelopment of The Pyramid arena into a Bass Pro shops store had almost 50 percent minority participation.

Earlier this year, the board governing The Regional Medical Center at Memphis formed an ad hoc committee to review and make recommendations regarding the amount of business the hospital conducts with minority owned companies.

The logic beyond why those levels of minority participation are sought is pretty straightforward. New factories need architects to design them, office parks need construction crews to build them, and warehouses need employees to staff them.

So if the city is already being approached with an outstretched hand, it’s the rule rather than the exception for officials to scrutinize plans for those projects closely and try and get as much minority involvement in the project as possible. It only makes sense, city leaders repeatedly say, to have workforces for these projects reflect the demographics of the city.

And when the number isn’t high enough on the minority participation side, project managers and developers are expected to have an answer and plan ready or face hostile politicos.

Outside of the political arena, the Black Business Association of Memphis is a nearly 40-year-old nonprofit dedicated to entrepreneurship and growth opportunities for minority and women-owned business. It helps business owners through investment, counseling and training.

While the association prepares businesses, Memphis Minority Business Council plays matchmaker between minority businesses and major corporations and public sector institutions in need of goods provided by smaller companies.

The MMBC Continuum started an in-house small-business incubator, the Center for Emerging Entrepreneurship Development. Several companies have graduated and helped grow the ranks of Memphis’ minority business sector. The incubator gives young entrepreneurs a place to develop their plans and take advantage of its strategic consulting services.

Without these and other resources, it’s difficult to see Memphis having been able to attain a top ranking. In 2011, Memphis was ranked 11th in Forbes' Best Cities for Minority Entrepreneurship List.

Memphis Chemical is an example of the kind of activity happening that the Forbes’ ranking recognized Memphis for.

In 2010, the company received a Quality Cup Award from the Greater Memphis Chamber, an award that honors companies whose project teams make exceptional contributions to their respective organization’s quality improvement efforts.

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