Yvonne Cheung Ho - Metropolitan Economic Development Association


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Metropolitan Economic Development Association's presentation from One Minneapolis: A Call to Action! conference December 2, 2011 hosted by the Minneapolis Department of Civil Rights

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  • This is not the first time we’ve seen this problem of disparity; in the early 1970s, the corporate community came together to form MEDA in order to address these same issues Since then, both Milestone Growth Fund and MMSDC were spun off from MEDA to focus on specific issues facing the minority business community As demographics change, these issues are intensified and these pronounced and stark disparities threaten our future Growth in the number of diverse businesses and communities of color increase the need for the organizations’ services Since the recession refocused philanthropy towards immediate needs, we’ve seen backsliding in support for economic development efforts that were closing the gap; the gap is now widening again To address other issues in communities of color, diverse businesses must be encouraged to grow and prosper In the U.S., diverse firms employ nearly 4.7 million workers, a disproportionate number of whom are persons of color Many of these jobs are in lower income areas, disproportionately communities of color, which can help with job access for those populations where transportation access is a major issue Business owners in the U.S. represent roughly 10% of the workforce, but hold nearly 40% of the total U.S. wealth. Strong diverse business growth directly impacts the reduction of inequality in earnings and wealth. Business ownership creates intergenerational wealth.
  • While there are many strengths in our region and much financial support for many good causes, it is embarrassing that Forbes recently ranked Mpls-St Paul as 49 th out of 52 metro areas in its “Best Cities for Minority Entrepreneurs” article. Other smaller cities with comparable percentages of populations of color and minority businesses were much higher on the list – Nashville #3, Oklahoma City #6, and Indianapolis #17 A recent study commissioned by the City of Minneapolis on the Twin Cities area found: persons of color are significantly less likely to own businesses (as a result of marketplace discrimination) when taking into account age, education, location, and industry significantly lower rates of business formation than expected substantially lower share of revenues for diverse businesses diverse businesses are rarely sought out as subcontractors when contract does not include goals to encourage the practice
  • Survey of Small Business Finances found credit market discrimination, including: higher denial rates, even accounting for size and credit history higher interest rates when credit granted Loans received are for half the amount of non-MBEs All credit markets have shrunk since 2008 and there’s no evidence that credit market disparities have improved for MBEs *MEDA – please input technical asst access challenge **Should be getting some facts from Deveny @ MMSDC to use in this space later this week
  • Actual Twin Cities diverse businesses responding to MEDA, MMSDC and Milestone surveys demonstrate the economic benefits to the community that diverse businesses provide In this time of large disparities in employment for persons of color, over 50% of the workers at these survey respondents companies are persons of color These workers are likely to earn a living wage and receive health benefits
  • Tony Williamson Need Tony’s bullet points and input on changes to this slide.
  • Tony Williamson Need Tony’s bullet points and input on changes to this slide.
  • Yvonne Cheung Ho - Metropolitan Economic Development Association

    1. 1. Narrowing the Gap: Invest in Diverse Entrepreneurs Presented by Yvonne Cheung Ho, MEDA
    2. 2. Diverse communities in the Twin Cities face stark economic disparities
    3. 3. Entrepreneurship is One Solution <ul><li>“ A critical ingredient in attaining financial security is business development; business equity is second only to homeownership as a share of total household wealth nationally… business creation has often been a route into America's middle class, particularly for minorities, immigrants, and the economically disadvantaged.” </li></ul><ul><ul><li>(Corporation for Economic Development, Washington D.C.) </li></ul></ul>
    4. 4. Status of Diverse Businesses <ul><li>Forbes list of “Best Cities for Minority Entrepreneurs” ranked the Twin Cities 49th of 52 large metro areas </li></ul><ul><li>16.9% of Minnesotans are people of color. By 2035, 1 of every 4 Minnesotans will be a person of color (Minnesota State Demographer, 2009) </li></ul><ul><li>Entrepreneurs of color own only 6.3% of MN firms and only 3.8% have employees (2007 Survey of Business Owners) </li></ul><ul><li>Self-employment rates among people of color are 53.1% lower than among white males (The State of Minority and Women-Owned Business Enterprise: Evidence from Minneapolis, 2010) </li></ul>
    5. 5. Access Challenges <ul><li>Working Capital: Diverse firm loan requests are substantially more likely to be denied and, if credit is granted, it is at higher interest rates , even after accounting for differences like size and credit history (The State of Minority and Women-Owned Business Enterprise: Evidence from Minneapolis, 2010) </li></ul><ul><li>Equity: In 2009, less than 4% of SBIC financing was awarded to diverse businesses (U.S. SBA) </li></ul><ul><li>Technical Assistance: Demand outstrips availability of services </li></ul><ul><li>Markets: Corporate supply chain consolidation has led to fewer opportunities for diverse vendors to grow their companies </li></ul>
    6. 6. MEDA’s Portfolio of Services <ul><li>1-on-1 business consulting </li></ul><ul><ul><ul><li>Strategic Business Consulting </li></ul></ul></ul><ul><ul><ul><li>Certification Assistance </li></ul></ul></ul><ul><ul><ul><li>Pacesetter Program </li></ul></ul></ul><ul><ul><ul><li>Volunteer / Mentor Program </li></ul></ul></ul><ul><li>Relationship building between minority clients and larger corporations & access to government market </li></ul><ul><ul><ul><li>Procurement Technical Assistance Center (PTAC) </li></ul></ul></ul><ul><ul><ul><li>Construction Partnering Program (CPP) </li></ul></ul></ul><ul><li>Lending & Financing </li></ul><ul><ul><ul><li>MEDA Loan Program / UIP Partner </li></ul></ul></ul><ul><li>Training & Leadership Development </li></ul><ul><ul><ul><li>Executive Development Series </li></ul></ul></ul><ul><ul><ul><li>Leadership Development Program </li></ul></ul></ul><ul><ul><ul><li>Customized training </li></ul></ul></ul><ul><ul><ul><li>www.meda.net </li></ul></ul></ul>
    7. 7. Economic Return on Investment Brooklyn Park 8 jobs Eagan 75 jobs New Hope 45 jobs <ul><li>Successful Diverse Businesses: </li></ul><ul><ul><li>Create jobs </li></ul></ul><ul><ul><ul><li>Expand our tax base </li></ul></ul></ul><ul><ul><ul><li>Improve and stabilize communities </li></ul></ul></ul><ul><ul><ul><li>Become business leaders </li></ul></ul></ul><ul><ul><ul><li>Inspire others as role models </li></ul></ul></ul>
    8. 8. 2010 Annual Survey 190 Responding Companies <ul><li>Each year, MEDA surveys the diverse businesses it serves </li></ul><ul><ul><ul><ul><li>Over the 16 years of the survey, covering 4 to 7,000 workers each year, over 50% are people of color </li></ul></ul></ul></ul><ul><ul><ul><ul><li>In the 2010 survey, 89% of employees were paid a living wage of $14 or more per hour </li></ul></ul></ul></ul><ul><ul><ul><ul><li>62% of companies provide health care benefits –national average is 54% </li></ul></ul></ul></ul>
    9. 9. Example Cowles Center for Dance & Performing Arts (Construction) Typical City Goal Project Goal Results MBE Participation 10% 10% 10.6% Skilled Minority Workers 11% 15% 17.3% Unskilled Minority Workers 11% 15% 16.4%
    10. 10. Example: Shelleye and Tony Williamson AJASA TECHNOLOGIES (IT Consulting & Staffing) <ul><li>Early ‘90s: began the business in their basement </li></ul><ul><li>A MEDA client from 1995 to present </li></ul><ul><li>Revenue growth from $3.5 million in 1999 to over $34 million </li></ul><ul><li>200 employees/contractors </li></ul><ul><li>MEDA’s 2008 Entrepreneur of the Year </li></ul><ul><li>Tony now serves on the MEDA Board </li></ul><ul><li>Give back to the community, including mentoring other entrepreneurs </li></ul>
    11. 11. Help us narrow the disparity gap: Invest in Diverse Entrepreneurs