A Friday lunch at Flying Fish led to an impromptu focus group on minority business that needs to be replicated in the conference rooms of our economic development officials.
It was a refreshingly honest and productive discussion which left little doubt that people working at the grassroots are unswayed by the rhetoric of minority business, a rhetoric that regularly outstrips the results of minority business programs.
They are frustrated by the lip service given to creating minority businesses without any of the tilling and hard work that are needed for all start-ups, but particularly African-American ones. They are discouraged by the lack of mainstream corporate support and practical help.
They talked about the minority participation goals that are treated as celebrations although they fall wildly short of being representative of the black population, whether it’s 30% at the airport or 25% at FedExForum. Worst of all, it is implied that minority business is the same as African-American-owned businesses, although at FedExForum, for example, those black-owned companies made up much less than 10% of the total 25% chalked up to minority business.
They talked of misleading reports on the percentage of business revenues that is generated by African-American businesses in Memphis – one report suggests that it amounts to 10% when this is for only for a select group of firms. The real percentage of revenues from African-American revenues is more like 1% of the total business revenues in Memphis, an amount that would be problematic in almost any city but which in Memphis devastates our economy and takes money out of our cash registers.
They talked about the need for a minority business certification program in Memphis that is affiliated with a national organization, so that in Memphis, like in Nashville, when a company is certified, its certification is recognized in other cities. They talked about the need for an ambitious African-American tourism program, they talked about how the white business structure benefits from our low-wage, low skill economy and resists changes to it.
They talked about the need for elected African-American leadership to move beyond their own political self-interest and to create incentives for minority business that is on a par with the taxes waived for big business.
And that was just the high points. It was a provocative conversation, and most of all, it reminded us that our economic development success could come largely from two huge opportunities for economic growth – talent and minority business.
Talent and Entrepreneurs
As we have said before, if we can increase our college attainment rate by 1%, it would mean $1 billion more in our economy. Increases in minority business offer similar payoffs, because more and more, economic success is about fostering and supporting entrepreneurs. Here, that has to mean African-American talent and African-American entrepreneurs.
Because of it, every economic development program in Memphis and Shelby County should adopt a shared priority of making our community a national hub for young African-American talent and African-American entrepreneurs. In the first African-American majority region with more than one million people, it’s not just a matter of sound morals. It’s the heart of a sound economy.
Despite decades of talk about the importance of minority businesses, they remain largely in low-growth and no-growth sectors and rely on personal debt and family financing rather than loans, equity, and other tools. Because of it, the businesses lack the size and capabilities of their white-owned counterparts.
Our modest recommendation is that Memphis adopt a “New Agenda” for African-American-owned business growth and expansion. We need a quantum leap in our thinking and in our actions, given the fragile state of the Memphis economy in the knowledge economy, and it will take collaboration by every segment of our community.
Hitting the Marks
Minority business leaders have to have a seat at the table when policy is being made, when important public discussions are taking place on economic policies and when white-owned businesses are trying to tap into the value of a diverse workforce.
More African-American businesses would accomplish so many objectives for Memphis, including accelerated jobs growth, rebuilding urban neighborhoods, expanding local tax bases, creating more customers and putting more money in cash registers and creating a model for young people in neighborhoods.
During the civil rights movement, leadership was motivated to find change in the professions rather than through entrepreneurship, so business development has to be a high priority for all sides. Also, minority businesses generally served minority consumers so the minority business community remains in an unfulfilled state, and it’s undeniable that discrimination was a formidable barrier.
As a result, every corporation in Memphis needs to expand its role in creating opportunities for African-American-owned businesses. On the other side, minority businesses must emphasize innovative ways and prove their added values.
It is all built on a central premise: African-American businesses are a major key to Memphis economic development.
As the first step, we’d recommend that economic development officials schedule a candid conversation with the people who understand the challenges and opportunities most: African-American businesspeople.