The Future of Small Minority Business: Holding on to Old Markets; Tapping New Ones

Barry Bluestone Cynthia JacksonDarnell Williams Russell Williams

Untapped Markets: Embracing Potential for Economic Opportunities

ABCD Federal Reserve Bank of Boston

October 8. 2002

Status of Minority Business in Massachusetts State Population in 1997 according to Census

Bureau estimate: White Non-Hispanic--- 85.3% (5,217,300) Minority------------------- 14.7% (898,176)

Black--------------------- 6.3% (384,540) Latino-------------------- 5.9% (361,859) Asian--------------------- 3.5% (212,473) American Indian------ 0.2% (14,675)

Minority Owned Firms in Massachusetts Minority-owned firms constitute 7.3% of all

Massachusetts firms 12,729 Asian firms 12,725 Latino firms 11,834 Black firms 3,428 American Indian-owned firms

Business Ownership in Massachusetts Percentages of firm ownership in Massachusetts: 89.9% of firms are White (non-Hispanic) owned 2.4% of firms are Asian-owned 2.4% of firms are Latino-owned 2.2% of firms are Black-owned 0.6% of firms are Native-American owned 0.3% of firms are 50/50 minority/non-minority owned 2.6% are classified as Other

Massachusetts White (non-Hispanic) Population, Business Ownership, and Business Sales/Receipts for

private businesses

85.3%

92.2%

96.5%

78.0%

80.0%

82.0%

84.0%

86.0%

88.0%

90.0%

92.0%

94.0%

96.0%

98.0%

White Non-Hispanic% of MA Total Population

% of MA Total Business Ownership

% of MA Total Business Sales/Receipts

Massachusetts Asian, Latino, Black, and Native American Population, Business Ownership, and Business Sales/Receipts for private businesses

(percentages)

0.2%

6.3%5.9%

3.5%

0.7%

2.3%2.4%2.4%

0.1%0.4%0.7%

1.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

Asian and PacificIslander

Hispanic/Latino Black Native American

% of MA Total Population % of MA Total Business Ownership

% of MA Total Business Sales/Receipts

Massachusetts Average Sales/Receipts(Privately-Owned Firms)

$450,872

$127,530

$328,588

$86,148$85,612

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

White (Non-Hispanic)-owned

firms

Asian and PacificIslander-owned

firms

Hispanic-ownedfirms

Black-ownedfirms

Native American-owned firms

African-American Owned Businesses in Greater Boston: Survey Results 40 firms Interviewed out of 467 identified 28 are male-owned; 11 female-owned; 1

male/female owned Average number of employees: 3.2 Median number of employees: 3.0 About half of these firms are in service industries

(19), another 15 are in construction, with the remainder being in real estate, manufacturing, retail trade, wholesale trade, and financial/insurance services.

Survey Results Only 14 have annual gross revenue levels of $500,000

or more 13 have annual gross revenue levels of less than

$100,000 97.5% have a business computer

55% use specialized revenue tracking software 48% use specialized expenditure/accounts payable

software 25% track their accounts, inventories, and payroll

manually without use of computer software

The Greater Boston Small Business Asset Development Project

Collaboration Northeastern University Roxbury Community College Urban League of Eastern Massachusetts

Three-year demonstration project to supply pro bono technical assistance, training, financial assistance, and e-commerce capability to a carefully selected set of small minority-owned businesses in the Greater Boston community.

Purpose The purpose of this effort will be to establish and

test a system of small business assistance that can help minority-owned firms develop the expertise to sustain and expand their markets increase their employment levels increase the value of business assets in the community

Using existing technical expertise and resources at Northeastern University, the Urban League, and Roxbury Community College

An Integrated Array of Technical Assistance Classroom training in general business operations,

management practices, and accounting procedures. Laboratory training in general computer use and e-

commerce applications Training in business-to-business (B2B) software for

vendor firms Technical consulting in specific business practices

(e.g. marketing, image, customer appeal, customer service)

Marketing assistance with large institutional vendors

Array of Services, con’t Development and maintenance of

e-commerce/ B2B websites for each client

firm

Specialized training in order to transfer maintenance of websites to client firms themselves

Assistance in locating financing for client firms

Overall Goal Build business assets in the local

communities where people of color reside Create role models for new business

enterprise Build a model of university/community

cooperation that can be duplicated in other cities