State queries minority businesses Survey wants to know why their revenue is low.

June 17, 1991|By Michelle Singletary | Michelle Singletary,Evening Sun Staff

State officials are surveying thousands of minority-owned firms to find out why those businesses typically generate less revenue than average Maryland businesses.

The Maryland Department of Economic and Employment Development has mailed out 20,000 surveys to businesses owned by blacks, women, Asians, Hispanics and disabled individuals. The state is counting on the responses to help it figure out why the average-size business in Maryland posts five times the annual revenue of the average black-owned business, and more than twice that of the average woman-owned business.

On average businesses owned by blacks have gross receipts of $33,200 a year and women-owned businesses $67,600. The average Maryland business has $169,600 in revenues, according DEED.

"We might be able to help them [minority-owned businesses] get closer and even things out a little," says Timothy Smoot, deputy director of Maryland Small Business Development Financing Authority.

The state effort is an attempt to follow up on a report released in December on black-owned businesses. Based on data collected the U.S. Census Bureau from 1982 through 1987, the report by DEED painted two pictures of black-owned businesses in the state.

Maryland has more black-owned firms per 1,000 residents than any other state in the nation, and the Baltimore-Washington corridor has one of the highest concentrations of black-owned firms among all metropolitan areas in the nation.

But the report also pointed out that the firms tend to be smaller and less profitable and have fewer paid employees than the average of all firms in the state or nationwide.

According to the report, the majority of black-owned firms are concentrated in the service industries. Business services, health services and personal services were prominent.

Maryland in 1987 had 21,678 black-owned businesses, placing it fifth among the states in the total number of black-owned firms. Baltimore had 5,044 black-owned firms in 1987, placing it ninth among all U.S. cities.

However, much of the information in the report is outdated, says Stanley Tucker, director of the financing authority, a state agency that provides loans and guarantees to small, minority and disadvantaged businesses.

"We know there's been a recession. This survey allows us to go back and find out what's happened. We know bankruptcies have increased. And credit is harder to get. All the things that have dealt blows to black businesses in good times are worse now," he says.

L "The survey is critical to what we want to do," Tucker says.

The survey, which is costing the state $13,000, was mailed out last month. It asks minority entrepreneurs to assess the impact of the recession on their operations. It asks them to describe their business strategies, tell what factors have been important in their success or lack of success, and indicate what types of assistance are needed, either from the private or the public sectors.

Individual responses will be kept confidential and are being compiled by the Schaefer Center for Public Policy at the %J University of Baltimore. State researchers and professors at Morgan State University's School of Business and Finance will analyze the data, Smoot says. The results of the survey are to be released in late August.

According to calculations by DEED's Office of Research, if black-owned firms were the size of the average Maryland business, the state would have $3 billion more in revenues and 29,775 additional jobs would be created.

If women-owned firms were the size of the average Maryland-based business, they would generate an additional $8.4 billion in revenues and 93,980 jobs.

The state worked up those figures to prove to legislators and the business community that if a concerted effort were made to help minority-owned businesses become more competitive, benefits would abound, Tucker says.

"If these businesses were fully developed and fully utilized, everybody would win," he says.

Increasing revenues generated by minority-owned businesses won't decrease the earning potential of other businesses, Tucker says. Instead it would help both minority-owned and large firms better compete with companies outside the state. The goal is to bring dollars to Maryland that now go elsewhere.

Even before the results of the study are in, the state has begun to put together a plan of action. Called "Strategies for the Minority Business Enterprise Initiative," the plan attempts to lay out a blueprint that would, among other things, increase minority firms' access to capital and procurement opportunities in both the public and private sectors.

The plan also includes goals to encourage joint ventures between minority-owned firms and major corporations in the area. Joint ventures can aid larger firms by developing a reliable network of subcontractors, Tucker says.

"We view the initiative as an economic development strategy and not a social experiment," Tucker says. "It's morally the thing to do but even more important, it makes good business sense."

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