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Women- and minority-owned businesses gaining attention
by
Robert Powell
Virginia Business
March
2005
Rarely do Virginia officials speak so harshly about
the performance of the state government. “Pitiful.”
“Embarrassing.” “Abysmal.” Those
are words several have used to describe the state’s
record in doing business with small, women- and minority-owned
companies in Virginia.
A study released early last year revealed that, over
a five-year period ending in June 2002, companies owned
by women and minorities received less than 1 percent
of the state’s procurement dollars. Before the
“disparity study,” some thought these companies
were getting up to 7 percent of the state’s business.
Instead, they found that companies such as the former
accounting giant Arthur Andersen had mistakenly been
counted as minority-owned businesses.
“Whereas the commonwealth thought it was doing
pretty well, we found out we weren’t doing so
well,” says Sandra Bowen, Virginia’s secretary
of administration. She says the system used to track
women- and minority-owned vendors was so imperfect the
state didn’t know “who was who and what
was what.”
In reaction to the study, Gov. Mark R. Warner’s
administration:
• Revamped the state’s certification process
for small, women- and minority-owned businesses. (After
starting over in October, the state had certified about
4,400 companies by late January.)
• Set an “aspirational goal” of doing
40 percent of the state’s procurement business
with companies with 250 or fewer employees, regardless
of the gender or race of the firms’ owners.
• Held agency heads accountable for broadening
the base of state vendors.
Bowen and Michael J. Schewel, Virginia’s secretary
of commerce and trade, stress that the initiative does
not abandon business judgment for the sake of diversity.
“To the contrary,” says a memo from Warner’s
office to agency heads, “these SWAM [small, women-
and minority-owned] rules specifically state that quality,
price and terms should not be sacrificed in any meaningful
way in order to achieve our procurement goals.”
Schewel says that the overall goal of the plan is “to
reflect the changing face of Virginia’s business
and population. We have a business community that is
predominately small business in terms of the number
of businesses. But we also have a business community
that has a lot of strong minority businesses and women-owned
businesses. And if our state procurement isn’t
reflecting that diversity, then we think it’s
not good for the state, because we’re not really
giving opportunities to the range of Virginia businesses.”
The current makeup of this changing business community
is hard to pin down, but authorities believe the number
of minority- and women-owned businesses is growing rapidly.
The Census Bureau conducts an economic survey every
five years. However, the results of the latest survey,
conducted in 2002, won’t be released until late
this year or early next year.
In 1997, the last year numbers are available, Virginia
had 71,705 minority-owned companies, the ninth largest
total among the 50 states. Compared to the 1992 survey,
Virginia’s total was up 54 percent. When broken
down, the data shows that the number of black-owned
businesses rose 28 percent to 33,539, Hispanic-owned
companies jumped 79 percent to 13,703 and the number
of Asian-American firms rose 63 percent to 22,441. By
comparison, the U.S. Commerce Department says that nationally
the number of minority-owned businesses rose 30 percent
during that time.
While minorities represented about 28 percent of the
state’s population, they owned 14.9 percent of
Virginia’s companies in 1997. But minority-owned
firms represented only 10.9 percent of the state’s
firms with paid employees (other than the owner).
A study by the Center for Women’s Business Research
provides a clearer picture of the current state of women-owned
companies in Virginia. The center projects that the
132,219 women-owned firms in 1997 had grown 20 percent
to 159,002 companies by last year. That total represented
31.2 percent of all privately held companies in the
state.
Anecdotal evidence shows that much has changed since
1997. Women- and minority-companies have grown and are
gaining a voice in business affairs:
• Booming Fairfax County is home to seven of the
nation’s 100 largest black businesses and 12 of
the top 500 Hispanic companies.
• The Virginia Hispanic Chamber of Commerce, formed
in 2000, now has 350 members.
• The Richmond-based Asian American Business Assistance
Center, started just last summer, has 150 participating
companies.
• The Virginia Minority Supplier Development Council,
an organization that pairs minority-owned suppliers
with major corporations, is considering creating similar
partnerships between large and small minority firms.
• The National Association of Women Business Owners
now has three chapters of more than 100 members in the
state, two of which started in the past three years.
The Central Virginia chapter in Richmond has grown 5
percent since June.
Erin Fuller, executive director of McLean-based NAWBO,
says the diversity of Virginia’s economy, access
to federal contracts in Washington and the presence
of Northern Virginia’s high-tech community have
contributed greatly to the growth of the state’s
women- and minority-owned companies.
But, she says, limited access to markets and capital
still pose big problems to these companies. Virginia
isn’t alone in overlooking “historically
underutilized groups,” she adds. The federal government
has fallen short in procurement goals for women-owned
businesses set more than 10 years ago.
In Virginia, the state’s total discretionary procurement
budget is about $4.5 billion, making 1 percentage point
worth $4.5 million. The money is spent on construction,
architecture and engineering, goods and supplies (ranging
from pencils to computers), professional services and
other types of services. The Virginia Department of
Transportation spends 40 percent of the total, while
the state’s universities control another 35 to
37 percent.
While the level of state business going to women and
minorities remains low, Tinh duc Phan, chairman of the
Asian American Business Assistance Center, believes
the state is making a good faith effort to do things
differently. “The good old boy network still exists,
but we’ve seen some improvement already,”
he says.
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