The Good, The Bad, The Future: Reimagining Minority Business Development
Minority business development in the U.S. has seen remarkable progress over the past few decades, but it still faces significant hurdles. At the 3rd Annual Symposium on Supplier Diversity in Higher Education, Peter Hurst, President and CEO of the Greater New England Minority Supplier Development Council, described where minority-owned businesses stand today, and more importantly, why there’s reason to be hopeful for the future. He broke down the situation into “The Good, The Bad, and The Ugly” while also outlining a clear path forward.
The Good
Despite many challenges, minority-owned businesses have made impressive strides:
- Growth in Numbers: As of 2020, in the U.S there were 1.2 million minority-owned businesses with paid employees, generating $1.6 trillion in revenue and employing nearly 10 million people. Between 2012 and 2020, the number of these firms grew by 32%, with a 33% increase in aggregate revenue and a 38% rise in employment.
- Success Across Ethnic Groups: African American-owned firms grew by 29%, while Hispanic-owned firms saw a 31% increase. This momentum shows the incredible potential of minority entrepreneurs to drive economic impact and create jobs.
The Bad
Unfortunately, the pandemic disproportionately impacted minority-owned businesses, particularly those run by Black and Hispanic entrepreneurs. Many of these businesses struggled to stay afloat, and some didn’t survive. One of the biggest challenges remains access to capital—from debt and equity to mezzanine funding. Minority-owned businesses often face systemic barriers to securing financing, with many being denied PPP loans during the pandemic.
The Ugly
The post-pandemic challenges for minority-owned businesses are daunting:
- Structural Barriers to Capital: Strict lending criteria, a lack of established banking relationships, and lower credit scores make it harder for minority businesses to secure loans and investments. This stifles growth and limits opportunities.
- Legal and Corporate Setbacks: Lawsuits have been filed against government and private programs designed to support minority businesses, threatening to dismantle key initiatives. Worse, some corporations are rolling back their supplier diversity efforts, further shrinking opportunities for minority-owned firms.
Reasons for Hope
Despite the hurdles, Peter Hurst is optimistic about the future of minority business development. Here’s why:
- Changing Perceptions: A shift in how minority-owned businesses are viewed is already underway. Hurst stressed the importance of overcoming the stereotype that minority businesses are small and struggling. Companies like World Wide Technology, a Black-owned IT firm with $20 billion in revenue, prove that minority entrepreneurs can operate at the highest levels.
- Building Stronger MBEs: Hurst envisions more minority-owned businesses growing stronger through increased opportunities from both corporate and public sectors. This can be achieved through more accessible contracts and transparency in procurement processes.
- Access to Capital: One of the most significant keys to success is improving access to capital for minority businesses. Hurst calls for more Community Development Financial Institutions (CDFIs), private equity, and venture capital managed by diverse teams.
- Capacity Building: Strengthening minority-owned businesses also requires better capacity-building services, such as financial management, strategic planning, marketing, and workforce development. These resources can help businesses grow both organically and through mergers, acquisitions, and joint ventures.
- MBE to MBE Commerce: Finally, fostering a stronger ecosystem of minority businesses supporting each other is critical. Large MBEs buying from smaller MBEs strengthens individual firms and helps create a more interconnected, resilient network of minority entrepreneurs.
A Path to the Promised Land
While there are real challenges—”the bad” and “the ugly”—facing minority business owners today, the opportunities for growth and success have never been more promising. As more corporations and public sector entities recognize the value of diversity, minority entrepreneurs will continue to break down barriers, create jobs, and drive economic impact in their communities and beyond.
Here is a link to Peter Hurst’s presentation at the Symposium 2024 – Presentation
Organization link – Greater New England Minority Supplier Development Council