was formed to meet a need because there were no minorities taking advantage of any purchases out of the $3 billion new car and truck hauling industry,” says Johnson. He says the relationship with Ford helped the auto dealer at a time when it was looking to expand its base of business with minority vendors–and helped Active become one of the largest black-owned concerns in the nation.
5 GET BETTER.
Black businesses must be committed to ascertaining “best practices” for running their businesses and then exceeding those benchmarks in order to eclipse the competition. This also means investing in the industry-appropriate technologies, including networked computers and the Internet, necessary to stay ahead of the curve in the global marketplace.
“Black businesses must adopt a total quality management policy,” says Alexis, in all areas of their company, including production, distribution, customer services and human resource management.”
Swinton agrees: “Black businesses must try to produce at lower cost and higher quality while maintaining excellent customer service. Black-owned businesses cannot rely on racial loyalty or affirmative action to insure their survival.”
4 SEEK EQUITY FINANCING, NOT JUST DEBT.
A major key to the acceleration of black business growth, particularly during the past decade, has been the progress made in gaining access to equity financing, whether via public offerings, private placements or venture capital. Traditionally, black businesses had been limited to debt financing, often requiring them to deal with banks with discriminatory lending policies. It is critical that black businesses continue to pursue equity financing, reducing their reliance on debt.
“I think this is the new frontier,” says Thomas Boston. “The kind of growth achieved by black companies [during the past decade] is beyond anything that could have been achieved earlier because now we’re talking about growth through equity. Just selling equity in a company really represents a new horizon.”
“Most black-owned firms will have to rely on and get debt going into the future, rather than equity,” Brimmer asserts. “But black-owned businesses will have to have more external capital. And given the risk they face, they will need more equity capital.”
One way to make more capital available, says Alexis, would be to “extend Community Reinvestment Act criteria to all financial institutions-insurance companies, securities firms, small business investment companies, investment banks, asset managers, pension funds, as well as commercial banks. This could create access to greater pools of capital, both equity and debt, for black businesses.”
This is a particularly intriguing idea, in light of the wave of mergers between commercial banks and other financial services companies (such as the Citicorp/Traveler’s merger announced in April).
3 EXPLOIT THE COMPETITIVE ADVANTAGES OF THE INNER CITY.
This is just one of the ways to play to
a natural strength of most black businesses, says Cecilia Conrad.
“Black-owned businesses are more likely to hire black workers and more likely to target low-income neighborhoods for recruiting workers,” she explains. “Their knowledge and experience in recruiting and training these workers can give these businesses a competitive advantage during periods of labor shortages. Black-owned businesses should continue to cultivate and develop this