Business growth, not ethnicity, now shapes minority strategies Back when his collection business was still new, Rudy Sanchez attended his first Valley Industry and Commerce Association meeting looking for networking opportunities. He has rarely been back. “I was asked what I was doing there. One of the board members said, ‘We have housing for you people,'” recalled Sanchez. “I was taken back. I just came from upper management in a corporate environment. I lived in Porter Ranch. That’s the way the Valley is. That’s the way the Valley was.” Today, after 20 years as president and CEO of Balboa Collections Service in Northridge, Sanchez has a sense of humor about it all. “If I walk into a room and say I’m Mexican, they might ask me to clear the tables,” he quipped. Still, the VICA incident was an early lesson many minority business owners are just beginning to learn. There is no automatic entry to the business world, not unless you have something to offer. And while minority labels have opened doors to business deals these owners might not otherwise have had access to, they have come at a price. Years of good-intentioned government programs designed to give minority business owners a leg up have also branded these businesses as small, inexperienced or, even worse, disadvantaged. Concerned about the potential harm stereotypes carry, some minority-business owners are casting their fate to the winds of the free market foregoing time-honored networking opportunities with “their own kind” and even certification programs that can open the door to contracts in the public and private sector. “There’s costs and benefits to being defined as a minority,” said Fernando Guerra, director of the Center for the Study of Los Angeles at Loyola Marymount University. “The benefits have not increased while some of the costs may have. It can only hurt you, not help you with most decision makers.” No majority group The mood swing has been bolstered by recent U.S. Census data showing no clear majority ethnic group in California and some other states. Not only are the numbers of minority businesses swelling, so too is the minority consumer market. Run the numbers, say these business owners, and it is clear that big business needs ways to reach these groups, and that gives these minority firms newfound power. “I’ve heard people say time and time again, we’re not a minority, we’re a majority, and we’re not disadvantaged,” said Kim Anthony, vice president of programs for the Black Business Association. During the several decades affirmative action programs were in place, minority business owners found it advantageous to trade on their ethnicity. Regulations required government contractors to recruit suppliers from the minority community and many private-sector corporations employed diversity managers to ensure that these businesses were represented in the bidding process. But beginning in the 1990s, a series of lawsuits charging that minority businesses received an unfair advantage put a halt to many of these programs and led to the passage of Proposition 209 in 1996, effectively outlawing the quotas put in place by affirmative action legislation. Minorities can still take advantage of outreach programs designed to increase access to bidding opportunities, but the payoff is far less certain, and they still must endure a complex certification process. “It’s so invasive to become certified that some people don’t want to give them access to that information,” said Martha Diaz Aszkenazy, co-founder of Pueblo Contracting Services, Inc. in Pacoima. “You have to give them personal and business tax returns for three years. They call your bank and creditors. They do a site visit. It’s a complicated process, and if you’re not going to get something out of it, why go through it?” The private-sector diversity programs have not panned out for many of these business owners either, who now say they were little more than toothless public relations efforts. “People are just now realizing that you can’t get to the real decision makers by identifying yourself as a minority or small business,” said Gene Hale, president of construction equipment leasing firm G & C; Equipment Co. and president of the Greater Los Angeles African-American Chamber of Commerce. “They have a niche for you and the people in those areas really can’t write any purchase orders or sign any purchase orders, so you’re at a dead end.” Maturity calls for different thrust The situation is somewhat different for startups and first-generation business owners where the main emphasis is on staying afloat. These businesses typically find it more helpful to seek out any opportunity to bring in business, and they continue to seek out networking opportunities, often within their own communities. “We like to be viewed as working in the mainstream, and that’s where I’m trying to bring our group,” said David Honda, president of D.S. Honda Construction Inc. and head of the Asian Business Association. For Honda, a Japanese-American, focusing on ethnicity is a severe departure from what he was taught. “My mom and dad always said, ‘The peg that stands up gets knocked down.’ That’s related to being interned in the camps,” Honda said. But his own experience as a Japanese-American businessman led him to believe the only way to build clout was to first mobilize as a group. “I started to see there was no business advocacy,” Honda said. “Not all small Asian companies that are first generation join chambers of commerce. They feel more comfortable amongst themselves, with their culture, their own ideas and their language. And the Asian Business Association recognizes the difference.” Eventually, though, the ABA, like other organized groups of minority business owners, learned their success will rise and fall on the ability to compete on the open market. “There seems to be a threshold,” said Guerra. “When you’re starting off you use (minority status) for networking leads and work, but once you pass that threshold, it no longer assists you, and it begins to hurt you because, if you’re seen as a minority business enterprise, you’re seen as only being able to do so much.” Owners of more mature businesses have also come to realize the challenges they face have little to do with their minority status. They are the garden-variety problems of growing the business and mobilizing and managing resources. “It’s no surprise to me that they want to be identified with the mainstream,” said Pedro Pulgar, business editor at La Opinion. “What they lack is access to capital. That puts them in the same league as everyone else.” Minority businesses still lag Despite their growing numbers, minority business owners point out that their size trails the averages for business at large. The recently released Census reports showed that annual gross receipts for Hispanic-owned businesses averaged $155,200 nationwide, African-American-owned firms averaged $86,500 and Asian- and Pacific Islander-owned companies averaged $336,200, compared with average gross receipts of $410,000 for all businesses. That gap, minority owners say, won’t be closed chasing specialized contracts, but by learning the same techniques that have built businesses for decades. “One thing about black-owned business, there’s a clearer understanding of the need to increase revenue,” said Pat Means, president and publisher of Turning Point Magazine, a publication geared to the African-American community. “So they are targeting in on serious business opportunities rather than meet and greet.” Many of the efforts underway by minority business associations have turned from a focus on expanding contacts to finding the points of contact most likely to result in a business deal. The Latin Business Association, through its Business Development Committee, has been canvassing major corporations that want to sell to Latinos with the argument that, by using minority suppliers, these businesses can better understand and target the market they want to attract. “We’re not looking to identify ourselves as Latinos, but as the Latino community identifying those corporations that want to embrace the community,” said Sanchez, who also heads the business development committee for the Latin Business Association. “So it’s that access that we offer to corporate America. In turn, we want corporate America to do business with us.” Similar efforts are underway in the Black and Japanese business communities. The difference may appear subtle, but it has shifted the focus from exclusion to empowerment. “Nowadays, I think the (minority and women-owned business) status you keep as an extra designation that may come in handy, but it’s not something you necessarily wear on your sleeve,” said Diaz-Aszkenazy. “I wear it on my face everyday, but I don’t think about it. I compete against white-owned firms and male-owned firms every day and I have to be better than they are.”
