Minority Businesses: Critical to Minnesota’s Success
I’ve recently had the opportunity to attend the documentary premier of the Small Business Revolution championed by Deluxe. Through this effort, the Deluxe Corporation has spotlighted “entrepreneurs across the country who exemplify the spirit of small-business success.” This documentary, celebrating the 100th anniversary of the Deluxe Corporation, highlights why entrepreneurship is leading to a new revolution in America to rebuild our middle class. Building sustainable minority entrepreneurs is the key not only to the country’s future, but to Minnesota’s future.
Recently, Minnesota was named “The Top State for Business” by CNBC. This is a high honor and is due to the work of the business community, philanthropy, non-profit and governmental sectors to create an environment that nurtures business development. CNBC’s high praise is well warranted given the robust economic boom Minnesota is now experiencing.
In reviewing the national recognition bestowed upon Minnesota, it’s apparent that not all of the contributing factors for Minnesota’s improved business climate were considered. The growth and contributions of minority business enterprises were not one of the factors CNBC considered in its criteria. Data suggests that minority businesses are increasingly significant to the economic landscape in Minnesota.
According to a new study of the U.S. Census data (Survey of Business Owners, 2012) by Dr. Sam Myers and Dr. Bruce Corrie, Minnesota minority businesses grew at a robust and unprecedented pace. For example, in 2012 there were 47,565 minority businesses with $8.7 billion in sales, employing over 63,000 people with an annual payroll of $1.7 billion. Throughout the Great Recession, from 2007-2012, sales of minority businesses grew at a faster rate than non-minority businesses. While minority businesses achieved a 58% growth in sales, non-minority businesses’ sales grew by only 30% in the same period. Minority businesses’ job growth increased at a higher rate as well. Minority businesses achieved a 68% growth in the number of jobs. Non-minority businesses’ jobs grew by only 10%. Furthermore, minority businesses’ payroll also outpaced the percentage change in payroll for non-minority businesses. Minority businesses payroll grew by 71% and non-minority payroll grew by 24% between 2007-2012.
Not only is the number of minority firms increasing in our state, but the diversity and breadth of industries they are operating in are also increasing. While the overall minority firms’ representation ratios are small in comparison to majority firms by industry, minority firms are no longer to be considered exclusively small, neighborhood-based enterprises. The fastest growing industries for minority firms are in mining, utilities, wholesale trade, transportation, management and other services.
Although minority businesses grew at a faster rate, there were significant differences between minority and non-minority firms in average sales. In 2012, the average sales for minority firms were $183,000, while the average sales for non-minority firms were $638,000. In fact, from 2007-2012, non-minority businesses average sales grew by 33% and minority businesses average sales grew by only 3%.
This means we have a lot of work to do to address the overall success rate of minority businesses. Increasing business sales is fundamental to business success. At Meda, we provide three solutions for minority business development:
- Access to capital
- Access to business consulting services
- Access to private and governmental markets
These are the key ingredients for growing business success, increasing sales and sustainability. The fundamental means by which Minnesota will address economic disparities for minority communities is to increase the pool of resources available to support minority businesses. Minority businesses hire minority people. By growing minority businesses, we will begin to break the cycle of racial economic disparities.
Minnesota should be very proud of its work to improve the climate for business success. We have done much to grow our economy and to create jobs and economic opportunity. As the racial demographics shift in our country and in Minnesota, minority businesses will increasingly play a greater role in our success story. It is only by making key investments in business development supports that minority communities will thrive. As Deluxe Corporation so eloquently states on its Small Business Revolution website, “…there is nothing “small” about Small Business – after all, they make up half the nation’s economy.” By supporting minority business development, we ensure a thriving future for all.