By Sydney E. Wayman
There are few greater joys in life than running one’s own business. Especially when its something one is passionate about and really enjoys doing; when its theirs, its pure pleasure. Even when the business is not making money, the benefits of ownership – not having to answer to someone, being able to do things one’s way, and having control – make it all worthwhile.
It seems more and more minorities are finding the pleasures of business ownership. In a September 2000 research report entitled The Minority Business Challenge: Democratizing Capital for Emerging Domestic Markets, Glenn Yago and Aaron Pankratz of The Milken Institute report some interesting findings. First, they report that the number of minority businesses increased by 13.3% over the decade 1987 to 1997. This is six times faster than the 2.7% increase in all U.S. firms. Even more, they report that sales of minority firms increased by 34.3% over the decade, as compared to 13.3% for all firms.
This is extremely positive news as it indicates minorities are beginning to increase their participation in the mainstream economy. This is important because it should serve to lower the unemployment rates among minority youth, increase the rate of wealth creation in the minority community, and may stabilize the local economies of minority communities.
Interestingly enough, positive minority news may not be so positive for African-Americans anymore. This is the case regarding business formation and revenue growth numbers for minority businesses. The report breaks out numbers for minority groups and the numbers for African-Americans is not good. While the number of African-American firms grew by 11% over the decade, their revenues grew by just 11% too. By comparison, Asian firms increased by 18% and their revenues increased by 42%, while Latino firms increased by 23% and their revenues by 46%. Aside from not growing as fast as their minority counterparts, African-American businesses also generate much lower revenues. Annual revenue per African-American business is just $70,000. The average for Asian firms is $250,000 and for Latino firms the average is $130,000.
There are a number of factors that explain this disparity in the performance of black firms relative to their Asian and Latino counterparts. We believe a significant factor is that black entrepreneurs do not use the services of experienced consultants to help them build their companies. In an article on entrepreneurship the Wall Street Journal noted that successful entrepreneurs got help from outside parties significantly more often than their unsuccessful counterparts.
It stands to reason that using experienced consultants will enhance a company’s chances for success. Most small business owners are so busy producing and delivering the products or services they sell, they lack the time for much else. They spend little or no time on the other functions that serve to build a stronger business. Or, the entrepreneur may lack the expertise or perspective to effectively manage those other functions and so just ignores them. The effect in both cases is that the entrepreneur does not know whether s/he is operating efficiently and effectively. Whether its knowing if prices at set correctly, or if the investment in inventory is too high, the inability to answer the question, assuming its even asked, retards the company’s prospects for growth.
Some small business owners claim they because they are losing money, they can not afford the expense of using experienced consultants. The reality is that if they are losing money, they can not afford not to engage an experienced consultant to help them improve their operations. Small business owners should view engaging a consultant as an investment, more than an expense. While some small businesses should turn out the lights, many need only to restructure their operations, restructure their capital structure, or restructure their marketing efforts to achieve sustainable growth.
Optimal Management Solutions, LLC (OMS) is a small business consultancy whose mission is to enhance the viability and longevity of small businesses by helping their owners identify operational efficiencies, track and monitor their financial performance, and improve their sales and marketing effectiveness. The company provides management consulting services, accounting and bookkeeping services, and training seminars and workshops to small business owners and individuals.
Through its training seminars and workshops the company teaches entrepreneurs the practical applications of accounting, finance, and marketing concepts so that they are better able to assess their operating performance. To date, the company has sponsored two accounting seminars and has plans to offer a marketing and real estate investment seminar over the next two months.
All of the company’s seminars are interactive and designed for participants to develop actual skills using their business as the reference point. For more information about the company, its products and services, and its training programs visit its web site at www.optimalms.com, or call 718-856-6736. If you are a small business owner, what’s your annual revenue?