In a joint effort between government and the private sector, more than 100 federally funded business development centers operated by private companies have opened throughout the country in the past three months.
Although the concept is not new, the business development centers, funded by the Commerce Department's Minority Business Development Agency (MBDA), now are operating according to tougher private sector criteria in a standardized form. ocated in areas with large minority populations, the centers seek to increase the number of minority-owned businesses, expand existing ones and reduce the number of failures among them.
The centers "will execute memorandums of agreement with private sector corporations to increase minority business participation in procurement, contracts, subcontracts, joint ventures and other business opportunities," says MBDA Deputy Director Theron J. Bell. A significant portion of their budget goes toward identifying and mobilizing resources within the private sector and increasing the business dealings of major corporations with minority firms. The centers will be evaluated regularly on how many businesses they start, expand and serve and on how many jobs they create.
"This new program is designed to serve as a delivery system for all federal minority business development programs," says MBDA Director Victor Rivera. "Creating economic independence for minority Americans is the main objective of our program." Adds Stan Straughter, director of the Washington center: This "is a great asset to the minority business community."
In Washington, the Minority Business Development Center has been operating since Oct. 1, providing assistance to minority-owned businesses in the greater metropolitan area, including the District, three Maryland counties and eight Virginia counties. The center has been granted $800,000 a year in federal funds and its management awarded in open bidding to a joint venture involving the Ibero-American Chamber of Commerce and the accounting firm of Leevy, Redcross and Co. Both the trade association and the CPA firm have worked together for some time, with the chamber counseling minority businesses and the accounting firm providing services, and they have now pulled their resources into the center.
For a nominal fee of $2.50 an hour for firms grossing less than $500,000 a year, minority entrepreneurs receive assistance in marketing, financing, accounting, management, inventory control, bid estimating, personnel management, contract negotiations and procurement. The center also maintains an inventory of minority vendor firms and potential buyers in the public and private sector. Working in close relation with local banks, it identifies capital resources for investment or lending to entrepreneurs or expanding firms. equirements are few but stringent, in order to increase efficiency in the delivery of services. Applying businesses must be minority-owned profit-making organizations.
"We also require that applying entrepreneurs have some knowledge of the business they are getting into. We used to waste a lot of time in the past doing basic research for them," says George E. Carr, deputy director of the D.C. Minority Business Development Center. "They also must put up at least 30 percent of the capital. We then give them advice, an accounting system and structure management. The end product is a business plan."
Community reaction to the center has been very encouraging thus far, officials said. The bid called, in the first year, for providing services to 233 clients and for $21 million in procurement and $5 million in loans. Although the center only opened on Oct. 1, it is already catering to 110 clients.