We live in challenging times. Europe is teetering on the brink of a major recession. Mexico’s economy is growing, but drug cartels strive for control. Even India, the poster child of an emerging economy, faces major problems related to national strikes over corruption, income disparity and weak infrastructure.
In the United States we are facing our own serious threats to our socio-economic equilibrium, including high unemployment, debt, slow economic growth, a weak manufacturing base and an aging population.
Without a positive attitude, one could quickly fall into a deep depression. Maybe because of my mother’s influence, my two years as an outward bound instructor or a strong belief in the resiliency of the U.S. economy, I remain optimistic that we will maintain our status as leader of the free world.
We will come out of this recession stronger and hopefully wiser. But will we learn from our mistakes and lay the foundation for extended growth and prosperity for the next 30 to 40 years? Can we address these threats to our socio-economic equilibrium? To do so we must incentivize business development and aid and encourage entrepreneurship.
In Minority Business Success: Refocusing on the American Dream, which I co-wrote with Amos Tuck professor Len Greenhalgh, we argue that America cannot restore its national competitive advantage without paying attention to demographics and utilizing all of the nation’s human capital. It is projected that by 2040 the majority of the U.S. population will be minorities. A grossly disproportionate percentage of minorities represent an economically deprived class in America. As minorities proliferate, the flagrant inequality will enfeeble the majority of our talent pool, causing social unrest and hindering our gross domestic product and national affluence. A critical aspect of managing this diversity should be the growth and development of minority business enterprises (MBEs).
Minority business growth, especially for larger businesses, can increase employment, enlarge tax bases and increase the number of business/civic leaders, giving hope to communities. For the minority business cadre to grow, there must be a national plan of collaboration with four partners: government, corporate America, support groups and minority entrepreneurs.
The government must improve the efficiency and funding of its business programs to ensure minority business growth. By clearly defining program roles and responsibilities, it can allocate resources more efficiently. With pro-business initiatives such as tax incentives or loan program expansion, MBEs can start, grow and thrive.
Corporations can play a very important role in minority business development by utilizing mentor-protege programs. These allow corporations to focus on MBE development and place it higher in the supply chain. Corporations take a stake in these MBEs and may encourage strategic partnerships for mutual gain. However, the impetus must stem from large support organizations that authenticate and advocate MBE development.
En masse, these support organizations affect thought and inspire change at the government, corporate and minority business levels. By conducting meaningful and comprehensive research, organizations may frequently illuminate and confirm economic inequalities and minority business development status. Given their size, support organizations can increase collaboration between businesses and develop high-impact programs that obtain contracts for MBEs. However, contract acquisition must depend on the MBEs’ ability to perform.
MBEs should focus on products and services that add value and attract consumers. Innovation is essential in MBE survival and growth given competition in our global economy. To remain competitive, MBEs must quickly move up the supply chain. Lastly, MBEs must rethink succession planning, strategic partnership and business size. A lack of focus in these areas may prevent entrepreneurs from adapting, growing their businesses and generating wealth.
If the aforementioned four partners are able to grasp the short- and long-term necessities of change, minority business will be able to achieve a meaningful place in our economy. Diversity executives must develop their companies’ minority business ties, help them to generate wealth and invest it to secure our future. If they do, our nation will be stronger and more united.
James H. Lowry is a senior adviser for Boston Consulting Group and inaugural member of the Minority Business Hall of Fame. He can be reached at firstname.lastname@example.org.