Gaining The Competitive Edge

Small black firms are forging alliances and applying new technology in order to increase market share and boost profits

as it becomes available.

E-commerce, as it relates to business-to-business transactions, has been astounding. Websites such as www.black enterprise.com, and www.blackvoices. com offer shopping and a multitude of B-to-B services. Internet trade is expected to double every year over the next five years from $43 billion in 1998 to $1.3 trillion in 2003. In an effort to assist small businesses (which provide b-to-b services) in becoming e-enabled and to have a stronger presence in this market, the MBDA has been working with Verizon, Lucent Technologies, and Nortel, among others, to host technology seminars across the country. These gatherings give small businesses the opportunity to hear what major corporations are looking for from minority businesses. “Discussions have included everything from how to develop portals to structuring computers to do invoicing,” says Davenport. “Companies must understand what this technology is and why it’s crucial to their survival.”

In this new millennium, small businesses must deal with the reality that the classic mode of doing business has changed. In order to compete on a larger scale, small businesses must evaluate and reassess their current standing in technology, and examine how forging alliances with other small businesses can best help them compete in their individual industries.

African American Business Capital Outlook
The Milken Institute sounds a wake-up call to lenders and business owners when it comes to accessing capital.

An investigative study by the Milken Institute in conjunction with the Minority Business Development Agency (MBDA) in September 2000 confirms that minority businesses are growing faster than majority firms in number and revenue, yet they still remain “severely constrained by lack of access to capital,” note Glenn Yago and Aaron Pankratz, authors of the study.

The largest disparity occurs in the African American business community.
Although African Americans are 12.5% of the U.S. population, they own just 3.6% of the businesses. According to the most recent census data available, there were more than an estimated 880,000 black-owned enterprises operating in the U.S. in 1997.

The report should serve as a wake-up call to both lenders and investors.

In order to increase minority economic participation in business ownership, the study recommends:
(1) Increasing the total supply of capital accessible to the minority business sector.
(2) Shifting the emphasis to equity investment vehicles for early stage financing.
(3) Developing black-owned finance companies focused on black-owned firms.

When compared to nonminorities, blac
k-owned firms are less likely than white-owned businesses to have commercial loans. (see Board of Economists sidebar).

The conclusion of the study suggests that within the African American community, the importance of wealth creation and accumulation must be legitimized to develop a business infrastructure that will address the many issues of the black community.

The Milken Institute/MBDA study was the subject of the most recent Black Enterprise Board of Economists meeting (see “Capital Ventures,” June 2000). BE Economist Andrew Brimmer, president of Washington D.C.-based Brimmer & Co., asserts, “If the issue is lending, reflect on how it is done in bank lending. The banks don’t sit and wait for potential borrowers to show up. The principle marketing approach in commercial banking

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