U.S. Census Bureau data reports that nearly 20% of American businesses are minority-owned, generating nearly $1.4 trillion in annual revenue, and employing more than 51 million employees. Unfortunately, many minority-owned businesses are not experiencing the opportunities as others despite their positive impact on the economy.
The pandemic and the murder of George Floyd brought national attention to these inequities, but even so, inequities like these and so many more have been commonplace for decades. For example, the U.S. Small Business Administration (SBA) recently released data showing that less than 10% of all federal contracts went to minority-owned businesses in fiscal year 2020.
As CEO and President of the National Minority Supplier Development Council (NMSDC), Ying McGuire leads efforts to advance business opportunities for certified minority business enterprises (MBEs) and connects them to corporate members. NMSDC-certified MBEs generate more than $400 billion in annual revenue – more than 28% of all minority business revenue in the U.S. The NMSDC’s first Asian American Pacific Islander (AAPI) CEO and President brings over two successful decades of leadership experience across both for-profit and nonprofit sectors.
I recently had the opportunity to speak with Ying about NMSDC and the organization’s future plans. I appreciate her taking the time; take a look at our discussion below.
Rhett Buttle: What are some of the challenges minority businesses owners face in starting and maintaining a business? How has the pandemic created more challenges for minority business enterprises (MBEs)?
Ying McGuire: It really boils down to access: access to contracts or equal opportunities, access to capital, access to technology, and access to talent – when you don’t have the right talent or enough talent, you can’t be successful.
Providing our MBEs with access to contracts is our top priority. We believe that minority businesses are still receiving a disproportionate number of contract opportunities than their counterparts in both the private sector and with the government. The most recent data published by the U.S. Small Business Administration (SBA) around contracting with minority demographic groups really solidifies that argument that the government contracting system is heavily biased towards white-owned businesses. For example, Black-owned small businesses only receive 1.67% of federal contracts. Think about the size of their population, and it is really not equitable. This kind of transparency is very important and I want to applaud SBA and Administrator Guzman for having the courage to publish the data and drive transparency. I think there is a desire and need for minority businesses to have a MBE designation in the federal procurement system along with greater accountability.
There is lots of data on access to capital. Forbes published an article a few months ago showing that more than half of black business owners polled in the survey said the lack of access to cash is the main barrier to their ability to grow. Then talent recruitment and retaining talented employees is crucial to starting and maintaining successful business. Larger companies can approach and offer a more competitive package to a minority business talent pool.
On access to technology, Covid-19 exposed the massive inequality with digital connectivity typically in minority-owned businesses that provide professional services or in micro-businesses. They really depend on this connectivity for conducting day-to-day business operations in the post-pandemic world, and the lack of high-speed internet connectivity in the communities of color have caused tremendous devastation to this entire spectrum of the smaller minority businesses. We’re seeing a record number of minority retail businesses closing doors because they lack the ability to connect digitally and also get access to governmental support programs because of language barriers that can exist.
The pandemic has also forced many minority businesses to deal with an increase in hate crimes. AAPI-owned businesses have had to deal with over thousands of hate crimes against workers in the businesses. As a result, many AAPI businesses have to spend extra dollars to ensure worker safety through security escorts to ensure our workers of Asian descent can get home and get to work safely.
Rhett Buttle: Can you describe NMSDC and its role in overcoming these obstacles?
Ying McGuire: NMSDC was created 50 years ago as a result of President Nixon’s executive order forming the Office of Minority Business Enterprise (now Minority Business Development Agency). Since then, we have been advocating on behalf of minority-owned businesses and bridging the racial wealth gap. I’m about seven months into my current position, but I’ve been involved with the NMSDC’s network as a corporate member, a minority-owned business, and a volunteer for 15 years. This year, we renewed our mission, which is to be the growth engine for NMSDC-certified MBEs and also enable our members, many of whom are Fortune 1000 companies, to advance economic equity by doing more business transactions with our certified MBEs. We are the leading certification and developmental organization that represents AAPI, Black, Hispanic, and Native American-owned businesses in our country. Our network is unmatched: we have about 15,000 certified MBEs and growing, 1,500 national or regional corporate members, 23 regional affiliates, five international affiliates, a Community Development Financial Institution (CDFI) funding arm for MBEs, and extensive NGO and government partners.
Our number one priority is access to contracts. NMSDC-certified MBEs generate about $400 billion in annual revenue, create and sustain 2.2 million jobs, and provide $48 billion in tax revenue for the government. However, we still have a long way to go to close the racial wealth gap. This year, as we celebrate our 50th anniversary, during this critical juncture for our country, we have set our aspirational goal of achieving $1 trillion annual revenue for NMSDC certified MBEs in the coming years. This is a big number, but it is less than 5% of our GDP. Let’s think about it – If by 2045, minority populations are going to be the majority of the U.S. population, 5% of GDP is not enough. It’s our first milestone. If the population grows, but wealth equity does not improve, the whole country will be worse off.
On access to capital, NMSDC is the only non-government organization with a CDFI funding arm. Our Business Consortium Fund has been helping MBEs with debt loans. They are now working with non-traditional funders like private equity firms that are looking to invest in minority businesses and build capacity. We have also stepped up our advocacy efforts with policymakers at the federal level, and at the state and city level through our regional affiliates.
Rhett Buttle: How do MBE certifications benefit businesses of all sizes?
Ying McGuire: We pioneered the gold standard of MBE certification many decades ago. The MBE certification provides a third-party validation that an organization is genuinely minority-owned, controlled, and operated. We want to ensure that the dollars going to that business flow into systematically excluded communities of color for wealth generation and job creation.
However, certification does not grow businesses. The benefits for NMSDC certified MBEs go beyond certification. We grow our MBEs by developing them and connecting them with corporate and government decision-makers for business opportunities. We help them grow from $1 million to $10 million to $50 million to $100 million to a $1 billion company. One of our roles is to overcome the multitude of obstacles to change the national narrative on what an MBE actually is. Minority-owned businesses comprise a very diverse spectrum of businesses in retail, high tech, professional services, healthcare, tech, construction, etc. If people think they can’t find minority-owned businesses. I tell people MBEs are in every single industry and they’re not just small businesses. There are scalable businesses as well those that are ready to take on tier one government and corporate contracts. They are really a vital part of our American economic fabric. We’re here to provide access: access to contracts, access to opportunity, access to capital, access to educational resources, and access to each other. MBEs should be doing business with each other.
Rhett Buttle: What could the U.S. Small Business Administration, other federal agencies and Congress provide minority-owned businesses to create a level playing field?
Ying McGuire: I always say the policy can make or break us, so that’s why we are stepping up our advocacy efforts. As the recent SBA contracting data shows, there is still a great disparity in the federal utilization of minority-owned businesses. SBA and Congress have the power to set new laws and regulations on designations for minority-owned businesses. We don’t have a federal MBE designation even though these diverse populations are going to be a majority of our country. We need that designation to ensure they will have a more equal opportunity in the $500+ billion federal contract market. The federal government can also open opportunities into the markets of the future, like technology transfers. We can focus on the technology transfer to minority-owned businesses in healthcare, international trade, energy, electrification, climate technologies, and on more learning-leading industry sectors. We are exploring the possibility of advocating for an official MBE designation in the federal contracting process, which has never been done before, but this is really a good time and environment for us to pursue the designation. With the current political, racial, and social climate, the time for that is now.
Rhett Buttle: Is there anything else that you would like to add?
Ying McGuire: This year is our 50th anniversary so it is a big year for us. We have made very impressive strides but need to do much more to make a real impact during this pivotal time. We are launching a “50 for 50” capital campaign and bringing in much needed financial resources to elevate and expand our services. For example, we are exploring certification automation as well as end-to-end intelligent technology stacks for our MBEs and our corporate members. There is no leadership without technology leadership. We want to set NMSDC up for the 21st Century technologically advanced economy.
In addition, we are reimagining our events and programming to grow MBEs, bring value to our corporate members, and reach our $1 trillion goal. I think the fastest path to achieving our $1 trillion plan requires a catalyst event to garner amplification and support of our goal from prominent C-level leaders, policymakers and media. Therefore we are hosting the first-ever Minority Business Economic Forum on May 11-13, in Chicago. It will be kind of a mini-Davos when compared to the World Economic Forum where world leaders come together to address pressing economic issues facing mankind. This hybrid in-person and virtual event would be the forum where NMSDC and its partners tap into the top leaders of corporate America, the Administration, local governments, thought leaders, and academic leaders to come together and re- calibrate the MBE narrative to be an integral part of the American economy, and rally around the $1 trillion goal. We will also be honoring C-suite leaders for leading the pack in advancing economic equity.
Furthermore, the global supply chain crisis is also causing major disruptions in communities of color. Our mission is to really position NMSDC to create new business opportunities as the domestic manufacturers of vital American products and technology innovations. This is a big year for us and we are seeking partners and financial resources to support these efforts.