Group Estimates 333 Years for Minority Firms to Achieve Revenue Parity

The Michigan Minority Supplier Development Council (MMSDC), a nonprofit organization committed to driving economic growth within minority communities, recently released a study titled “Facilitating Growth for Minority-owned Businesses.”

333 years or 121,545 days is what it will take for minority-business enterprise (MBE) business revenue to match that of white-owned businesses. In a recently released study titled “Facilitating Growth for Minority-owned Businesses, the report suggest that with no concerted effort to make significant changes in corporate and government procurement and buying practices, 333 years is the estimated time it will take for minority businesses to achieve parity with white owned firms.

Here is a link to the report https://minoritysupplier.org/333-years/.

There must be an intentional effort put forth by large corporations, government agencies and procurement professionals to diversify their supply chains to include diverse owned businesses and minorities.

McKinsey estimates that achieving revenue parity between Black and white-owned businesses alone will add over $290 billion to overall wealth.

According to the study, minorities continue to drive disproportionate economic growth in the United States, but continue to lag in receiving the equitable economic benefits of their contribution. In 2018, minorities represented approximately 40% of the US population, yet revenues collectively earned by minority owned business enterprises represented only 9.4% of the revenues earned by private US firms.

Here are some of the key findings from the report.

• In the five years from 2014 to 2018, MBEs created 14.2 percent of the new jobs in the country but experienced only 7.3 percent revenue growth during the same five-year period.
• The Fed’s 2020 Small Business Credit Survey, only 69.7% of MBE loan requests were approved compared to 84.4% for white-owned firms.
• In 2018, in MBEs with more than $1 million in revenues, MBEs earned $4.8 million on average compared to $9.7 million for white-owned firms, spending with MBEs must double to achieve revenue parity.
• In 2020, Black and Hispanic businesses received only 2.6% of all venture funding, MBEs also start with lower start-up capital than white-owned firms and are less likely to receive credit from banks.

If MBEs continue to grow at the current rates, it will take over 333 years for MBEs to achieve revenue parity with White-owned businesses.

So what are some actions that corporations, government agencies and procurement intensive industries can take to close the gap?

Genesis Block’s Converting Conversations to Contracts aims to target revenue parity as the primary objective for the trade show style event.

“ We realize one of the biggest hurdles facing minority communities is the revenue gap between diverse owned businesses and white owned firms. There are many ideas and programs with good intentions but we must address the stark realization that minorities represent 40% of the population, yet minority owned firms represent only 9.6% of all the revenue generated by private firms in the United States. This is a Red Alert issue and this event helps create opportunities for minority owned businesses to increase revenue and for large companies and organizations to increase their spend with diverse owned businesses,” says Genesis Block President Tracey Newkirk.

Areas such as construction, low-growth manufacturing, catering/food services, or janitorial services, while easy targets for supplier diversity, often tend to be in low margin and low growth areas of the economy. Corporations should commit to procuring from MBEs in high-growth, high-margin areas of the economy, such as advanced manufacturing, technology and professional services.

We are excited to announce our next Converting Conversations to Contracts event will be at The McKeithan Center on the North Campus of Cape Fear Community College on December 1 from 8:00am to 10:00am. Reserve your spot below.

Register here for Conversations to Contracts: https://genesisblock.zohobackstage.com/ConvertingConversationsToContracts

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Greater Wilmington Business Journal: https://www.wilmingtonbiz.com/insights/girardnewkirk/237