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InBiz Blog

Category: Small Business Climate
Posted by: tlohrentz

Last week I attended a statewide small business crisis summit sponsored by the California Reinvestment Coalition, with the main audience being nonprofit providers of business services and financing, including many community development financial institutions. One of the purposes of the summit was to create a unified voice around the need for the federal stimulus package to address the needs of small businesses in California, and, eventually, in the U.S.

The main problem that small businesses here are facing is the lack of financing. This is especially true of the credit typically used for cash flow - line of credit and credit cards, where maximums are being dramatically reduced. Thus business-owners are at their maximum allowable on their credit cards; forcing down their credit scores and making it even harder to secure financing.  Financial institutions are concerned about the next bubble to burst, the commercial real estate market, so they are not lending even if they received TARP.

Small business development providers are needing to teach businesses, including very well established businesses, survival techniques and crisis management. Saving a small business could save dozens of jobs, even if a few employees need to be cut in the meantime. While this is the worst climate to start a business, many unemployed people are forced to start microenterprises as a matter of survival and there is a need to provide services to these folks. While financing for existing businesses has dramatically declined, it is basically non-existant for start-ups.

One point that the summit stressed, and that I strongly concur with, is the need to ensure that the stimulus package and the associated public contracting and procurement process:

  • have unbundled contracts and small-sized RFPs that M/WBEs are able to bid on, whether as a prime or sub.
  • maintain affirmative procurement measures per federal guidelines, while money going to states and local governments should also include those provisions. (Unfortunately, the first federal bailout waived most federal procurement standards.)

I add my voice to the summit leaders who will be telling Congress that federal support needs to include:

  • "Operating funds for nonprofit community-based organizations to run programs in danger of severe cutbacks or elimination due to the cuts in previous funding.
  • Investment funds for nonprofit community lenders’ loan pools and loan loss reserves [as well as for credit unions]. (These lenders are not able to access any of the TARP funds.)
  • Authorizing nonprofit community lenders as SBA guarantors since few financial institutions are fully utilizing their SBA 7(a), Community Express, or Micro Loan programs.
  • A secondary market for small business loans from community lenders to enable continued lending."
Category: Events and Webinars
Posted by: tlohrentz

The Inclusive Business Initiative is sponsoring a webinar from 11:00 am to 12:30 pm, Pacific, on Thursday, Dec. 4, "Keep the Momentum Moving! Planning to ensure your program continues strong in the face of change." Registration for the webinar is free although the call-in number is a toll number.

Presenters:

Angel McCormick Franks
Director, Missouri Office of Supplier and Workforce Diversity

Teo Tijerina
Executive Director, EDCO Ventures, Austin, Texas
  Jeff Jones
Sr. Vice President, Bank of America Supply Chain Management

This webinar will address how to create structures and processes that ensure that your program maintains its strength in the face of change, whether that is a change in executive, key staff, or Board, loss in funding, a natural disaster, or major downturn in the economy.  More information...

Category: Inclusive Business Initiative
Posted by: tlohrentz

The Insight Center's Inclusive Business Initiative is excited to announce that Director Tim Lohrentz will be a featured blogger, called 'The State of WBE,' for the US Women's Business Journal, an online e-zine of the U.S. Women's Chamber of Commerce.  In a blog entry written prior to the election, Tim outlined state ballot measures that threatened to end affirmative action in Colorado and Nebraska.  In his latest entry, Tim described how Colorado voters rejected the ballot measure, in part led by women and minority business associations, including the Hispanic Contractors of Colorado.

Category: Affirmative Action on the Ballot
Posted by: tlohrentz

The Winter 2008 issue of Ms magazine has three articles related to the attempts to severely restrict affirmative action programs through ballot measures in five states this November. I hope you check out the articles in Ms., which will later become available online. An organizational colleague, Monique Morris of the Thelton E. Henderson Center for Social Justice at UC Berkeley School of Law, is featured prominently, highlighting the research that the Henderson Center completed last fall.

We also are working to share our research on the impact of Proposition 209 in California and Initiative 200 in Washington with public agencies and advocates in Missouri, Colorado, Arizona, Nebraska, and Oklahoma, the five states targeted by the ballot measure proponents. One colleague in one of the states recently assessed that it will take a major organizing and communications effort to counter the ballot measure proponents since there is so much misinformation out there already.

I have recently seen a number of OpEds from conservatives such as George Will blasting affirmative action and stating that the results of the five ballot initiatives would be more important than the Presidential elections. In fact, he said, the candidacies of Barack Obama and Hilary Clinton prove that affirmative action is no longer necessary. Will’s logic is flawed. The example of a few gifted people to reach national prominence does not negate the persistent barriers that most people of color and most women still face in many public and private arenas. As we emphasized in our December 2007 state policy report, “state governments [and other public agencies] create affirmative procurement programs in order to remove barriers to state contracts faced by minority- or women-owned businesses, barriers that white male-owned businesses usually do not face and large corporations almost never face.”

Unfortunately, it is harder to get the message out if you are not George Will. For example, how well known is it that procurement in Washington from minority business enterprises (MBEs) and women business enterprises (WBEs) fell precipitously after the passage of Initiative 200? State procurement from MBEs had been 5.7% of total state discretionary spending in the two years prior to Initiative 200, while WBE procurement had been 5.2%. Due to the ballot measure, these rates fell dramatically for six consecutive years, until by 2004 they reached an abysmal 0.7% for MBEs and 1.0% for WBEs. The barriers to state procurement for MBEs and WBEs are very real. Washington has realized that there is a problem and to its credit is slowly turning those numbers around with a voluntary supplier diversity program. However, because the state can not use race or gender as a consideration when determining contracts or sub-contracts, the state may never be able to totally overcome the barriers faced by MBEs and WBEs.

A recent LA Times article quotes Supreme Court Justice Sandra Day O’Connor, “We expect that 25 years from now, the use of racial preferences will no longer be necessary.” Sadly, the continuing evidence from around the country suggests that 25 years from today another Justice could be making a similar quote.

Category: Corporations and M/WBEs
Posted by: tlohrentz

The Federal Communications Commission adopted three proposals yesterday. The first has measures to encourage media to be more responsive to local communities. The second rule attempts to increase diversity in media, through financing mechanisms, a diversity guidebook, and other minor measures. The third measure allows a newspaper to also own a radio or television station in the 20 largest markets.

The second rule applies mainly to small businesses, as defined by the SBA. The SBA small business size standard is $6.5 million in annual sales/receipts for radio stations or networks, $13 million for a television station, and a maximum of 500 employees for a newspaper publisher. I am not an expert on the media, but I wonder how realistic it is for a radio or television station of that size or smaller to compete in the major media markets, even if financing opens up somewhat.

In addition, the third measure facilitates the trend toward the consolidation of media ownership and seems to contradict the spirit and purpose of the first two measures passed by the FCC. Dissenting FCC Commissioner Michael J. Copps agrees:

"Women and minorities own low single-digit percentages of America’s broadcast outlets…. We are told to be content with baby steps to help women and minorities—but the fine print shows that the real beneficiaries will be small businesses owned by white men. So even as it becomes abundantly clear that the real cause of the disenfranchisement of women and minorities is media consolidation, we give the green light to a new round of—yes, you guessed it—media consolidation."

On December 17, Rep. Edward Markey released a Government Accountability Office (GAO) preliminary letter on media ownership issues, including diversity, in 16 media markets. The GAO letter references a Free Press study that shows that 5% of commercial television stations are owned by women and 3% are owned by minorities. These numbers are low, but in reality are slightly higher than the market share of women and minorities in the economy overall (4.2% for women and 2.9% for minorities). The problem is not specific to the media sector.

As we note in the Introduction of our 50-state study, the primary reason for the low and declining market share of WBEs and MBEs is not due to competition from white male-owned privately-held companies, but rather from publicly-held corporations. This is even more exaggerated in the media sector. According to the Census Bureau 2002 Survey of Business Owners, publicly-held corporations had a market share of 74.2% in Publishing (NAICS 511) and 73.5% in Broadcasting (NAICS 515). The market share of publicly-held corporations in all industries is 61.1%.

Commissioner Copps, again:

"Powerful companies are using political muscle to sneak through rule changes that let them profit at the expense of the public interest. They are seeking to improve their economic prospects by capturing a larger percentage of the news business in communities all across the United States."

Category: Inclusive Business Initiative
Posted by: tlohrentz

Welcome to the launch of the InBiz website, a key component of our Inclusive Business Initiative. In addition to providing information not readily available elsewhere, we hope that this site becomes a source of discussion and sharing by the leaders in the inclusive business field. Please check out the InBiz Forum on a regular basis in addition to the InBiz Blog and the rest of the website.

I would like to briefly introduce myself - my name is Tim Lohrentz - and I will be one of the primary bloggers here. I have been at the Insight Center (formerly NEDLC) for nearly four years and work on a variety of projects in workforce development, cooperative development, social enterprise, and inclusive business development. I was one of the lead researchers for a report creating a strategic approach for The Cleveland Foundation to support minority business development in the Cleveland metropolitan region. That work has led the Insight Center - and me along with it - down the path of creating the Inclusive Business Initiative.

The InBiz Blog will serve many purposes. First, it will help us keep visitors up to date with what is happening on the website, since we hope to be adding features, new data, and new links on a continual basis. Second, it provides us with an opportunity to share information and opinions related to research, events, political trends, and new inclusive business programs in the private, public or nonprofit sector.

  InBiz Blog
Inclusive Business Initiative (2)
Corporations and M/WBEs (1)
Affirmative Action on the Ballot (1)
Events and Webinars (1)
Small Business Climate (1)