Subj: MBE Business Leads
From: BerwynCap
I represent a minority-owned natural gas marketing company. In our marketing activities, we have approached some companies in our Fortune 500 target market without ever mentioning our minority status. In other cases, we have used diversity program directors as our initial point of contact.
Generally, we prefer the former approach because involvement of the diversity program directors has tended to delay, rather than expedite, our initial contact with the person(s) responsible for natural gas purchases. There is also concern that introduction by the diversity director may unfairly stigmatize us as a company looking for a "handout," rather than as a fully capable marketing firm just looking for an opportunity to demonstrate our merits as a gas supplier.
My question for is whether there is information resource available that would help identify companies genuinely interested in fostering relationships with minority-owned suppliers. We have the ability to offer a combination of service and price that is competitive with anybody in our industry and I am trying to find companies that are dedicated to increasing the portion of their business done with MBE's.
Any help you can provide will be gratefully appreciated.
AskRecy Response:
This is a good question. It’s no secret that the natural gas industry has undergone some radical changes during the past decade. Legislation was introduced in 1978 to ensure a competitive and consumer-oriented natural gas industry and initially was directed at the wellhead and pipeline sectors. Total deregulation of wellhead gas was completed by January 1, 1993. Future legislation lead to pipeline reform. Today’s movement is being focus on the retail or local gas distribution company and the utility sector and the retail gas and electric customers should have a wide array of services from which to choose. Customer choice requires rate/service unbundling and customer access to new services. The Texas Legislature adopted a new law introducing retail competition in the sale of electricity, to begin in Texas on January 1, 2002.
Notwithstanding, we have also seen another major change in the industry - Diversity Program Directors and Managers. A number of factors have led an explosive growth of a black middle class market for these products and services. This has been stimulated by the surge in affirmative action initiatives and the benefits these are expected to deliver.
Using diversity program directors as the initial point of contact sometimes is more of a roadblock. Most of them do not truly have the decision-making authority, however, some certainly do.
Last year I was at a Shell Oil meeting involving more involvement on Shell’s behalf with minority contractors and one of the several Diversity Program Directors handed out a professional brochure addressing the company involvement with minority business owners in the Houston market and their successful outreach program. The only problem was that I have three active businesses and am registered with the City, State, School District, and Houston Minority Business Council as a Minority-Owned Business and had not seen the brochure or their involvement. Therefore, you see that you cannot depend or rely on diversity program directors, if you really want to succeed in business.
As to whether there is information resource available that would help identify companies genuinely interested in fostering relationships with minority-owned suppliers. Yes and No.
Due to the ongoing legislative requirements from the natural gas and utility sector, they want to do business with qualified minority companies in order to enhance their diversity necessities. How do you get on that list? Perseverance. Working with the Diversity Program Directors - Working through and around the Diversity personnel when you see or detect a lack of true authority - Making sure that you are registered in your field with all of the proper agencies - Getting your satisfied and current base of customers to write to the CEO of the company on your behalf - Continue to network and market your company. It’s not easy but it can be done.
Subj: Procurement
From: Wmango2
Mr. Dunn:
I am currently employed as an Assistant Manager of Purchasing with a Fortune 500 company. I will be retiring in approximately 18 months. Since I cannot play golf everyday, I would like to contract my services as a procurement specialist on a part-time basis in either the private or public sector. Any information or contacts on how one would go about establishing such a service.
AskRecy Response:
There is one organization
called SCORE - Service Corps Of Retired Executives,
a nonprofit association providing business counseling to small business owners.
The U.S. Small Business Administration (SBA) also sponsors SCORE.
The SCORE Association is also a national, nonprofit association with 11,500
volunteer members and 389 chapters throughout the United States and its territories.
The organization is composed of retired business executives with broad business
experience, often in your specific business area. The SCORE business leaders
have faced the same situations you do and are dedicated to helping all business
owners or potential business owners-women and men- realize their entrepreneurial
dream. The effective part of their program matches volunteers with small businesses
that need expert advice. SCORE also offers free counseling services and workshops
designed for those who want to go into business for themselves.
SCORE was founded in 1964 and assists approximately 300,000 entrepreneurs annually. Each year, the SCORE Chapter of the Year is honored during Small Business Week in June. Their email address is www.score.org.
Subj: Venture Capital
From: Tony B. (via email)
Mr. Dunn
I am an African American. I am a mostly self-taught electronics designer (inventor). Following this note is a partial list of some of my work. I have seen lots of programs to fund Black-minority businesses, it is just that they usually are aimed at a venture that is non-technical (usually wig or BBQ shops). Do you know of any programs -or private investors that I might contact? I want to be able to start my own (tiny) design business, and am willing to share the pending Shure, inc. project.
Respectfully, Tony Brewer
I am responsible for the product development of and market strategy for the following.
* Distributed outside the U.S.
by Yamaha
** Just signed a NDA with Shure for product development
AskRecy response:
I have recently received similar questions regarding venture capital. Additional research on the subject revealed that an established group called the National Venture Capital Association (NVCA) and the Financial Executives Institute (FEI) recently had as its scheduled speaker, the Chairman of the Financial Accounting Standards Board (FASB), Edmund Jenkins. To have the Chairman of FASB to address this venture capital association does give the group credibility. You can also visit their website at http://www.nvca.com/. Another site that may help you is http://www.redherring.com/vc/. You can also read Red Herring Magazine, November 1999, feature issue on new Venture Capitalists or go to http://www.ventureone.com/ for additional information.
However, I must caution that Venture capitalists are higher risk investors and, in accepting these higher risks, they desire a higher return on their investment. The venture capitalist manages the risk/reward ratio by only investing in businesses which fit their investment criteria and after having completed extensive due diligence.
Venture capitalists have differing operating approaches. These differences may relate to location of the business, the size of the investment, the stage of the company, industry specialization, structure of the investment and involvement of the venture capitalists in the companies activities.
The entrepreneur should not be discouraged if one venture capitalist does not wish to proceed with an investment in the company. The rejection may not be a reflection of the quality of the business, but rather a matter of the business not fitting with the venture capitalist's particular investment criteria.
Venture capital is not suitable for all businesses, as a venture capitalist typically looking for companies with superior products or services targeted at fast growing or untapped market or they are seeking companies with high borrowing capacity, stability of earnings and an ability to generate surplus cash to quickly repay debt.
There is a key and important factor entrepreneurs, especially start-ups to remember about venture capital firms - the name is sometimes misleading. Venture capital implies willingness for someone to take on the profit and loss risks of young companies. Most of these companies have ventured away from funding start-up companies and have offered funding opportunities towards more established businesses. So be careful, instead of having a venture capitalist as a partner, you may attract the attention of "vulture capitalists." However, there are still some quality Venture capital firms willing to take a chance on good market opportunities.
There is book called The Gold Book of Venture Capital Firms. It is a directory of venture capital firms in the United States. Entrepreneurs seeking capital can find contact information, a short description, and a sampling of portfolio companies in the particular area of business entry. It also has four comprehensive indexes to help start-up business entrepreneurs to focus in the right venture capital firm, including key principals, industry sector, stages of financing, and the name of the venture capital firm.
There is also a Venture Capital Resource Library located at www.vFinance.com. The Wall St. Journal, Entrepreneur and Inc. Magazine all recommended this site for anyone in the private funding arena. However this site charge less than $1 each day, and claims to enhance your deal and direct vast audiences of capital-seekers from around the world to your website and also to check each application carefully and accept ONLY accredited, highly professional and recognized firms. If approved, your firm will be entered into our VSearch database search engine which will provide entrepreneurs with immediate access to your firm's investment parameters and its website.
For reading material go to www.inc.com. This site provides service to the small-business market. There are very good articles written on this subject. Go to the site search book and type in "venture capital" to read magazine articles from Inc. Magazine and other sources.
AskRecy
| AskRecy recently received the following emails regarding either registering as a minority owned business or exactly what are the qualifications for a minority owned business: |
AskRecy response:
A Minority-owned Business Enterprise is a business that is at least 5l % owned and controlled by one or more minority persons. A minority is generally defined as an individual who is African American, Hispanic American, Asian American, Native American, a Woman or a Disabled person. Most states also recognize non-profit firms that are organized to promote the interests of the physically or mentally disabled. The Federal Government DBE Program also includes Alaskan Natives, Pacific Islanders, Aleuts, and persons who are not minorities but who are socially and economically disadvantaged in its definition. The socially and economically disadvantaged owners must demonstrate longstanding, chronic and substantial disadvantage since persons in the cited minority groups do not own the business.
There are many specific eligibility criteria for certification; however, four basic rules generally apply; (1). United States Citizenship or US resident alien status, (2) Fifty-one percent ownership by a minority, (3) Proof of effective management of the business such as hiring and firing authority, operating control, and decision-making role, and (4) Control is defined and evidenced by signature role on loans, leases and contracts.
In assessing ownership, investments by the minority owner are important. Control also includes both managerial and operational control with technical knowledge of the firms' major areas of work being an important component for assessing operational control.
Effective fiscal year July 1, 2000 - June 30, 2001, the U. S. Department of Transportation Disadvantaged Business Enterprise program has added a new requirement for qualifying as a DBE; the personal net worth of each minority individual who owns and controls the firm as a part of the 51 % minority ownership must be less than $750,000.00. When an individual's personal net worth exceeds the $750,000.00 threshold, the individual is no longer eligible to participate in the Federal DBE Program
There are advantages toward becoming certified as an MBE. Certification as a MBE provides greater exposure for work opportunities on State projects. The names of all certified MBEs appear in the MBE Directory, a reference manual which is widely disseminated to each city and states procurements administration when registered both with the City, County and State in which you reside. In most instances, this certification allows you to bid as a MBE on other state contracts.
In response to the Forestville question, the State of Maryland administers a MBE certification program. Once certified, you may participate as a MBE subcontractor on any state contract, regardless of the agency. Any business may bid directly on any bid or proposal without regard to certification. However, certification does not guarantee work to a MBE; however, it does enhance a MBE exposure to prime contractors and the business community. To be successful, a firm must market itself, its personnel and its services, as any good business should.
In response to the Buffalo question, the Small Business Development Center (SBDC) - Provides one-to-one counseling to start-up and existing small businesses on a wide range of advisory, training and research services; including the preparation of business plans, marketing programs and financial strategies. Export Assistance Program targets the beginner and the more experienced small business exporter.