Minority-business enterprise: the national priority: the challenge minority-business...

Predictions abound that the fastest growing population segment in the United States, between now and the year 2050, will be among racial and ethnic minorities. Today, minorities represent 32 percent of the U.S. population. Looking forward to the future, I contend that if America is to maintain

its preeminence in the world marketplace, we must ensure that our entrepreneurial economy is alive and weil among all segments of our nation's diverse population. Accordingly, we must put in place strategic business policies and an infrastructure that fosters an environment where minority entrepreneurs can realize their hopes and dreams of business ownership and prosperity.

Over the last decade, minority businesses have become a driving force behind U.S. economic and productivity growth. In fact, the growth of minority-owned businesses has substantially exceeded those of non-minority firms throughout the 1990s. Today, minority-owned businesses exceed 4.1 million firms, generate 4.8 million jobs and almost $700 billion in gross receipts. How we plan for this demographic shift will significantly impact our domestic living standards and the competitive advantage of the United States in the worldwide economy.

According to an issue paper by Dr. Matthew J. Slaughter, of the Tuck Amos School of Business at Dartmouth and the President's Council of Economic Advisors, "The success or failure of minority-owned businesses will increasingly drive the success or failure of the overall U.S. economy." Professor Slaughter, and his co-author Dr. Andrew B. Bernard, make the business case of why minority-business enterprise is, and should be, the national priority. By masterfully identifying the need to link population demographics and historic labor force trends to longitudinal business databases, Slaughter and Bernard have reopened the discussion of why minority-business enterprises are critical to the future productivity and competitiveness of the United States.

For the last three decades, the United States has had the competitive advantage of a rapidly expanding U.S. labor force across all racial and ethnic fronts. Women entering the labor force, the baby boom generation, and the baby boom echo have provided the United States with unprecedented labor skill, innovation and entrepreneurial energy. Maintaining this growth in future decades will require the contribution of immigrants and minority workers. Slaughter and Bernard caution us that a "slower growth in the U.S. labor force will mean greater pressure to raise the rate of U.S. productivity growth." This requires greater productivity from minority workers, increasing business ownership among minorities and building existing minority firms into larger and more dynamic enterprises.

America's economy was born out of an entrepreneurial spirit. We have a legacy of free enterprise and innovation that has established a historic preeminence of competitive advantage in the worldwide economy. Entrepreneurs develop and commercialize innovative products and services; generate new industries and firms to replace those that have run their course; and create employment opportunities and wealth that is reinvested in new economic enterprises and in communities. Yet, minority-owned businesses only account for 18 percent of all U.S. firms, 4 percent of all paid employees and 3 percent of total gross receipts.

The U.S. Census Bureau is in the process of releasing the final results of the 2002 Survey of Business Owners (SBO). While there is still much work to be done, the news is encouraging. Specifically, the trend and trajectory of minority-business enterprise growth is positive and upward. The results show that minority-business enterprises have outpaced the rate of growth for firms and revenues of all U.S. businesses. For example, the number of all U.S. firms grew by 10 percent between 1997 and 2002; however, the number of Hawaiian and Pacific Islanders-owned firms grew 67 percent; the number of black-owned firms grew 45 percent; the number of Hispanic-owned firms grew 31 percent; the number of Asian-owned firms grew 24 percent; and the number of women-owned firms grew 20 percent. During this same timeframe, the receipts of all U.S. firms grew 22 percent, but receipts for black-owned firms grew 30 percent, Hispanic-owned firms grew 22 percent, women-owned firms grew 16 percent and Asian-owned firms grew 13 percent.

The dramatic growth of black business firms--from 824,00 firms in 1997 to 1.2 million firms in 2002--and the growth of Hispanic firms from 1.2 million to 1.6 million--is remarkable. Especially noteworthy too, is that Asian firms consistently outpace all minority firms in annual gross revenues. These indicators illustrate that increasingly more minorities are seeing themselves as business owners capable of providing products and services, competing in the marketplace and generating wealth for their families and their communities.

The results of the SBO data validate President Bush's vision of an "ownership society" and this, combined with other economic indicators point to a strong national economy--an economy that has grown over the last 17 straight quarters, where the unemployment rate of 4.7 percent is lower than the average of the last three decades; and one that has created five million jobs since August 2003. What is most impressive is that this growth occurred in the shadow of the Sept. 11 terrorist attacks, the recession and other economic obstacles and challenges. Looking back, it is clear that the spirit of entrepreneurship was never lost.

As the national director for the Minority Business Development Agency, I believe minority-business enterprises are in a period of historic expansion and they present a dynamic growth opportunity for the United States. Our nation needs the burgeoning racial and ethnic minority population to embrace an entrepreneurial spirit and to succeed. We must approach the demographic change with open eyes and champion the formation of yet another "nation of immigrants" who, with America's historic minority communities from the rural south and urban centers, will continue the growth and productivity which is the American entrepreneurial legacy.

By adopting a policy that makes minority-business enterprise the national priority, MBDA is striving to increase business ownership among minorities and thus ensure a competitive nation and a prosperous future for all Americans. It is only through becoming major stakeholders in the American economy that minority entrepreneurs can significantly enhance America's gross national product, consumption, savings and tax base. We must move forward to the future now.

The International Franchise Association's business model of pursuing economic independence through franchise ownership speaks to the heart of the president's vision of an "ownership society." As a member of the IFA's Diversity Council, I am pleased that the IFA and its members also recognize the value in attracting new entrants into the franchising sector from all segments of America's diverse population. This strategy will serve the short-and-long term interests of the IFA and contribute to our nation's prosperity. Because of its outreach and new focus on diversifying its ranks nationally and globally, the IFA is poised to make a direct and immediate impact on business ownership, jobs and wealth creation.

The challenge minority-business enterprises must accept is their vital role in shaping the 21st century worldwide economy. There must be a renewed vision of economic empowerment and national pride through business enterprise and ownership. Minority businesses must prepare themselves to compete in the 21st century worldwide economy. Preparation means strengthening your business financials to access capital. Preparation means understanding the value and importance of strategic partnerships. Preparation means mastering the back room of your business and leveraging technology to produce efficiencies.

The IFA with its corporate network, educational curriculums, business assessment tools, and working knowledge of supply chains can serve as the critical "center of influence" for minority-business entrepreneurs pursuing competitive advantage in the global economy.

The challenges of our dynamic economy and population demographics are important to the IFA and MBDA, and the opportunities are exciting. The United States, more than any other country in the world, looks and speaks like every other country in the world. This is our strength and competitive advantage in a 21st century worldwide economy. That is why the MBDA has deemed minority-business enterprises as the national priority. MBDA is committed to assisting minority- business enterprises in taking charge of their destiny and realizing their dreams. We welcome the IFA as a full partner to achieving our vision whereby the success of minority firms in terms of numbers, revenues and employees reach a level that commensurate with the minority population.

Ronald N. Langston is national director of the Minority Business Development Agency. He can be reached at rlangston@mbda.gov.