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Problems Faced By African American Businesses

May 27, 2008
It would only be fair to invite bids from black-owned businesses. However, the fact remains that although African-Americans represent 13.4% of the total US populace, only 5% of businesses are owned by them and they account for hardly 0.5% of the total business in financial terms. These figures become even more offensive keeping in view that other minorities in the US do not suffer as much.

For example, Hispanic-Americans, accounting for 11.9% of the USA's total population, own as much as 7% of businesses. Asians too, who account for 4.5% of the total USA's population also own 4.5% of the businesses.

African-Americans face more challenges and fewer opportunities than any other ethnic groups in this country. Therefore, as long as more American businesses do not come forward to buy from black-owned business and embrace a greater degree of supplier diversity, African-American entrepreneurs will continue to face the same dim future in the American business sector.

Another interesting characteristic of the American business sector happens to be the failure of black-owned businesses in their first four years of business. This trend amounts to almost 20% more in comparison to white-owned businesses. Black-owned businesses also get lesser capital help as compared to white-owned businesses and are almost four times more vulnerable to credit denial. In addition to this, there is no such possibility for the African-Americans to benefit from multigenerational families, other business and social tie-ups that often result in corporate partnerships in the US.

In corporations, one frequently discussed topic is supplier diversity, but it is seldom achieved. The federal government has also announced a mandate for the federal agencies to do business worth 8% with disadvantaged and other minority-owned businesses, including black-owned businesses. This was done way back in 1978.

This created an active outbreak within the government, followed by other repercussions obvious in the rest of the corporate world. Many companies readily adopted the supplier diversity program, but often remained restricted in staffing. Naturally, the black-owned companies remained fewer in number and smaller (92% of all the black-owned companies have no employees), thereby receiving a disproportionate share of the business pie.

This triggered a general tendency of black-owned vendors not receiving enough supply roles within the corporate field, especially when it comes to professional services, frequently based beyond traditional procurement processes. Another sad end of the story remains the bias against African-Americans as being labeled as corporate incompetence. Most corporate organizations are also of the belief that practicing supplier diversity will stretch the company investment. However, statistical data prove quite the opposite and companies that have embraced the program, have been known to have gained more returns on their investment.

This problem needs to be addressed at a practical level or lesser number of black-owned business enterprises would mean fewer job opportunities for these minorities in the US, further lessening hope for the multicultural utopia.
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