By 2015 African Americans will yield $1.1 trillion in spending. But that thirteen-figure power should be used to invest in not only patronizing black-owned businesses but starting black-owned businesses, says Congressman Donald Payne Jr. (D, NJ), who won a special election in 2012 following the death of his father, representative Donald Payne Sr. As a member of the House Committee on Small Business, Payne has championed minority entrepreneurs gaining greater access to capital and resources. He has worked with the U.S. Small Business Administration to help them increase their contracting spend with minority-owned businesses. Payne led a panel on empowering the black community through entrepreneurship at the Congressional Black Caucus Foundation’s 43rd Annual Legislative Conference in Washington, DC.
Among the group was Dr. Dt Ogilvie, dean and professor of business strategy at the Saunders College of Business at the Rochester Institute of Technology. The prevailing model for economic development has been a focus on jobs and housing for the past 50 years, but it has not worked for most inner cities, she says. “You can get job training but not get a job; you can buy a house but that doesn’t create wealth.” Learning the skills to create and successfully run a business creates wealth, she adds.
Ogilvie is the founding director of the Center for Urban Entrepreneurship & Economic Development, in Newark, New Jersey. While there, she helped develop and manage its Entrepreneur Pioneers Initiative, a nine-month program that trained first-generation business owners on what she refers to as the “science of entrepreneurship.” Olgivie plans to duplicate this model in Rochester, noting that it has to be tweaked for local conditions.
“If you know the science you can avoid a lot of mistakes that entrepreneurs often make,” says Ogilvie. What are the main elements of this science?
1. You need to have a growth plan and an exit strategy. You should know what the typical revenues are for your type of business and in your industry. You also should think in terms of starting a business and selling it. That is the way you create wealth for yourself and your community. Or if you are thinking of passing the business on to a family member or employee, you need a succession plan in place.
2. You need to know how to manage your money, your cash-flow. You should not be operating out of a shoe box in terms of your receipts. You need to keep a track record of your business operations.
3. You need to know how to talk to a small business banker. This is a skill that you can learn. You also will need to have a business plan in place if you plan on asking anyone for money.
4. You have to be competitive. Once black businesses graduate from the SBA’s 8(a) program, a number of them fail because they haven’t been competitive enough. Stay ahead of your competition.
She also pointed out the importance of circulating dollars back into the black community., especially if you live within that community–don’t shop outside of your neighborhood.
Ogilvie participated in the first ever White House Summit on Urban Entrepreneurship. “As a result of that summit, we affected federal policy,” she says. “President Obama proposed some initiatives that were successful in helping small and medium-sized businesses.”