Nonprofits Offer Help for Firms Owned by Minorities, Women

The biggest value proposition to do business with MBEs is the opportunity to work with suppliers eager to provide their services

June 14--When Lamonte Sowell opened Regents Service and Supply in St. Louis in 1998, he knew starting his own company would be daunting at times. He had been laid off from an insurance company and was working as night manager at a grocery store when he decided to open Regents, a company that distributes maintenance and janitorial supplies.

"There are some challenges out there that you have to overcome," he said. "And that comes with building confidence that you're capable of doing the job and providing the services and products a customer wants."

Sowell found that confidence, and since 1998, his business has grown from an upstart to a company that does $3 million in revenue per year, and he expects to increase revenue another $500,000 in 2014.

The keys to his success have been a passion for what he does, a strong family and his faith, Sowell said.

But he also points out that his business would not be as well-developed and profitable were it not for the fact his company became certified as a minority-owned business enterprise, or MBE, and the support he got as a member of the Mid-States Minority Supplier Development Council.

Minority business owners are finding that groups such as the Mid-States council and the St. Louis Minority Business Council can be valuable resources as corporations and governments increase the amount of contracts and work given to minority- and women-owned businesses.

Besides supporting the local economy, the biggest value proposition for corporations to do business with MBEs is the opportunity to work with a wide variety of suppliers who are eager to provide their services, said Michael Jennings, senior manager for U.S. Strategic Sourcing for electric utility AES Corp.

"They're going to bend over backwards to give us innovation, to be responsive to our needs and to provide us with low pricing," he said. "It's not some economic theory, it's pretty much common sense."

Jennings, who works with the Mid-States council, said he does not believe in the "old ideas that this is some sort of charity or community service."

MBEs were codified in law in 1978 when President Jimmy Carter signed a bill to amend the Small Business Act of 1958. The bill defined MBEs as companies 51 percent owned and operated by a member or members of an economically disadvantaged minority group. It also included language requiring the government to encourage the growth of MBEs by providing the "maximum practicable opportunity" for minority-owned businesses to compete for government contracts.

One year after signing that law, Carter signed another law that similarly established women-owned business enterprises -- WBEs -- and in 1983, President Ronald Reagan signed an executive order requiring federal agencies to develop plans to encourage certified MBEs and WBEs to compete for federal contracts. Some states, including Missouri, created similar programs to encourage the development of MBEs and WBEs by helping them earn government contracts.

Indianapolis-based Mid-States Minority Supplier Development Council is an affiliate of the National Minority Supplier Development Council, and it recently opened an office in St. Louis. A privately funded nonprofit, the council offers MBE certification to local businesses, and works to facilitate relationships between its member MBEs and large purchasers.

"Our focus is trying to certify the minority businesses, connect them with opportunities to do business with corporations here locally, but also to position those minority businesses to grow beyond the St. Louis area to be able to do business anywhere in the country," said Carolyn Mosby, the Mid-States council's president and CEO.

The St. Louis Minority Business Council, which was created in 1973, also provides certification for MBEs and helps connect them to large purchasers.

The St. Louis council was a member of the NMSDC but left last year due to a disagreement over the aim of these organizations.

James Webb, the St. Louis council's president and CEO, said the NMSDC and its affiliates like the Mid-States council focused too heavily on trying to quickly build minority-owned businesses into national or regional players.

"Sixty percent of all the minority companies in the St. Louis market are below $1 million dollars per year, and it's hard to go from that to be a national company when you don't have that experience or background," Webb said. "So our focus was to take these companies and grow them locally before they go national."

Meanwhile, the Chicago-based Women's Business Development Center offers certification for WBEs in the St. Louis area as well as other services, such as access to funding. Much like the organizations that focus on MBEs, the organization also offers matchmaking services to connect WBEs with corporations and governments.

However, joining one of these groups isn't necessary in order to get certification.

The Missouri Office of Equal Opportunity and the Business Enterprise Program with the Illinois Department of Central Management Services will certify a business as an MBE or WBE free of charge. Both states also help businesses compete for government contracts.

Still, the nonprofit groups like the Mid-States and St. Louis councils offer valuable networking opportunities and contract-matching programs.

"The council is a very significant piece of our growth," Sowell said. "There is no way I could build relationships with 1,700 large corporations without the council. Networking is vital, especially when you're a small business."

Missouri has a 10 percent target for awarding contracts to minority-owned firms, and a 5 percent target for women-owned firms, according to Ryan Burns, a public information officer with the Missouri Office of Administration.

Illinois has a combined goal of 20 percent minority-owned and women-owned businesses.

Many large corporations also have set targets to award contracts to these firms.

Locally, Ameren has set a goal to award 15 percent of the company's contracts to MBEs and WBEs by the year 2020, said Dennis Weisenborn, vice president of safety and supply services at Ameren. The company's share of contracts awarded to MBEs and WBEs increased to 12 percent last year from 4 percent in 2005.

Supplier diversity is one of the key metrics for executives' and managers' performance pay at the company, Weisenborn said.

"At Ameren, we believe doing business with diverse suppliers is more than the right thing to do," he said. "It's an economic imperative for the communities we live in and serve."

The economy is on the mind of Glen Franklin, owner of Franklin Graphics, a certified minority-owned business in Black Jack.

With the improving economy, he is seeing more interest by minority entrepreneurs in establishing new businesses.

Franklin, a former professional baseball player who was the No. 1 draft pick for the Montreal Expos in 1978, started his small business on Manchester Avenue in St. Louis in 1987, at the end of his baseball career. He attributes much of his success to the professional guidance and development he received first from the St. Louis Minority Business Council and later from Mid-States council.

And he thinks the improving economy may help spur more minority entrepreneurs.

"I think some people are willing to take risks now," Franklin said.

Numbers from the U.S. Small Business Administration back up that sentiment. As of May 31, SBA's 7(a) small business loans made to minority business are up 12 percent over the same period in 2013, according to figures released by the administration.

Rhonda Carter Adams, executive director of Mid-States council's St. Louis office, says the group is ready for that growth.

The council already has partnered with several local incubators, and she is hoping to begin working with others in the area.

Adams said she also has worked with the St. Louis Mosaic Project, an initiative to highlight the economic impacts of immigration to the area.

Up to 60 percent of immigrants in the area have expressed interest in starting their own business, Adams said, adding that the council is hoping to help some get certified as minority-owned businesses and connect them to corporate clients.

For existing minority-owned firms, Adams is eager to get the new office running and off to the races. She is planning to hire two full-time assistants to help out.

"My role serving here in this region is to focus on the large number of MBEs in St. Louis," Adams said, "and we would love to see them grow nationally."

Fred Broschart is a business reporter at the St. Louis Post-Dispatch.

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