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Director Hinson People Fund Conference on Economic Opportunity
AS PREPARED FOR DELIVERY - November 21, 2009
Good Afternoon! On behalf of President Barack Obama and Secretary of Commerce Gary Locke, it is my honor to be here today.
I’d like to take a moment to thank the Board of Directors for the People Fund for extending this wonderful invitation, specifically Mr. Hopeton Hay who has had a long career as a staunch advocate for minority business development.
I had the pleasure of being a guest on Mr. Hay’s radio show, “Economic Perspectives,” when I was first appointed to be the National Director of the Minority Business Development Agency only a few, short months ago.
I would also like to thank Kenia Davalos, Suzi Sosa and all of the other participants and panelists who have provided sound advice and counsel at this very important conference.
But most of all, I want to thank the entrepreneurs and business owners here today, who are indeed the backbone of our nation, who continue to hang in during these very difficult times.
It is your unwillingness to flinch in the face of this economic downturn that is putting food on the tables of millions of workers nationwide and ensuring that these families remain hopeful as our economy adjusts to the impact of mistakes of the past. For this, you deserve our praise.
For those of you who may not know, the Minority Business Development Agency is the only agency in the federal government with the sole task of promoting the growth and global competitiveness of the minority business community. We manage over 46 centers nationwide, providing technical and business development assistance and access to capital to minority businesses of all sizes.
In our current business model, MBDA’s activities are centered on helping companies from these diverse communities obtain financing and contracts from both the public and private sectors. In 2008, MBDA generated more than $2 billion in contracts and financing for our clients and created more than 5,000 new jobs. This gives MBDA a Return on Investment (ROI) of 74 times. In other words, for every tax payer dollar put into MBDA, we create $74 of economic output. Year-to-date, we have executed over $2.4 billion in contracts and financing and created nearly 3,000 new jobs in what has been an extremely challenging year for minority-owned businesses.
Over the last 40 years, MBDA has helped thousands of businesses grow.
And with a continued effort from MBDA, organizations like the People Fund and hundreds of strong entrepreneurs, like those of you here today, the minority business community now accounts for more than $660 billion in gross receipts and generates approximately 8 million jobs nationally.
In the great state of Texas alone, there are approximately 491,000 minority-owned firms generating more than $71 billion in gross receipts, and employing more than 543,000 workers. Between 1997 and 2002, minority firms in the state of Texas grew 34 percent (34%) and were significantly greater than the total growth percentage of all businesses in the entire state, which was only 13 percent (13%).
As you know, the state of Texas has the second largest minority population in the country!
And if the business activity matched the state’s minority population growth, there would be more than 830,000 minority businesses generating more than $305 billion and employing nearly 2 million workers.
This final point is our central goal - the achievement of economic parity.
If we expand economic parity nationally, the minority business community will generate $2.5 trillion in gross receipts and create 16 million jobs and over $100 billion annually in tax revenues to the government.
But achieving this goal is nearly impossible given the current state of minority businesses. The average minority-owned firm is still less than half the size of the average majority-owned firm; has lower average payroll per employee; and a lower chance of survival.
Minority entrepreneurs and business owners still face some of the same obstacles that existed 40 years ago.
Limited access to private sector contracts due to lack of networks.
Limited access to public sector contracts due to increased bundling.
And we know that there is still today limited access to capital partially as a result of discrimination in lending.
Today’s economic environment only exacerbates this problem.
It’s unacceptable for firms in the position to grow and create jobs to not be able to receive the capital they need. That’s why programs like the People Fund’s Loan Fund Program must be strengthened.
This year, the People Fund invested approximately $1.3 million in loans to over 24 community ventures. Minority businesses account for approximately 75 percent (75%) of these loans.
We must move this success to the next level and increase by 100 times the lending capability of this very important organization.
But capital is only part of the solution.
We must delineate, clearly delineate, between lifestyle businesses and those that are poised for dramatic growth.
To be clear, there is nothing wrong with having a lifestyle business, most minority businesses are just that - giving that the average minority firm nationally generates gross receipts of $163,000. In the state of Texas, this number is $144,000.
But we have to focus our attention on those management teams who have the desire to build empires and are willing to share their wealth with their employees. Minority entrepreneurs, both now and in the future, must think in terms of buying cash flow and not building cash flow.
And in this respect, these businesses need to move away from traditional business growth models and embrace the growth models of the future: Joint venture, strategic partnership, merger and acquisition.
To achieve this, these management teams need to move away from a sole ownership psychology to a strategic partnership psychology.
We must move away from service-oriented businesses and embrace the innovative opportunities of the growth industries of the future like:
Clean / Alternative energy
It is through innovation and entrepreneurship in these new industries that we will rebuild this great country’s economy and fuel the engine of our economic recovery.
Finally, we must think more globally and consider avenues of growth outside the Austin metro region, outside the state of Texas and even outside the borders of the United States. Participation in the global supply chain of corporate America requires that you have this capability.
Minority businesses are uniquely positioned to reach new markets through cultural competencies, language capabilities and flexibility of our businesses.
At MBDA, we are here to help you achieve all of these goals and the first step is to visit an MBDA Minority Business Center and build a relationship with one of our Business Development Specialists.
If you are interested in contracting opportunities that are available through the American Recovery and Reinvestment Act, this is a key area of focus for MBDA. Or if you are ready to get involved in one of the growth industries of the future, I want to emphasize that our Centers are ready to help your business grow. Our Southwest National Enterprise Center is located in Dallas, lead by MBDA’s Southwest Regional Director, Mr. John Iglehart, who is with me today.
John, please stand up.
He can guide you to the appropriate resources within the Texas region.
One last thing, there are also plenty of resources online including: mbda.gov; business.gov; and fedbizopps.gov.
In closing, I would like to share with you an impression. When I arrived in Austin, I found myself driving down Caesar Chavez Drive.
I began to think about what all the Caesar Chavez’s of the world – your parents, grand-parents, and even great grand-parents – endured to make it possible for me to stand before you today.
This nation was forever changed by their commitment to excellence as they understood it. And no matter how difficult things are today, it pales in comparison to the difficulties of the past. They never gave up and we can’t give up! They never lost faith and we can’t lose faith!
And they were absolutely committed to the success of a generation that we represent today. We owe them a debt of gratitude.
And there is no greater way to say thank you then achieving your share of the economic pie. So, let us work together to make sure that all minority communities nationwide achieve their share.
Again, I thank you all for having me here today.
I look forward to working with all of you.
I enjoyed being on the show and hope to be invited back.