Active and deliberate inclusion of minorities contributes to business success, speakers told a crowd of more than 200 business leaders at the fourth annual State of Small Business forum.
Minorities have driven the growth of small business in the United States and play a crucial role in economic development, said Tatiana Bailey, director of the UCCS Economic Forum, at the breakfast meeting, held Aug. 28 at the Pinery at the Hill. It was hosted by Pikes Peak Small Business Development Center and the UCCS Economic Forum. The Business Journal was a media sponsor of the event.
Bailey said research demonstrates the impact minorities are having on U.S. business, especially small business.
According to U.S. Census data, the number of minority-owned businesses has grown from 24 percent of all U.S. businesses in 2007 to an estimated 40 percent in 2017, Bailey said.
Hispanic-owned firms are the largest and fastest-growing segment among minority-owned firms, she said.
“A large share of minorities are immigrants,” Bailey said, “and they are the powerhouse behind entrepreneurship and innovation in the United States. … Entrepreneurs are often immigrants, because they’re not afraid to take risks.”
Bailey said 43 percent of Fortune 500 companies were founded by first- or second-generation immigrants, as well as 28 percent of Main Street businesses.
Bailey cited a study published in the Harvard Business Review that showed diversity of ownership impacts the average number of employees at a firm.
Firms founded by immigrants averaged 4.4 employees, while those founded by non-immigrants averaged 7 employees. But businesses with a “mixed founder team” grew to almost 17 employees.
“That, in and of itself, speaks to the beautiful things that can happen within a business when you have diversity,” Bailey said.
Women are making great strides in business ownership as well, Bailey said, especially in the 25-to-34 and under-25 age groups. In those categories, the number of women-owned small businesses is almost equal to those of male-owned businesses.
Minority business ownership in El Paso County is lower than in the nation as a whole, “but it’s still quite high,” Bailey said.
Racial and ethnic minorities owned about 18 percent and women owned almost 40 percent of all businesses in the county in 2012 — figures that undoubtedly are higher now, she said.
BUILDING MINORITY BUSINESSES
Despite the success of minority-owned businesses, they face challenges that present opportunities for assistance.
“The No. 1 thing,” Bailey said, is to “be aware of persistent biases and barriers for minority groups.”
While a college degree increases the median net worth of nonminority household heads fourfold, earning a bachelor’s degree makes considerably less difference in net worth for black and Hispanic heads of households.
“That tells me that there’s still work to be done,” Bailey said.
Minority-owned businesses have less access to capital than nonminority businesses, she said, making it more difficult for minority businesses to scale up. They rely on informal financing, such as lines of credit and other high-interest loans, which means they then have less capital to invest in more employees.
“I see that as an opportunity to focus on and partner with smaller financial organizations within the small business community,” she said.
Minority businesses are more likely to sell their products and services to individuals than nonminority-owned businesses.
“I think of that as an opportunity to help them branch out to the larger customer base,” Bailey said.
Chambers of commerce, higher education, community organizations and government can partner to provide services that are necessary for minorities to succeed in general.
And for the next generation of minority business owners, fostering growth focuses on “the simple things — high school graduation completion and access to post-secondary certification and degree completions,” she said.
“Part of why we have so many small businesses in our community is our diversity,” El Paso County Commissioner Stan VanderWerf said.
While a key component is ethnic diversity, it’s also important for businesses to cultivate “skills diversity, idea diversity and expertise diversity,” he said. “If you have the right mix of talents, delivered in no small part by a diverse mix of people and other forms of diversity, you can and you will succeed.”
VanderWerf listed ways in which the county supports small businesses and referred small-business owners to the county’s website, elpasoco.com.
“We have sections on business regulations to help you with compliance and information on our Pikes Peak Work Force Center, which can assist you with finding employees,” VanderWerf said. “We also have an entire host of economic development tools that are actually available to us.”
Although the county does not have specific set-asides, “it is our policy in our procurement division to make a special effort to solicit and encourage small business participation in the products and services that we need,” he said. “And I believe the percentage of small business contract awards in El Paso County exceeds 70 percent.”
VanderWerf said the county’s procurement policies manual, posted on the website, can guide small businesses in contracting with the county.
“If you haven’t done this already, get yourself registered with the county, which will make it easy for you to participate in future opportunities,” he said.
Also available on the county website is a link to BidNet, which gives access to statewide contracts.
“There are 15,000 opportunities on BidNet right now,” VanderWerf said. “I think we should go after some of those a little bit more.”
Small businesses also can explore tax credits and incentives through programs such as enterprise zones, the commercial aeronautical zone and opportunity zones. Information about these is available through the county economic development department.
“We also have services that provide business loan funds, and these are designed to create and retain jobs and expand the diversity of our economic base in El Paso County, with a priority to manufacturing,” VanderWerf said. “These loans can range from $10,000 to $200,000, and are offered through the Pikes Peak Regional Development Corporation.”
The U.S. Small Business Admin-istration recently created a Hispanic employee resource group, said Allen Gutierrez, associate administrator of the office of entrepreneurial development.
“Not only do we want to empower entrepreneurs in all communities [but] also our team to have those opportunities of upward mobility,” Gutierrez said.
Of about 2 million government employees (excluding Postal Service workers), about 7,000 are minority senior executives, he said.
The agency’s partners, including the small business development centers, women’s business centers and SCORE networks across the country are working collaboratively with the SBA to increase diversity within their ranks in order to better serve minority businesses.
“We’re doing a lot more outreach, a lot more workshops, a lot more inclusion,” Gutierrez said. “We’re working very closely with the academic community colleges,” especially historically black colleges and universities, to “really engage and really provide that environment and those tools and services that help them springboard to start, grow and be part of their business.”
Frances Padilla, SBA Colorado district director, said SBA recently awarded funds to 24 organizations across the country to help improve outcomes for underrepresented entrepreneurs.
The Colorado SBDC network received $125,000 to continue working with entrepreneurs to develop and commercialize new technologies.
“We are all about educating small business,” said Aikta Marcoulier, executive director of the Pikes Peak SBDC.
The center’s active clients have grown over the past three years, she said.
“We’ve had 480 clients already this year,” Marcoulier said, compared with 590 in all of 2018.
More than 1,000 people have attended the 87 workshops offered this year to date and the SBDC has helped 27 business register with the state.
“These are businesses that are generating revenue,” she said. “We’ve helped businesses increase their sales at $14 million; we’ve helped them increase contracts of over $5 million.”
The center partners with organizations such as the Colorado Procurement Technical Assistance Center, the state Minority Business Office, the World Trade Center and Fort Carson to help businesses owned by minorities, women, veterans and the LGBTQ community.
“The Pikes Peak SBDC here in Colorado Springs is the hub for cybersecurity small business education for the entire state network,” Marcoulier said. “We launched [the TechSource Cyber:CYA, or Cover Your Assets] program in the last six months of 2018. Just from those six months, we had 26 workshops for statewide events. … We had the first-ever statewide cybersecurity for small business summit.”
The center also is piloting a Better Business Bureau badge for cyber awareness, she said.
These innovative programs, along with classes, on-demand workshops, one-on-one mentoring and special programs for veterans and parolees, are designed to support diversity and minority businesses.
Quoting Barbara Myrick, owner and president of B&M Construction, Marcoulier said: “Creating diversity in your business provides continual opportunities for you, and … leads to an environment of trusted collaboration, increase in productivity, employee morale and, at the end of the day, better business results.”