In the discussion of sustainability small businesses are still an important component of the new economy. Some could jest and say yes, as the result prove differently. As the economy shifted pre-recessionary time the large firms started to compete for small business contracts as economic security blankets. The contracts that were being let for small business saw new competition. The new economy opened up new spending and purchasing options. Now consider the effect on the small women-minority owned businesses. Black Enterprise in “Women and Minority-Owned Businesses Operate on Less Financing” gave a snap shot of the implications of the new economy on these businesses.
Lets first start with a cultural tidbit. The term minority business is a conversation in equity minority versus majority. The dualism implies less and inequity. The goal in a strong economy is to close the inequities to build a stronger economy.
“The report, called Access to Capital among Young Firms, Minority-owned Firms, Women-owned Firms, and High-tech Firms which was sponsored by The Office of Advocacy, looked at new businesses’ access to capital during the 2004-2010 periods and how it affected their operation and growth,” revealed how small businesses were fairing in this economy.
“The first takeaway from the report, which was authored by Alicia Robb, found that minority firms in particular rely more on their own funds —and have less capital to start up and grow. This was true especially of non-technology businesses owned by African Americans, Latinos, and women. African American and Latino owners of young firms are less likely than others with similar credit scores to have access to bank financing. During the financial crisis, women and minority owners of new startups were less likely to apply for credit, fearing loan denial.”
“High-tech businesses that rely on patents, copyrights, and trademarks also faced bank financing hurdles, possibly because their products rely on knowledge, which is harder for banks to assess than physical assets.”
A nation has to determine the placement of small business within the economy. As more small business programs are not as popular despite the hype the non-promotion of small businesses can trigger economic shocks. In a lagging economy under the construct of sustainability, small businesses produce jobs, undergird large Tier I and OEM services and solutions, as well as support the circulation of the dollar. Now consider the impact on businesses of color that suffer more dramatic impacts and shocks than those of their counterparts. Further these businesses pay for barrier to entry that may not reap the payout of their counterparts who invest back into the business or in networks.
The cost to loosing these businesses increases the rate of workers that could be subject to unemployment. When only large businesses are served and supported the economy is weakened and stripped of development and increase unemployment rates. It is time to think sustainably about the critical role of small business.
- New York Disparity Study Reveals Need for Change (landsdssustainable.com)
- SBA plan for minority vendors stumbles (govconchannel.com)
- Loans.org Uncovers Major Shift in Minority Business Financing Patterns (prweb.com)
- Cargill to increase spending with minority, women-owned firms to $1 billion (bizjournals.com)
- Minority Business Partnerships http://www.nmsdc.org/nmsdc/ (fundingnc1.wordpress.com)