to look at how to market their products and services via the Internet. They should have a physical shop and e-commerce. The Internet will become Main Street, where people will shop and buy more and more.”
Position your business to attract capital. A key ingredient of the formula for entrepreneurial success is having funds to build your business. That won’t change, even in a new millennium. As a whole, black businesses haven’t participated in this country’s prolonged economic growth because of lack of access to capital and lack of exposure to and knowledge of strategic alternatives for funding growth, such as angel investors, private placements, and initial public offerings.
According to a report by the Milk-en Institute, demand for capital in the minority business community is estimated to be in excess of $144 billion per year. Furthermore, there will be increasing capital demand over the next 20 years given the steady growth of minority businesses and the minority population.
“Growth can kill a business,” says Alford. “As businesses grow, they must find better credit arrangements to meet cash demands, such as hiring more employees or equipment purchases. Capital is the lifeblood of any business.”
Despite the significant growth of minority-owned businesses, the amount of venture capital (and the number of investment funds) that are operated by or targeted to black businesses is inadequate. Of the estimated $85 billion in investment funds allocated to private equity capital, only $1 billion to $2 billion is managed by minority-owned firms and/or targeted to minority businesses.
That said, there is money out there. But whether you get any will depend on whether you have to chase it or you can position your company so that it comes looking for you. Measure your business against the “dream/ team” model used by many venture capitalists. Is your “dream,” or business model, viable? What can you offer a potential financing source as proof (for example, customer surveys, market research, competitive analysis, increasing sales, etc.) of this? How strong is your team — the people you have assembled to execute the idea? Do you, your partners, and key managers have the industry knowledge, training, experience, and management skills to make the dream come true? You must be able to clearly demonstrate the viability of your business concept and the people who will execute it in your business plan, your financial records, and through the quality of your operation if you are to compete for the capital you need to keep your company growing.
Form entrepreneurial rainbow coalitions. Don’t overlook the potential of the fast-growing Hispanic and Asian communities. Understanding diversity beyond just black and white can open up opportunities to establish partnerships and strategic alliances, as well as find new markets for your products and services.
One example of a successful, multiethnic business alliance is Don Coleman Advertising’s strategic relationship with True North Communications in the formation of the New America Strategies Group. This advertising agency alliance includes Siboney USA, a leading Hispanic agency; Imada Wong Communications Group, which focuses on Asian consumers; and the