Prosperity Partnership
Minority Economic Development Working Group

As diversity increases in Washington State, support of minority small businesses (MBOs) becomes an increasingly important part of the Prosperity Partnership's Regional Economic Strategy. Small businesses are a crucial part of our region's economy, both in terms of economic impact and in terms of job creation. Nationally, 70% of new jobs are created by small businesses. Success among minority owned businesses translates to increased jobs, increased wealth and long-term prosperity for all of our region's residents. More must be done to ensure that these entrepreneurs have the tools, resources and access they need to be successful.

What is the Challenge?

According to the US Census, 3.5% of the state population is Black, but Black-owned businesses account for only 1.5% of the total number of businesses in the state. Similarly, Hispanics make up 8.8% of the population, but only 2.2% of businesses state-wide are owned by Hispanics. This ratio holds true for Asians, Native Americans, and Pacific Islanders as well. Nationally, 17.8% of all businesses are owned by racial minorities, compared to just 10.9% of businesses in Washington State.

Minority Owned Businesses in King, Kitsap, Pierce, Snohomish Counties 31,600 Minority Owned Businesses in Prosperity Partnership Region Minority Owned Firms Generate $8.8 Billion in Sales Minority Owned Firms Employ 62,300 People - 2002 Business Census

In May of 2007, the University of Washington published its first annual Washington Minority Business Survey. Minority business owners identified several challenges to their growth: 1) 17% of Washington State minority business owners reported that their financing needs were not met, compared to just 5% of small businesses nationwide, and 2) competition from larger businesses was ranked fifth among concerns of small business owners nationwide, whereas among minority business owners in Washington, it was ranked as the principal concern.

Similarly, according to a recent Seattle University Minority Business Survey comparing Washington State MBOs to Washington State non-minority small business owners, Washington State MBOs report unmet credit needs and business development concerns at a significantly higher rate than Washington State non-minority small business owners.

What Can We Do?

In March of 2007, the Prosperity Partnership formed the Minority Economic Development Working Group, led by Seattle Councilmember and EDD Vice Chair David Della, El Centro de la Raza Associate Director Estela Ortega and Nate Miles of Eli Lilly. The working group was asked to identify specific, tangible public policy and other changes that can be realized in the short term at the regional and state level to improve the ability of minority businesses and minority economic development organizations to be successful.

Based on the data from the Washington Minority Business Survey and from a similar report by Seattle University, the working group identified two major barriers to success for minority businesses: lack of access to capital and credit, and lack of access to contracts. In order to get additional credit and new business opportunities, minority small businesses need to grow increase their capacity and improve their ability to negotiate existing systems of lending and contracting. Preparing MBOs to be more competitive working in, or contracting with firms, in the five pilot Prosperity Partnership industry clusters will give them the best opportunity to expand their businesses and will increase prosperity and create jobs in the Puget Sound.





Our Strategy

After a nine month process, guided by its Minority Economic Development Working Group, the Prosperity Partnership has developed and finalized a four-part strategy to improve the business climate for minority entrepreneurship in our region. The four parts of the Prosperity Partnership Minority Entrepreneurship Strategy are as follows:

1) Work with Regional Cluster Businesses to:

• Develop their own supplier diversity programs and policies, based on shared best practices
• Increase opportunities for peer networking among procurement and contracting officers
• Create a shared database of top minority businesses with the skills and capacity to meet cluster business needs

• Develop programs to encourage cluster businesses to develop their own supplier diversity programs and policies
• Identify ways to create membership and networking opportunities for minority-owned small businesses

• Identify our region’s top high-capacity and fast-growing minority-owned businesses that can work in our leading industry clusters
• Clarify the skills and capacity they need to help minority businesses achieve to be successful

• Communicate better about contracting opportunities and help them gain the skills and capacity needed to successfully secure them

1) A Supplier Diversity Best Practices and Implementation Toolkit
2) A Supplier Diversity Professionals Networking Forum
3) A Trade Association “Access Membership” Package
4) A Shared Database of top MBOs
5) An MBO Resources Website

Our Goals

Support and strengthen business assistance resource providers
Minority business owners need to take advantage of the support of an interconnected network of organizations and programs that provide everything from training to funding. These resources ensure that minority business owners have the best opportunity to access capital and generate new business, particularly new business opportunities in the five pilot Prosperity Partnership industry clusters.

Increase recognition by government and large businesses of the importance of contracting with minority small businesses
Increasing contracting opportunities from government and large businesses is the basis of real growth in small business suppliers. According to the UW Minority Business Survey, the largest customer base for minority-owned enterprises was other businesses. Convincing government and large businesses of the importance of prioritizing contracting with minority-owned businesses creates an opportunity for MBOs to grow and develop, increasing competitiveness regionally and creating additional jobs.

Connect minority small businesses to resources and contracting opportunities
Steps need to be taken to actively connect minority business owners to the capital, training resources, and contracting opportunities to which they have lacked access in the past. The Prosperity Partnership has launched an effort to identify specific minority-owned businesses in the five pilot industry clusters that could best benefit from this type of engagement. Additionally, the Prosperity Partnership has begun to map the ecosystem of resources currently available to minority business owners and businesses that are top targets for contracts. This information will be essential in ongoing efforts to increase access to these resources and contracts, as well as make sure MBOs take advantage of them.

A Broad Coalition

The Prosperity Partnership, a coalition of over 250 business, labor, government, non-profit, and educational organizations in the Central Puget Sound region, has identified five industry clusters that are the drivers of the region's economy. The five clusters are aerospace, clean technology, information technology (IT), life sciences, and logistics and international trade. The success of minority business enterprises, especially the enterprises located in these clusters, will help to support economic success in the region in general.


Contact
For more information, contact Eric Schinfeld, Senior Economic Policy Analyst, eschinfeld@psrc.org, 206-971-3053.