MINORITY ENTREPRENEURS TRAINING ASSOCIATION, INC.

META BLOG

AN ON-GOING SERIES OF INFORMATION


MINORITY OWNED BUSINESSES 

LIFE BLOOD OF AMERICAN SOCIETY

Minority business owners are the lifeblood of American society. Although this group only owns about 20 percent of all small businesses in the U.S., they contribute much-needed diversity to the business landscape.

The issue: Currently, there aren't enough minority-owned businesses out there. While white-owned firms account for 81 percent of businesses, black and Asian individuals own less than 10 percent of businesses — and Hispanic founders own just 5.8 percent.

Consumer Support: Buy Black

In the first episode of Trigger Warning with Killer Mike, Michael "Killer Mike" Render attempts to live exclusively on black-owned business's products and services, from shopping to eating to traveling. Killer Mike’s struggle to find black-owned businesses points to a larger disparity between white business ownership and minority business ownership. "Business deserts" are created when there is an absence of black-, Latinx- and women-owned businesses. Even though minorities influence cultural needs and trends, these deserts remain when minorities don’t own the businesses we need.

As a result, many black consumers are taking a stand and putting their dollars back into their communities by buying products and services from black-owned businesses. Trending hashtags like #BuyBlack and #BankBlack encourage people to buy from black-owned stores and use black-owned financial institutions, while online directories like Black Pages and We Buy Black connect consumers to black-owned companies locally and internationally.

The University of Georgia reported that black buying power is projected to reach $1.4 trillion by 2020. Latinx buying power is projected to top $1.9 trillion by 2023, and Asian-American buying power could increase 32 percent, to $1.1 trillion, by 2020.

For consumers, it's important to remember that where they spend their dollars can make a real difference. If black households spent $1 of every $10 at black-owned stores, between half a million and one million jobs could be created. Alongside the growth of these enterprises, consumers looking to #buyblack would then have a variety of options to spend their money where they see fit. Being intentional about shopping at black-, Latinx- and women-owned companies can help ensure that your favorite stores have the support they need to operate and grow within your community

Gregg Bishop, Contributor

Commissioner of the New York City Department of Small Business Services

5 Organizations Helping Minority Startup Founders Succeed

From the White House’s Tech Inclusion Pledge to Apple’s and Google’s annual diversity reports, players across the tech world have been expressing concern about the industry’s infamous diversity problem. According to CB Insights research in 2010, only one percent of venture capital­ funded startup founders were black. Although there have been only minor pockets of progress thus far, several organizations have emerged as leaders in the effort to help minority entrepreneurs start companies, build businesses, secure funding and eventually achieve success. To highlight a few of the most prominent:

1. Techstars Foundation.

International accelerator Techstars takes a unique approach in its effort to increase representation of minority founders in the tech community. In addition to funding technology companies all over the world, it also launched a nonprofit division, the Techstars Foundation, which aims to increase representation of minority tech founders “by providing opportunities through grants, scholarships and sponsorships.” By donating cash or company stock to the foundation, Techstars’ enormous network of portfolio startups ­­ 762 startup companies, with collective total funding of more than $2 billion ­­ can make a real contribution to diversity in the tech community.

Donations are used to fund a variety of organizations that are dedicated to helping minority entrepreneurs through tangible, meaningful programs and initiatives. Current grant recipients include Change Catalyst, a nonprofit that provides minority founders with mentorship, education, and funding opportunities. By encouraging a “Give First” mindset in their startups and partners, Techstars hopes to create a ripple effect, spawning change agents who can, in turn, help more underrepresented entrepreneurs succeed.

Related: The 10 Best Cities to Be a Minority Small-Business Owner (Infographic)

2. CODE2040.

CODE2040 takes its name from the year when it is predicted that minorities will become the majority in the United States. It is a nonprofit organization that is aggressively pursuing its goal of having “Blacks and Latinos proportionally represented in the leading edge of America's innovation economy as technologists, investors, thought leaders and entrepreneurs.”

In addition to a flagship Fellows Program that places promising black and Latino college­-level computer science students in internship programs at top tech companies, CODE2040 has also started a Residency Program designed to help black and Latino entrepreneurs build companies and cultivate diversity in their own communities. The one­year residency provides participating founders with a $40,000 non­equity stipend, as well as additional support from CODE2040, Google for Entrepreneurs and participating founders’ hometown tech hubs. Participants receive hub workspace for the resident and his/her team, along with mentoring by experienced entrepreneurs and investors in the CODE2040 and Google for Entrepreneurs networks.

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3. 500 Startups.

500 Startups is among the leading seed accelerators and early funders that are advancing the cause of diversity and inclusion across the global tech community. According to founding partner Dave McClure, 500 Startups has a long history of supporting startups led by women and minorities. Since its inception, it has invested in such minority­led startups as Walker & Co., AllDay Media and Mayvenn. The 15th graduating class of the 500 Startups accelerator was one­quarter minority ­­ 15 percent black and 10 percent Latino.

Related: Franchises a Draw for Minority Entrepreneurs

In May of this year, 500 Startups held its first Diversity & Entrepreneurship Summit as part of an ongoing conference series in which minority entrepreneurs could connect with venture partners and other founders and leaders from the tech startup community. In June, the organization also launched a $25 million micro fund dedicated to investments in early­stage startups led by black and Latino founders. The fund will invest in up to 100 companies and provide minority founders with capital and access to networks and expertise that they need to build their businesses.

4. NewME Startup Accelerator.

NewME was founded in 2011 by Angela Benton, a widely­acclaimed change agent in Silicon Valley. The organization’s mission is to accelerate the funding and success of underrepresented founders and innovators around the world. Its 12 ­week residential incubator program offers entrepreneurs an opportunity to nurture ideas and seek mentorship from tech industry leaders and to live and work with fellow founders 24/7 to foster collaborations and exchange ideas. At the end of the accelerator program, entrepreneurs can also pitch their ideas to potential investors. NewME has successfully helped launch and grow the businesses of hundreds of minority founders, who have collectively raised more than $20 million in venture capital financing.

Entrepreneurs in the program can also take advantage of NewME's sophisticated online learning platform, which provides educational resources, tools and access to the accelerator’s network of technology mentors at any time and from any place.

5. Black Founders.

Black Founders is a national network of African­-American founders that is dedicated to increasing the number of successful black entrepreneurs in tech. The organization creates networking events year­round, as well as educational programs and a conference series, “Ideas Are Worthless,” in San Francisco, Atlanta, New York and Austin where black founders can network with each other and potential partners and investors.

Related: 11 Grants for Women-Owned Businesses You Need to Know About

Black Founders started the HBCUHacks program, which is a well known series of weekend hackathons that provide students at HBCUs (historically black colleges and universities) the opportunity to develop their computer science skills and invent apps or software. In fact, during the last few years, one-­fifth of graduating black students at HBSUs with a degree in engineering have benefited from the hackathon program.

As a minority entrepreneur who has founded several startups and successfully raised VC money, I’ve always advised young people of color who are interested in entrepreneurship to actively seek outside help. Even if only 1 percent of resources within the tech community are dedicated to minority founders, those of us who want to see change in minority representation in future years should make the most of these resources ­­ in the hope of maximizing not only our own chances of success but also our ability to help others and pay it forward.

Luke Cooper, Guest Writer

Founder and CEO of Fixt

The Steps and Benefits to Becoming Certified as a Minority Business Owner

If you are a minority business owner, it’s a good idea to become certified as a minority-owned business. Government agencies and corporations actually set goals for conducting business and buying from minority-owned companies, so becoming certified immediately increases your business’ appeal.

Corporations want to do business with minority-owned businesses because they realize that U.S. minorities have great purchasing power. And needless to say, if they want minorities to purchase their products and services, they have to support their businesses in return.

Federal officials support minority-owned businesses because they realize that by doing so, they will help the country grow a sustainable economic climate.

So, now that you know the benefits of being a minority-owned business, it’s time to look at how you can officially certify your business as minority-owned.

The National Minority Supplier Development Council

Becoming certified with the National Minority Supplier Diversity Council (NMSDC) is a great way to position your business for growth by connecting with private sector buyers. The National Minority Supplier Development Council matches certified minority-owned businesses with members of their network who need to purchase products, services, and solutions. Currently, they have matched 12,000 certified minority-owned businesses. Their network includes a national office located in New York City, 24 affiliate regional councils nationwide, and 1,750 corporate members to date. Additionally, the council offers management training programs and a working capital loan program.

NMSDC Eligibility Requirements

In order to be eligible to start the certification process and to be considered a Minority Business Enterprise (MBE), at least 51% of the business must be owned by a United States citizen who is Asian, Black, Hispanic, or Native American. Or, if the business is a publicly owned business, such individuals must own at least 51% of the stock.

NMSDC Certification Process

The first step in the certification process is to gather the necessary documents. The documentation required depends on the type of business you have, but typical documents for corporations include:

The history of the business

Certificate of Incorporation or Articles of Incorporation

Stock Certificates and Stock Ledger

Bylaws

All ownership agreements

Business cards, resume, and copies of drivers’ licenses

Proof of U.S. Citizenship (Birth Certificate or U.S. passport)

Corporate Bank Resolution which includes your Bank Signature Card

Business Lease Agreement and/or Security Deeds if home-based

Proof of general liability insurance and depending on the type of business proof of bonding

Copies of canceled business checks

Before you can complete the application, you must register at nmsdc.org. and create a login.

Application Process

The steps to apply are as follows:

Review eligibility requirements.

Review online application so you have all of your answers and required documents.

Start the online application by clicking the Start MBE Certification You will need to have your Tax ID (Employer Identification Number) on hand.

Once you start your application, an Application ID will be assigned to your business.

You have to upload your documents. Make sure that your documents are scanned files, jpegs, or pdfs and each copy includes the name of your company.

The fee for certification is due upon submission of the application and must be paid by credit card. The fees are dependent upon the annual revenue of a business. But for businesses that have an annual revenue of $1 million or less, the filing fee is $350.

Once all of the required documents have been verified a Field Auditor will contact you to schedule an on-site visit.

Your completed application will be forwarded to the Board Certification Committee for final review and approval.

Once approved, a certification letter and MBE certificate is emailed to you. Normal processing time is 45 days.

Department of Transportation

The Department of Transportation (DOT) requires that at least 10 percent of their budget is allocated for contracts awarded to minority-owned businesses. Thus, departments that receive funding from the DOT, including state agencies, are required to develop Disadvantaged Business Enterprise (DBE) programs. Each DBE must create annual goals that include establishing contracts and specific subcontract goals.

In order to be recognized as a DBE, you must go through your state department of transportation. Each agency has a DBE Site. Here is a list of all of the state departments of transportation and DBE Program Websites. Once you are approved as a DBE, your business will be listed on the DBE directory.

Eligibility

To be certified as a DBE, you must be a small business owned and controlled by socially and economically disadvantaged individuals.

Application Process

To start the process to be recognized as a DBE, you must contact your state transportation agency. The U.S. Department of Transportation does not review the applications. However, you can view the application form on their website.

State and Local Agency Certification

Most state and local agencies offer minority-owned business programs. Similar to other certifications, the requirements are that 51% of the company is owned by a member of a minority group. Check with your state to find out what programs are available to you.

Other Helpful Resources for Minority-Owned Businesses

Minority Business Development Agency

The U.S. Department of Commerce-Minority Business Development Agency (MBDA) assists minority business owners. The MBDA has secured an average of $49 million worth of contracts for minority businesses. The agency works with businesses that have been certified with the National Minority Supplier Development Council. The MBDA offers a plethora of tools for minority business owners to connect with government contracting opportunities.

The MBDA has business centers across the country. The business centers are located in areas with high levels of minority concentration. You can view a list of business centers here. To get started accessing MBDA opportunities, you must first register for the MBDA Online Business Applications. You can access the tool by registering on their website, MBDA.gov.

Small Business Administration 8(a) Business Development Program

The Small Business Administration does not certify minority-owned businesses. However, their 8(a) Business Development Program provides assistance by helping minority-owned businesses gain access to government contracting opportunities. Specifically, recipients can receive contracts up to $4 million for goods and services and up to $6.5 million for manufacturing. A great benefit to this program is that those selected into the program can create joint ventures with one another to bid on contracts.

Eligibility

The business has to be at least 51% owned by an individual who is either socially or economically disadvantaged. You can view the breakdown of the eligibility requirements for Social Disadvantage Eligibility and Economic Disadvantage Eligibility at sba.gov.

The individual must be an American citizen

The business must be a small business

Separate eligibility requirements exist for those businesses owned by American Indians, Native Alaskans, Native Hawaiians, or Certified Development Companies

Required Documents

Some of the documents that you will need before applying include:

Your business tax returns for the past 3 years

Your personal tax returns for the past 3 years

Business Financial statements for the past 3 years

Business Balance Sheet including profit and loss statements for the past 3 years.

Lease Agreements

Bank Agreements including signature card or statement

Documented proof of contributions, transfer of assets for the past 2 years

Incorporation or Limited Liability documentation including Articles of Incorporation, Certificate of Incorporation, or Articles of Organization

Any DBA filings (Doing Business As)

Bylaws

Meeting Minutes

Stock certificates and ledgers

Visit the 8(a) Application Checklist for a complete list of documents required.

Application Process

The steps to apply are as follows:

View the SBA online course Pre 8(a) Business Development Program Module 1-Setting Expectations.

Obtain official copies of all government documents. This is outlined in the checklist portion.

Obtain a free D-U-N-S number from Dunn and Bradstreet.

Obtain an SBA General Login System user ID.

Start the free 8(a) online application.

US Small Business Administration

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