Corporations, City of Boston unite to grow minority businesses
08.06.2009, 19:12
In a first for the region, a coalition of corporations, institutions and the City of Boston are funding a major new initiative, called Initiative for a New Economy, to expand business between local minority-owned businesses and large corporations.
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The Initiative for a New Economy will develop minority business enterprises so they will be able to serve as suppliers to major corporations and move into the mainstream of business activity. The initiative will be funded for its first three years with $1.3 million from Blue Cross Blue Shield of Massachusetts, The United Way of Massachusetts Bay, The Boston Foundation and the City of Boston.
Each has committed to $100,000 per year for the initiative's first three years. An additional sponsor is Liberty Mutual Group, which has contributed $100,000 for the first year. The Greater Boston Chamber of Commerce has also agreed to be a founding sponsor and has offered to house the Initiative and provide in-kind contributions.
The initiative will assist businesses of color with the bidding process, strengthen their balance sheets through recapitalization or other financial restructuring, and team them with corporations that can guide them through these processes. The group also will assist corporations that are just beginning minority business development programs and help them develop the infrastructure to carry out these activities.
"Boston is a minority/majority city, with minorities accounting for more than half our population," said Mayor Thomas M. Menino. "By bringing together this coalition of large corporations, institutions, minority business enterprises, and the City of Boston, we can ensure that all communities participate in our economic success. Together, we will make great strides in building the capacity of minority business enterprises and creating jobs in all of our communities."
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The seeds for the Initiative for a New Economy were sown in 2003, when The Business Collaborative, a nonprofit business membership group of major corporations and entrepreneurs of color, commissioned a first-of-its-kind study to assess the environment for minority businesses enterprises in Massachusetts and make recommendations to expand business between the minority firms and large corporations.
The Initiative for a New Economy has embraced the study's chief recommendation, that a corporate-led collaborative effort is needed to promote supplier development among African American, Hispanic American, Asian American and other businesses of color. The program stands the most chance of success, according to the study, if it is accompanied by strong senior corporate management commitment. The Initiative for a New Economy also will establish a set of benchmarks to measure success, such as revenue growth, conversion of bids to wins, and growth in the size of relationships with corporations. A search for a President/Chief Executive Officer is underway, as is the formation of a broad-based Leadership Council and a smaller Executive Committee that will have oversight for the initiative's financial and operational activities.
"By launching Initiative for a New Economy, we are fundamentally changing the way corporations do business with minority-owned firms," said William C. Van Faasen, Chairman and CEO of Blue Cross Blue Shield of Massachusetts and Co-chairman of The Business Collaborative. "In the past, it's often been about purchasing - a passive endeavor. We are embracing supplier development - working collaboratively with minority businesses to develop their ability to compete as suppliers to major corporations."
"We have been able to launch Initiative for a New Economy because the study has given us information we've never had before - a roadmap of how to develop these businesses so they can play a greater role in our corporate community," said Edward Dugger III, CEO of UNC Partners Inc. who, along with Van Faasen, co-chairs The Business Collaborative and is one of its founders.
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The study that helped launch The Initiative for a New Economy provides an in-depth profile of businesses of color in the Bay State. According to the study:
* There are roughly 60,000 businesses of color in Massachusetts, of which approximately 6,000 have the potential to serve as effective vendors for corporations.
* The most advanced companies - approximately 1,600 minority firms - are positioned now to provide needed services to corporate customers.
* Since 1997, minority business enterprises have grown by approximately 9.3 percent per year, more than five times the rate of all corporations in Massachusetts, which grew by roughly 1.8 percent per year.
* Despite this growth rate among businesses of color, three quarters of minority owners surveyed believe the environment in which their business operates has not changed or has grown worse over the past decade.
"As Greater Boston's community foundation, the Boston Foundation has a longstanding and deep commitment to diversity in all aspects of community life," said Paul S. Grogan, President and Chief Executive Officer of The Boston Foundation, a sponsor of the new organization. "It is especially important that the business community reflects and benefits all of the people it serves."
"Building sustainable, minority-owned businesses promotes job growth and fuels neighborhood stabilization," said Milton J. Little Jr., President and Chief Executive Officer at United Way of Massachusetts Bay. "This initiative will have a positive economic impact on our community, but its reach will extend beyond that. A successful and inclusive economy will yield strong families and a platform for success for generations to come."
"The Chamber has a vested interest in the ability of minority-owned businesses to expand and succeed here in Greater Boston," said Paul Guzzi, President and CEO of the Greater Boston Chamber of Commerce. "Minority owned businesses are currently growing at a rate five times faster than all corporations in the region, creating new jobs, supplying critical services, and taking increasing leadership roles in the community. Supporting the steady growth of these businesses is key to a strong regional economy."
"The Burroughs Group is willing to work diligently with The Initiative and the other corporate sponsors to ensure that the recommendations as a result of the findings of the study are brought to fruition," said Shelley Webster, Chair of the Burroughs Group, an advocacy organization comprised of approximately 35 African American businesses of diverse trades and services that was one of the sponsors of the study. "We therefore will work closely with our partners to ensure that this process to move businesses of color into the economic mainstream results in meaningful transactions and growth, especially for Black business owners in Massachusetts."
The study was funded by Bank of America, Blue Cross Blue Shield of Massachusetts, The Boston Foundation, The Burroughs Group, Citizens Bank, City of Boston, Deloitte, Ernst & Young, the Greater Boston Chamber of Commerce, John Hancock, KPMG, Liberty Mutual Group, Massachusetts AFL-CIO, Massachusetts Business Roundtable, NSTAR, PricewaterhouseCoopers, Sovereign Bank of New England and the United Way of Massachusetts Bay.