Owners take advantage of opportunities

Entrepreneurs benefit from rapid growth in information technology

Minority Business

January 24, 1999|By Shanon D. Murray | Shanon D. Murray,Sun Staff

To build a business, owners must make wise, timely decisions.

Former executives from Ameritech Corp. left their jobs two years ago to launch Ntegrity Telecontent Services Inc., a telecommunications company in Chicago. They added an office in Detroit shortly after.

Six months ago, the 20-worker company secured venture capital funding and moved to President Street in Baltimore's empowerment zone, where it has hired four residents from the neighborhood. Ntegrity is at the forefront of trends business experts said minority-and women-owned firms in Maryland should pursue to find success in 1999: It's run by executives who bailed out of corporate America and relocated to an area where they can take advantage of tax breaks.

They also picked a state where minority businesses have a strong presence -- about 13.3 percent of all firms in Maryland, compared with 9 percent nationwide, according to 1996 data from the state and the U.S. Small Business Administration.

Experts expect mergers and acquisitions to feed the nation's entrepreneurial ranks, leading to more minority-owned firms this year and beyond.

"Minorities in corporate America realize they are vulnerable to being downsized, so they say, 'Let's take our experience and capital and make that entrepreneurial plunge,'" said Stanley W. Tucker, president of MMG Ventures, a black-owned venture capital company for minority businesses.

The reason the company's founders started Ntegrity -- which provides local and long-distance phone service to small business and residential customers -- is simple, said Keith Machen, Ntegrity's vice president of legal and regulatory issues.

"We primarily wanted to be in business for ourselves and create jobs and economic development," Machen said. "We talked about it for years, but we waited for the right opportunity and timing."

Ntegrity also is a part of another trend -- the proliferation of minorities who are starting businesses in high-growth fields such as technology and telecommunications, taking full advantage of a bustling information economy, Tucker said.

"The number of small, minority-owned tech companies in Maryland is extraordinary," said Alan B. Kutz, director of the Office of Regional Response for the state Department of Business and Economic Development.

According to DBED and the SBA, more than half of all minority-owned firms are in the services sector. The trend shows the transition from muscle to intelligence, Tucker said. "At one time, minorities lived off of our muscle," he said. In the late 1980s, "70 percent of our loans were to minority-owned construction companies."

"Now, construction may make up 10 percent of our portfolio," Tucker said. Business owners of color are "migrating to the services and technology arenas."

In addition to reselling local and long-distance phone service to consumers, Ntegrity also provides paging, voice messaging and Internet service.

Its customer base is in New Jersey and Pennsylvania, and it's certified to resell phone service in Massachusetts and New York, Machen said.

The $7 million company expects to be certified in Maryland by the Public Service Commission in the first quarter of this year, Machen said.

The company decided to move to Baltimore because of the empowerment zone, Machen said. Four years ago, Baltimore became one of six cities to secure $100 million in federal empowerment zone funds to revitalize some of the city's poorest neighborhoods.

As part of the program, companies can receive tax credits for creating new jobs, and building owners can receive tax credits for making certain improvements.

"When we talk to businesses interested in coming to Maryland, we tell them about the empowerment zone," said Robert C. Brennan, assistant secretary for financing programs at the state's economic development department.

Baltimore's empowerment zone "is a high-priority area and we will do more to make things happen there," Brennan said.

One trend that Ntegrity has not been part of, but might investigate later, is the "buy-and-build" strategy, Machen said.

Historically, minorities entered business by starting their own, but now they are expressing interest in acquiring businesses and adding value, Tucker said.

"They are trying to duplicate what Reggie Lewis did," Tucker said.

The late Reginald Lewis, a Baltimore native who completed one of the largest leveraged buyouts in history 10 years ago, purchased the international food conglomerate, TLC Beatrice International Holdings, and became one of the 400 wealthiest Americans.

Tucker said he's working with a systems integration company that intends to grow from $15 million to $100 million in 18 months -- primarily from acquisitions.

"That's how businesses are growing these days," Tucker said. "It's not about developing technology. It's about buying it."

Ntegrity is rapidly expanding, but not yet from acquisitions, Machen said. The company is looking to hire for sales and data entry positions.

"We've grown from 4 to 20 people in a few months, and it could easily double," Machen said.

Pub Date: 01/24/99

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