Some encouraging news for minority business in Maryland came out of Baltimore the other day when J. Randall Evans, the secretary of economic and employment development, announced a new initiative to ensure the continued development of that sector.
The announcement should be especially encouraging for black business owners in Maryland, whose enterprises are still "underdeveloped and underutilized resources," according to Evans.
Black-owned businesses in Maryland are far from being unique in that regard, however, and this initiative has strong implications for other states. That is, of course, if officials in those states share Evans's assertion that all businesses in a state are important components of its economy.
The logic of that seems so clear that it's difficult to understand how any state official could disagree. There are those, however, who seem not to share that belief, unfortunately.
Programs previously established in Maryland to assist small and minority-owned businesses have become models for several states, nevertheless. So the Maryland initiative and the results that it's expected to produce will likely be studied with as much interest by outsiders as those for whom the program is being developed.
The initiative, as outlined by Maryland officials, is designed to strengthen minority businesses primarily by improving accessibility to capital and procurement opportunities in the public and private sectors. Operators of small businesses and those who aspire to become entrepreneurs will tell you that the difficulty they encounter in trying to obtain capital is their biggest obstacle.
Maryland also hopes to gain greater access to international markets for minority entrepreneurs through the initiative and to build competitiveness through better management, technical strength and product quality assessment.
In addition, the initiative will support the development of centers for entrepreneurship and economic excellence at historically black colleges in the state. One of the more critical aspects in the development of this initiative perhaps is the state's resolve to bring together government, industry and academic institutions in a partnership to ensure the continued growth of minority-owned businesses.
Maryland's commitment to strengthening the minority business sector is made all the more significant by the fact that the state leads the nation in the number of black-owned businesses per 1,000 residents. A new report by the department of economic development shows that the number of black-owned businesses in Maryland increased 57 percent, to 21,678, from 1982 to 1987 -- the last year for which economic census figures are available.
Those numbers don't mean very much, however, as long as so many of those firms remain outside the mainstream of business, struggling to hold on, scraping for capital and fighting to open doors to new markets for their products and services. Annual receipts for all black-owned firms in Maryland averaged only $33,000 in 1987, compared with more than $169,000 for all firms. Only 12 percent of black-owned businesses in Maryland had paid employees, compared with 23 percent of all firms.
No wonder Evans candidly observed that black-owned businesses in the state still are underdeveloped and underutilized economic resources.
He would not have been exaggerating had he made the same statement about the state of black-owned businesses in the country.
Census bureau figures showed that black-owned firms in the United States increased 37.6 percent -- from 308,260 to 424,165 -- between 1982 and 1987. Total receipts for those firms increased 105 percent, to $19.8 billion from $9.6 billion. Nonetheless, black-owned firms accounted for only 3.1 percent of all businesses in the country in 1987 and only 1 percent of total gross receipts. Further, blacks owned nearly 4 percent of all firms with annual receipts of less than $5,000, but their ownership of businesses with annual gross receipts of $1 million or more was a paltry 0.8 percent.
Bear in mind, however, that most black-owned firms are small businesses and that starting and running a small business is extremely difficult under most circumstances. Surveys by the Small Business Administration show that 24 percent of all small businesses fail two years after they're started. Fifty-two percent fail after four years and 63 percent fail after six years.
We tend not to think about those staggering statistics as we note the success of exceptions such as Marriott Corp., Apple Computer Inc. or Ford Motor Co., all of which began as small businesses. Henry Ford failed twice before building the foundation for the nation's No. 2 auto manufacturer. Indeed, the successes of major black-owned companies such as Johnson Publishing Co. Inc. and the Maxima Corp. tend to obscure the difficulties of their less-fortunate counterparts.
A study prepared for the Department of Commerce's Minority Business Development Agency in 1983 listed four critical factors that were said to be largely responsible for the relatively slow development of black-owned business: limited market demand, limited access to capital, limited efficiency, and racial discrimination. Seven years later, they remain the biggest stumbling blocks to minority business development.
Initiatives such as the one Maryland unveiled last week can go a long way toward breaking down those barriers, though it will be next to impossible to overcome the pervasive racism that continues to thwart minority business development in many instances. Racism, however, is all too often used as a crutch to compensate for a lack of initiative or some other shortcoming.
The Maryland initiative could render discrimination and allegations of racism moot where there are serious efforts to achieve and promote minority business growth. Aggressively and sincerely executed, the expanded state initiative can help bring about stronger business plans, more creative growth strategies, new alliances, new market opportunities, better products and services and stronger ties to mainstream businesses. It could strengthen the state's economy for all citizens and that ultimately is what counts.
In the Washington-Baltimore corridor -- especially in Prince George's County, which has the largest number of black-owned firms in Maryland -- there is substantial opportunity for minority business growth. But economic empowerment won't come gift-wrapped. It's there for the taking by those who are prepared to go for it alone or with help from programs such as those being offered by the state of Maryland.