In an increasingly interconnected and diverse world, the importance of supplier diversity and the success of minority-owned businesses cannot be overstated. These two factors play a crucial role in not only promoting economic growth but also ensuring a more equitable and inclusive marketplace. But how do we expand opportunities and close the equity gap for minority businesses?
In this blog post, we share seven of the solutions discussed at last week’s National Minority Supplier Development Council (NMSDC) Annual Conference & Exchange. We hope you’ll join us and hundreds of other minority business owners, supplier diversity leaders, policymakers, and industry experts in working to create a business environment that is reflective of the people it serves.
1. Understand the Equity Gap
One of the recurring themes of the conference was that supplier diversity isn’t just a moral imperative but a smart business decision. Diverse suppliers bring unique perspectives, innovation, and a deeper understanding of various market segments. But more than that, they are a massive economic engine generating nearly $2 trillion in revenue each year.
Indeed, minority business enterprises are a crucial driver of employment and prosperity in America. Yet, they face far more barriers than their non-minority business peers. With equitable investment, an estimated increase of $6.3 trillion could be added to the U.S. economy as well as 2.6 million minority-owned firms and 21.82 million jobs.
NMSDC and its regional affiliates, the U.S. Minority Business Development Agency (MBDA), private companies, and others have made tremendous progress in advancing the interests of minority businesses. However, as U.S. Secretary of Transportation Pete Buttigieg made clear in his remarks, it’s going to take all of us to “make minority entrepreneurship reach its greatest potential.”
We must begin by understanding the equity gap. Then, we must act. If you’re in a procurement role, seek out qualified companies with minority-business certifications. If you’re a consumer, search for minority-owned businesses that provide the products and services you need. And if you’re an MBE, plug into available resources and opportunities through NMSDC, MBDA, and others to help you grow your business and champion others.
2. Create Access to Capital
Access to capital is often cited as the most significant barrier to growth for minority-owned businesses. From being denied bank loans to receiving only a sliver of available venture capital, MBEs are too often excluded from essential financial investment.
While many organizations, both public and private, are working to create funding opportunities for minority entrepreneurs, more must be done to close the equity gap. Large financial institutions have immense and immediate power to affect positive change by increasing access to funding and ending discriminatory practices. However, the situation also demands innovative and collaborative avenues for financing and fiscal mentorship.
The nonprofit Prosperity Now suggests piloting lending options that don’t rely on traditional creditworthiness measures. Programs that provide advisory and education along with funding are another great option as they enable growth while reducing investment risk. Individuals, meanwhile, should consider pooling resources or contributing to entrepreneurship support organizations to help their funds go further. Last but not least, lenders of all sizes and priorities should require diversity, equity, and inclusion training to create awareness and guard against bias and discrimination.
3. Lean into Unique Strengths
Cultural understanding. Lived experiences. Language capabilities. Resilience. These aren’t just nice-to-haves in today’s business landscape—they are essential to success. And they are minority businesses’ superpowers.
At Montage, we have long believed that diversity is one of our greatest strengths. We have therefore strategically pursued opportunities that leverage our multicultural mindsets and skillsets. More and more frequently, however, we are being sought for these services.
Our conversations at the NMSDC Conference reinforced the demand for suppliers that know how to speak and interact authentically with diverse audiences—a demand that is only likely to increase as the country progresses further toward becoming a majority-minority nation. Whether leading a marketing agency with multicultural engagement and communications expertise like Montage or buying and selling any other products or services, minority business owners can find success by embracing who they are and making their unique strengths part of their sales proposition.
4. Work Together to Win
Another overarching message in keynotes and breakouts was the power of collaboration and partnership. Although minorities lead in new business creation, MBEs generally start and stay small, with only 11 percent having paid employees. To overcome barriers like access to capital, talent, and opportunities, win work, and grow, Under Secretary of Commerce for Minority Business Development Don Cravins urged minority-business owners to work together rather than compete against each other.
We couldn’t agree more! Partnering with other minority- and woman-owned small businesses has enabled Montage to expand our capabilities and compete for work that may have otherwise been out of reach. Alongside partners like Pyxis Partners, BETAH Associates, Clyde Group, and JDC Events, we have co-led projects for several leading Federal agencies while growing our own businesses in the process.
Getting involved with one of NMSDC’s regional affiliates or an MBDA Business Center is a great first step toward finding trusted partners. In addition to networking opportunities, both organizations provide their members with resources, guidance, and support to help them grow and succeed.
5. Advocate for Equity
“There is an assault on equity.” These were the words of Under Secretary Cravins. While the attack was coming from a small faction, he said, the results are alarming. Constitutional protections, DEI programs, supplier diversity initiatives, and other precedents have been rolled back or are at risk following the Supreme Court’s affirmative action ruling earlier this year. Critics suggest these measures make the marketplace less fair when, in reality, they are essential to fairness in that they help close the equity gap.
Caring about America’s economic future means advocating for policies that support supplier diversity, DEI, and minority business success. To counter threats posed, MBEs—along with other corporations, policymakers, and consumers—must address the concerns of naysayers and make their voices heard at all levels of government. In the spirit of the late Congressman John Lewis and civil rights activist, when equitable opportunities are threatened, we must “get in good trouble, necessary trouble, and help redeem the soul of America.”
6. Get into Government Contracting
The federal government helps create more equal opportunities for minority-owned businesses. This includes setting aside 5% of federal contracts for small businesses owned by socially and economically disadvantaged individuals. Despite these set-asides and other programming aimed at encouraging competition in government contracting, there has been a decrease in small businesses applying to do work with the federal government.
Under the current leadership of the U.S. Small Business Administration, only 3% of both African American- and Hispanic/Latino-owned businesses and 2% of both Native American- and Asian American, Native Hawaiian, and Pacific Islander-owned businesses have sought opportunities with the government. This is particularly staggering when remembering that Latinos and African American women are starting small businesses at record rates.
The SBA hopes to counter the decline by enrolling eligible businesses into its small business certification programs. The Biden administration also has a vested interest. As part of its equity agenda, the White House is calling on federal agencies to spend 15% of their contracting dollars on small, disadvantaged businesses by fiscal year 2025.
Minority business owners should seize the moment. As a certified SBA 8(a) small business that supports many government clients, we can attest to the benefits of doing business in the federal marketplace. For one, government contracts tend to be more stable and long-term, often with options extending to five years. As a result, they can help early-stage minority businesses establish a reliable foundation on which to grow.
7. Support Diversity, Equity, and Inclusion
Supporting minority business interests doesn’t begin in state houses or the halls of Congress. Rather, it begins inside our own companies. Supplier diversity must be part of a broader commitment to diversity and inclusion. All companies, MBEs included, need to create cultures that embrace diversity not just in procurement but throughout their organizations.
From hiring the best person for the job to establishing environments of emotional safety, celebrating individual and shared identities to pursuing continuous improvement, practicing diversity, equity, and inclusion makes businesses stronger. It ensures that diverse suppliers can thrive within the business ecosystem. Moreover, it means that the minority employees of today can become the minority owners of tomorrow.
The National Minority Supplier Development Council Conference & Exchange brought together thousands of passionate individuals and organizations committed to driving positive change in the world of business. The event emphasized that supplier diversity is not just a checkbox but a strategic imperative for growth across all sectors of business as well as the broader U.S. economy.
As we move forward, it’s clear that the path to success involves not just embracing diversity but also addressing the challenges that minority-owned businesses face. By working together, fostering partnerships, advocating for supportive policies, and promoting an inclusive business environment, we can truly unlock the potential of diversity, close the equity gap, and create a more resilient and robust economy.