The economy may be facing a downturn in the short term, but as government leaders and large corporations develop opportunities for minority suppliers, there needs to be a renewed focus on creating opportunities that allow suppliers to grow and profit.
If policymakers and corporations are serious about building, retaining, and growing minority-owned and women-owned businesses – much more must be done to level the playing field.
Often it is much cheaper to talk about increasing opportunities versus doing so. Fast Company recently noted that there were commitments by U.S. companies of $50 billion toward racial equity, and diversity, equity, and inclusion (DEI) initiatives, but only an estimated $250 million has been spent.
Contracts, at equitable, profitable, price points are the change we need.
If the last services company you hired had a budget of $100,000, don’t offer the replacement contractor $50,000 for the same work, which in most cases will not be of the same quality. If the goal is to increase minority business, offer them the $100,000 the other company would have received.
There is much more work to be done to create the same amount of success, and wealth, in the minority-owned and women-owned business community that would exist if equitable access to large, profitable, contracts were available.
I would argue that we could go further. Instead of offering minority firms 5% or 10% as a subcontractor, find opportunities for them to be the prime contractor.
Corporations, and government agencies, can do much more to help minority-owned and women-owned businesses grow in the Philadelphia region. To achieve the commitments that were previously made by corporations and government leaders, it may be necessary to significantly reduce or eliminate insurance requirements and other barriers to entry for minority-owned and women-owned businesses.
If the insurance for a $50,000 project is $10,000 a year, how much does that leave over for the costs to perform the work and profit? Profits are necessary to hire more employees, secure office space, make down payments on new company assets, and participate in the larger economy of small businesses and corporations in the region.
How does any firm go from ten employees to 50 without profits or outside capital? It either doesn’t happen or is vastly more difficult.
DEI commitments and subcontracting opportunities are important steps towards a goal, but that goal cannot be achieved without equitable access to prime contracting opportunities.
According to a recent study by McKinsey, organizations have spent $8 billion per year on DEI training and often do not have many tangible results to show for their efforts.
While I understand the need for training at many organizations, supplier diversity, and contracting opportunities are critically important to show what really matters to a corporation or government.
Small businesses are ready to do the work. But they need a fair chance to thrive and succeed.
Teresa M. Lundy is the principal and founder of TML Communications, the award-winning strategic public relations, crisis communications, and community engagement firm that produces results. Follow Teresa on Twitter @TeresaMLundy.