In interviews with experts and entrepreneurs, we found that the characteristics of a certain region that appeal to entrepreneurs include a favorable climate for black business development, a viable support system for small enterprise, and the expense of doing business there–including labor costs and tax structure.
According to Boston, fast-growing African American entities flourish in areas with economic activity and growth and a strong history of expansion in African American businesses. The renowned economist asserts, “Studies I’ve done have demonstrated three factors that affect the growth of African American business: a large in-migration of black entrepreneurs, along with a large general population growth; income growth in the general population; and, most important, black political power.” Boston says he found those elements in the places with the most vigorous growth of African American businesses–notably, the South and Midwest. “Atlanta, D.C., Richmond, Baltimore, Chicago, and Detroit have a strong and long history of black entrepreneurship,” says Boston. “As blacks in those cities gained power, they created opportunities for others. The extent to which blacks can exercise power in a particular area [for example, having a mayor who can influence procurement] can create a more favorable economic environment.
“If a politician’s political base is black,” he adds, “the politician is more closely aligned with the African American community. Local city governments establish affirmative action for minority businesses, and that influences others in the private sector to do the same thing; it influences practices. It’s bad business practice for a big corporation to have no commitment to affirmative action. The programs themselves are important because there is still discrimination, and we need government to make sure they are successful.”
The experience of Donna Stevenson, CEO of Baltimore-based Early Morning Software Inc. (www.emslab.com), bears out Boston’s assertion. She speaks highly of former Maryland governor, Parris N. Glendening, who set higher goals for the number of contracts that must include small and minority-owned businesses. “This governor recognized the value of small business in the economy,” says Stevenson, who is originally from Maryland and whose partner worked there before the business site was chosen. “Maryland made sense. The state supports small and minority businesses with partnership opportunities for firms that team up to bid,” says Stevenson. Her company has partnered with IBM and Titan Corp. to fulfill major state contracts. It will be interesting to see, however, the maintenance of Maryland’s business climate under the administration of Republican Gov. Robert Erlich and Lt. Gov. Michael Steele, one of three African Americans in the nation to hold such a high-ranking post.
Missouri’s late governor Mel Carnahan created a rare requirement that minorities must sign documents of the details of partnerships with majority firms, including copies of invoices. Brenda Newberry, president and CEO of St. Charles, Missouri-based The Newberry Group Inc., says that process reduces “fronting,” in which large companies could win state contracts using affiliations with black businesses and then prevent the minority firm from fully participating or gaining payment for its labor. Newberry hasn’t seen a similar