Federal Minority-Owned Small Business Programs in Jeopardy

Efforts by the federal government to ensure equity in contracting may be jeopardy.

As a formality, the Obama administration has proposed eliminating a federal contracting program benefiting ethnic minority-owned businesses after courts ruled that the program was unconstitutional.

Before 2008 and 2009 court rulings, the Defense Department and other agencies added 10 percent to low bids from non-minority firms and awarded contracts to the best minority-owned company bids that came in below the new bid amount. The practice was used to help the agencies meet their goal of giving 5 percent of contracts to companies owned by minorities.

The programs were originally designed under the Nixon Administration to help reversed years of systemic discrimination against minorities and women who sought to do business with the federal government, yet were often left out due to gender or race.

Around 35 percent of the U.S. population is made up of ethnic minorities, and 5.8 million businesses are minority-owned. The American Small Business League (ASBL) estimates that if the policy is implemented, minority-owned small businesses could lose close to $50 billion in federal contracts annually, which could lead to the loss of millions of jobs.

“It is unbelievable that at a time when unemployment among minorities is at record levels, the President is going to eliminate the largest federal programs to help minority-owned businesses,” said ASBL President Lloyd Chapman. “It will no doubt destroy millions of jobs and minority businesses from coast to coast.”

It May Have Bottomed Out - But Why Not Start a Business and Take Advantage of It

The hard times are not new to most African Americans - in fact, for many, it just another day. We know how to stretch our money, we also know how to get the products that we want, by juggling, if necessary. But, even with all of that, if you ever even considered starting your own business, now is still a good time. You can spend this time working on your ideas, developing a concept, researching the industry, learning as much as you can. In fact, if you had previously done your business planning but was priced out of the market, now might be a better time to jump in.

Let's talk retail businesses, which I have experience in. Many manufacturers have to think of ways to move their product - get it into stores. They also have to should be willing to help you sell the product so that you will continue being a distributor for them. So, they are offering all kinds of discount terms, no shipping, longer payoff terms, etc to lower your product costs. This lower start-up amount could make a big difference.

Another big expense will be the lease or purchase of your retail location. Well, we all know that the real estate market took a hit. So, there is a lot of commercial inventory sitting -as a result of the unfortunate businesses that didn't make it through the nose dive. As such, the landlords and building owners are having to drop prices, be more negotiable in terms to get someone in these places. I have been watching the rents drop and sales prices drop on several buildings (I regularly watch the DC Metro and Philadelphia Metro markets). In fact, I have seen buildings sit now, over a year - where some owners appear in-flexible. I guess they don't mind the loss, but I would say, that attitude will eventually change.

Of course, there is still the consideration of your consumer. Will they have the money to buy your product? This question requires the same considerations that you would have had even in a good economy - what do you need to get customers and keep customers? are you competitive? do you have good customer service? etc.

Anyway, I say get planning, get moving, get started. If you are in the Philly area, I want to help you get going. Attend my seminar on Tips to Open a Bookstore, Gift Shop or Specialty Boutique on Jun 3, 7PM - see my website for more info and to register