2012 MBE Report by ARIZONA HISPANIC CHAMBER OF COMMERCE

Arizona Minority Business Enterprise Report presented by

Arizona Hispanic Chamber of Commerce Phoenix MBDA Business Center November 16, 2012

Research conducted by:

WestGroup Research

WELCOME

welcome to az mbe REPORT Here’s an astounding figure: 91.7 percent of the nation’s population growth between 2000 and 2010 was attributed to racial and ethnic minorities, with the largest segment of population growth occurring in the Latino community, according to the U.S. Census. Locally, Maricopa County added about 28,000 Hispanics last year, a figure almost equivalent to the size of Marana, Arizona. What does that mean for our state and national economy? It is not difficult to understand that the ramifications in the short and long term are mammoth and manifold. As our country’s minority population moves toward majority status, not only do minorities become an increasingly vital segment of the nation’s total workforce and consumer base, but its entrepreneurial class as well. The pursuit of the American Dream is common to us all, no matter our ethnic or racial background, but starting and operating a business requires a unique set of skills, including talent, imagination, perseverance, resources and, yes, even a bit of luck. The results of the study you are about to read speak to the nature and characteristics of entrepreneurship in minority communities. More specifically, you’ll get to hear directly from the people in the trenches who have spent most of the past five years struggling to survive the greatest economic downturn since the Great Depression. Their voice is strong and full of optimism. Knowing how the 600-plus companies interviewed weathered the recession and the residual impact on the economy can serve as a critical and practical guide to small businesses facing similar challenges anywhere. It can also facilitate the essential business-to-business relationships our economy needs to further fuel our economic recovery and growth. In most ways, minority business enterprises have the same challenges as those that are non-minority owned, but MBEs also confront unique obstacles that, as many in the study put it, require them to “work twice as hard” to earn the respect of their customers. Because we recognize the challenges faced by minority-owned firms, the 2012 Minority Business Enterprise Study was commissioned by the Phoenix MBDA Business Center and the Arizona Hispanic Chamber of Commerce. The presenting sponsor for the study and a coinciding Minority Business Enterprise Summit on Nov. 16, 2012 is Arizona Public Service (APS). Special thanks to APS Chairman and CEO Don Brandt, whose vision has made APS a leader in minority supplier diversity. Also worth noting: this groundbreaking study was prepared by Westgroup Research, among the most prestigious research firms in the region. (Westgroup also happens to be a Minority Business Enterprise.) The company conducted a similar report in 2007, which allows for a unique analysis of pre- and post-recession sentiment among minority business owners. As we consider the results of this report and the expanding role of Minority Business Enterprises, we believe the study serves as a reminder to Arizona’s leaders in private industry and government that can help them understand that the economic sustainability of our state depends more and more on the entrepreneurial vitality of its minority communities.

Gonzalo A.

de la

Melena, Jr.

President & CEO Arizona Hispanic Chamber of Commerce

“Know Your Customer” Customers, Clients, Constituents, Stakeholders... whatever you call them, knowing who they are and what they want is critical to your success.

At WestGroup, we’ve been helping companies connect with customers for over fifty years, regardless of who they are, where they live, or the language they prefer.

We hope this MBe report provides the insights you need to help Make a difference With

Minority-oWned Businesses.

Give us a call or visit our website for more information on how we can help you stay in touch.

602.707.0050 | westgroupresearch.com | answers@westgroupresearch.com

AcknowleDgements

Acknowledgements Collaborating OrganizationS Arizona Hispanic Chamber of Commerce Arizona Public Service Phoenix MBDA Business Center WestGroup Research

ENDORSING ORGANIZATIONS

Partnership. Diversity. Opportunity. For more than 100 years, SRP has kept diversity at the forefront in all aspects of our business. When our business partners reflect our diverse community, everyone benefits. To learn more about becoming an SRP partner, visit srpnet.com/procurement.

AcknowleDgements

ACKNOWLEDGEMENTS

RESEARCH TEAM

Gonzalo A. de la Melena, Jr. Arizona Hispanic Chamber of Commerce (AZHCC)

James E. Garcia Arizona Hispanic Chamber of Commerce (AZHCC)

Dr. Loui Olivas Arizona State University

Glenn Iwata WestGroup Research

Katy Gallert WestGroup Research

PRODUCTION TEAM Carmen G. MartĂnez, Graphic Design Director Terri Morgan, Production Manager James E. Garcia, Editor Monica Villalobos, Co-Editor BC Graphics, Printer

SPECIAL THANKS Michael Woodard, Arizona Public Service Company Miguel Bravo,

Arizona Public Service Company

Alika Kumar, Phoenix MBDA Business Center Lorena Valencia, Reliance Wire Aldo Contreras, Telemundo

PetSmartÂŽ Proudly Supports the

Arizona Hispanic Chamber of Commerce As a Phoenix-based company for 25 years, PetSmart is thrilled to support the Arizona Hispanic Chamber of Commerce. We are proud of our city and are committed to organizations like the Arizona Hispanic Chamber of Commerce that celebrate the diversity of our community and promote small business.

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10/31/12 2:00 PM

table of contents

TABLE OF CONTENTS WELCOME

Acknowledgements

Study Highlights

Conclusions

Study Background

Detailed Findings section i. cHALLENGES: What types of challenges have minority business enterprises (MBEs) faced?

section ii. STRATEGIES AND SUCCESSES: What steps have these businesses taken to succeed?

section iii. Resources and Role Models: Which resources have MBEs relied upon to run their business? 33 section iv. Business Characteristics: What are the characteristics of MBEs?

section v. Owner Characteristics: Who owns these minority business enterprises?

section vi. The Future: What do these owners think about the future of their business?

Analysis by Target Groups: Acculturation: How does acculturation have an impact on opinions?

Minority Groups: How do minority groups differ?

Company Size: How different are MBEs by size of company?

Study History and Methodology

End Notes

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STUDY HIGHLIGHTS

STUDY HIGHLIGHTS The purpose of the 2012 Minority Business Enterprise (MBE) Study is to provide insights into the challenges, strategies, needs and resources of Arizona minority businesses enterprises. The Phoenix MBDA Business Center and Arizona Hispanic Chamber of Commerce designed the study to be a resource for businesses, organizations, educators, government agencies and individuals who want to help Arizona MBEs succeed. A total of 605 telephone interviews were conducted with Arizona MBEs during August – October 2012. The businesses represent a range of industries, company sizes and locations throughout the state.

Challenges • Surviving the downturn – Like most businesses, Arizona MBEs have spent the past five years focusing on surviving the impacts of the economic downturn. The residual effects of the recession were mentioned throughout their survey responses. For example, the single biggest challenge MBEs said they face is building or rebuilding their customer base. Their biggest accomplishment has been surviving the economic downturn. Their annual revenues have leveled off over the past five years. Their personal income has dropped.

• Earning respect – The biggest challenge related to being an MBE is being taken seriously by customers, suppliers, peers and lenders. MBEs face a range of stigmas, misconceptions, and basic discrimination that they still have to overcome. For example, 40% considered overcoming negative perceptions of being an MBE as a challenge that they have had to address.

Strategies • Back to the basics – To address the economic

exposure. While these MBEs solutions use the same strategies taken by most businesses, the increased challenge is competing against other non-MBEs in a shrinking marketplace, while also trying to overcome the negative minority perceptions. Several MBEs commented that they needed to “work twice as hard” to earn the trust of their customers because they were a minority.

• Increasing company exposure – In terms of specific strategies MBEs have taken to overcome their challenges, the owners/managers were more likely to have mentioned increasing advertising and networking efforts compared to 2007.

• Leveraging minority status – MBEs have significantly increased promoting their minority status and networking with other minorities over the past five years. Even though some firms had to overcome negative perceptions of being MBEs, 46% promoted the fact that they were minority-owned in 2012, which increased significantly from the 29% mark when asked the same question in 2007. MBEs appear to be leveraging their minority status more than in prior years. •

Larger companies (20+ employees) were more

downturn, MBEs top strategies are to work harder, cut

likely to promote their minority status than smaller

back their expenses, and increase their companies’

firms (1 – 4 employees).

STUDY HIGHLIGHTS

Resources/Role Models • Seeking help – Half of MBEs have sought help from government, trade, and/or minority-related organizations to help their business. The type of information they seek is: •

Sales/marketing (37% mentioned) – Where to find

of the MBEs in Arizona have less than 10 employees. The median revenue in 2011 (the year prior to the survey) was $215,000 with a median staff size of four employees. Almost half were home-based businesses. (Note: These figures are relatively comparable to all Arizona businesses in general). •

these Arizona MBEs was reflected in $14.1

bid opportunities, how to market/promote, how to

billion in receipts last reported in the 2007 Survey

grow the customer base. •

of Business Owners. Even though MBEs are

Capital/loans (18%) – How to gain access to

primarily small businesses, their overall numbers

capital and loans for the business. •

carry a significant fiscal impact on the state.

Business training (8%) – Address questions about running the business such as accounting, legal, tax and human resources. Also mentioned was wanting a mentor to help answer questions.

On the other hand, the cumulative impact of all of

• Using the Internet – Two out of three MBEs advertised in 2011; 69% of those who did advertise used the Internet to market their business.

• Self-funding – Most MBEs bypass traditional lending institutions and finance their businesses using their own money or reinvesting funds generated by the company. In addition, almost one-quarter did not feel they were treated with respect when applying for a loan.

• Politicians are the top business resource – The election year rhetoric probably had some effect when asked who the MBEs would want to talk with to help their business. Politicians were the top category and President Obama was the top individual mentioned in 2012. One note, less than 1% mentioned the up-and-coming Barack Obama in the 2007 study.

Owner Characteristics • It pays to own – MBE owners had 50% higher annual income than the typical Arizona household in 2011 (year prior to the survey). In addition, owners were twice as likely to have a college degree.

THE FUTURE • Strong optimism – MBEs remain optimistic about the future. •

63% feel their financial situation will improve in the next 12 months.

BUSINESS Characteristics

•

• Small businesses, big impact – The profile

•

60% plan to expand their business in the next few years. 65% plan on adding employees in the next two

of the typical MBE reflects the firmagraphics of small

years (median number they plan to add is five

businesses in general, especially considering that 78%

employees).

CONCLUSIONS

CONCLUSIONS 1. Survival first – MBEs are experiencing many of the issues common to all businesses. The number one priority is to survive during this post-recession recovery, and

E. MBE positioning – Some companies only use their MBE status to find new business. Others consider this status part of their company’s values, strategies, and “corporate DNA.” In both

the strategies for survival have changed over time. After the

cases, more MBEs are relying on their minority

recession hit full force in late 2007, most businesses spent

status to promote, network, and target their busi-

the following few years cutting back their operations, laying

nesses. Larger size companies (20+ employees)

off employees, and shrinking the overall size of their compa-

seem to be most likely to take advantage of their

ny in order to reflect the decreased demand for products and services. As the economy is slowly recovering, businesses are now in the redefining mode. If they survived the first five years of the slowdown, the next phase involves rebuilding their business. Organizations wanting to help MBEs need to

status. Minority-related support organizations have the opportunity to provide leadership to help these businesses.

F. MBE perceptions – A significant portion of MBEs have had problems earning the trust of

first focus on addressing their basic business needs – how to

their customers, suppliers, peers, and lenders.

rebuild these businesses during the slow recovery.

MBEs with first generation owners were most likely

2. Focus points –

to mention having problems in this area. MBEs The 2012 MBE Survey

surfaced a wide range of focus points that represent a clear agenda for those wanting to help rebuild these companies.

A. Marketing/Sales – MBEs need help finding new customers and rebuilding their

need support from within the business community to help break down some of these misconceptions and stigma.

G. Outside organizations – MBEs seek advice from outside organizations on topics such as advice on marketing, accessing capital

customer bases as a critical first step in the

and running their business. Some firms (e.g.,

economic recovery.

smaller size companies) are so busy with the dayto-day operations that they do not have time to ask

B. Capital – Even though most MBEs self-fund,

for help. Outside organizations, such as the SBA,

they are still looking for access to capital, espe-

ASBA, or minority-based chambers of commerce,

cially if they plan to expand in the coming years.

might consider taking a more aggressive strategy

C. Internet/Social Media/Websites – MBEs are relying more on electronic media as part of their sales and advertising strategies and could use help with these new tools.

D. Growth planning – Most MBEs have plans to expand in the next few years and need help determining how to grow their operations and staff during this slow recovery.

to reach out and help these companies.

H. Promotion/Success stories – The survey identified numerous MBE stories involving individuals starting their businesses with nothing more than dreams and credit cards and building them into successful enterprises. Highlighting these stories could provide a great source of motivation to future entrepreneurs, business startups, minority groups and the business community in general.

business Profile

Brown and White, Inc. Owner: Pete Granillo Who is Brown and White, Inc.? Pete Granillo started his business in 1981 as a fence and guard rail company. The construction company he was working with at the time decided to shut down their Tucson operation and asked Pete to finish their existing contracts. Peteâ&#x20AC;&#x2122;s experience as an assistant manager in the construction industry gave him enough of a background to step out on his own in 1981 and incorporated Brown and White in 1983. Over the past 30 plus years, the company has grown from a small fence and guard rail company to a full-service, general contractor that has worked in Arizona, Texas, and New Mexico.

Photo by Joe Ramirez, Area520

Brown and White, Inc. PETE GRANILLO 501 E. 30th Street, Tucson, AZ 85713 [520] 624.9860 brownandwhiteinc.com pete@brownandwhiteinc.com 30 years in business

business profile

BROWN AND WHITE, INC. • PETE GRANILLO

What have been your biggest challenges as a minorityowned business?

employees grow over the past 30 years.

The economic downturn hit the company hard. As the size and

houses, and weather difficult times. These are also the same

number of available construction contracts began to shrink, we had to cut back in order to survive. The biggest challenge we faced was always having to “feed the monster” (i.e. the expenses

We have a num-

ber of long-term employees with tenures ranging from 15 – 30 years. The company has helped employees go to school, buy employees whose commitment to organization has helped the company succeed over the years.

related to maintaining a large organization) and took a number of steps to downsize the company, cut expenses, and be more selective in the contracts we pursued. These changes made a positive impact over the past five years and helped us return back to the previous growth mode. Another significant challenge we have faced is the negative

What lessons have you learned since starting this company? A few key lessons I have learned over the past 30 years running Brown and White include:

perceptions of being a minority-owned business. I have had to battle the perceptions that the only reason we won a particular

Starting a new business: Learn as much as you can in the

contract was because we are a minority-owned business.

business you’ve chosen to begin. Work in the industry and

I have to prove to customers that Brown and White is a well-run company that does good work and also happens to be

learn the methods. After a few years, step out and create your own methods.

a minority-owned business. Bidding requirements on government contracts have opened doors, but we still have to work twice as

Capital sources: If you are just getting started, try to fund

hard to prove that we earned the business. Customers would not

the business as much as you can by yourself. It is very dif-

come back to Brown and White if we only relied on our MBE

ficult to find banks and bonding companies who are willing

status. We are only as good as our last job.

to support startups.

How have you overcome the challenges of being minority-owned business?

Being a minority – There are significant advantages being

I have found that the key to overcoming the negative stigmas has

in one culture and make money in the other. Being a minor-

been to build relationships, especially with those who initially have

ity has been a blessing for me.

a minority business person. I speak two languages. I can navigate in two different cultures. I have learned to survive

been resistant to working with our company. Over the years, we have reached out to these companies until they finally gave Brown and White an opportunity. Once the door was open, we made sure that our company did quality work and convinced the customer to use Brown and White in the future.

Staying involved/Giving back – Brown and White sponsored the first MWBE workshops in Tucson. I have served on a number of local and national boards representing minority businesses. I take the philosophy that everyone benefits if we all share our experiences and help others find

What have been your biggest successes as a company?

solutions to their business challenges. We can show these

I think that the company’s biggest success has been helping

to be successful.

businesses how to get there. They have to put in the work

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STUDY BACKGROUND

STUDY BACKGROUND Most of the attention regarding U.S. population growth between 2000 and 2010 centered on the disproportionate increase in minorities. The Pew Hispanic Center reported that… …racial and ethnic minorities accounted for 91.7% of the nation’s population growth over the past 10 years.1 Shortly after the 2010 Census, some demographers estimated that non-Hispanic whites would become a minority as early as 2040.2 It should be noted that the slow economic recovery has also coincided with leveling of minority growth rates and has since pushed back the 2040 date estimate. Despite this slowdown, this long-term minority growth has created an unavoidable red flag to those looking to grow their business in the future. The new majority consumer base is emerging. The Arizona Minority Business Enterprise Study is

which represents the total number of firms with

an important next step to understanding this minority majority

or without paid employees. (A total of 12,292

dynamic. The natural outgrowth with minorities living in the

minority-owned businesses had paid employees.)

U.S. has been to start their own businesses and contribute to the overall economy. Fueled by strong population growth,

•

Receipts from all minority-owned Arizona firms totaled $14.1 billion.

minority-owned business owners have created a subsequent “second growth wave” by filling the marketplace with companies in virtually every industry.

•

Minority-owned firms represented 17% of all Arizona businesses.4

In the most recent figures released by the U.S. Census Bureau, the number of minority-owned businesses increased

The Arizona Minority Business Enterprise Study is designed

by 46% in Arizona (as well as nationwide) between 2002

to reach behind these numbers and gain a better understand-

and 2007. This increase was more than double the 18%

ing of these entrepreneurs. What challenges have they faced

national growth rate of all businesses during the same time

being a minority-owned business? How have they overcome

period.

The U.S. Census has conducted national studies

these challenges? What types of businesses do they run?

of American businesses every five years and is currently in

Who are these owners? What plans do they have for the

preparation for the next study.

future?

The 2007 Survey of Business Owners highlighted the size

While the next U.S. Census Survey of Business Owners is still

and impact of Arizona minority business enterprises at that

being planned, this study helps bridge the information gap

time.

during the post-recession recovery and provides a platform

to identify ways to help minority businesses enterprises suc•

Arizona had 85,227 minority-owned businesses,

ceed in Arizona.

& I N

P A R T N E R S H I P

W I T H

P R E S E N T

AZ Million DollAr CirCle of exCellenCe Leading

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Way

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2012 inDuCtees AmericAn express ArizonA public service (Aps) ArizonA stAte university (Asu) At & t bAnk of AmericA

centurylink city of phoenix AviAtion cox communicAtions hensel phelps construction co. pepsico

sAlt river project (srp) southwest GAs sundt construction university of phoenix wAlmArt

CHALLENGES

DETAILED FINDINGS section I • challenges What types of challenges have minority business enterprises (MBEs) faced? The overriding challenge facing Arizona MBEs (and most businesses in general) over the past few years has been surviving the economic downturn. According to the National Bureau of Economic Research, the recession officially began in December 2007 and ended in June 20095, but Arizona MBEs continue to experience the long-term impact of the downturn in the form of lower revenues, limited access to capital, and struggles to stay solvent. Even when asked to focus on the challenges specific to being an MBE, business owners/managers’ responses were influenced by the economic downturn: Running the business – The top challenges MBEs face tended to be business-related issues, such as finding more customers, gaining access to capital, and competing with other businesses. Almost one-quarter (22%) said they face the same challenges as any other company. MBEs, like most businesses during the downturn, have been just trying to stay afloat until the economy recovers.

Earning respect – Some MBEs experienced challenges that were directly related to being minority-owned. A common theme these companies mentioned related to earning the respect of customers, suppliers, peers and lenders: •

A total of 40% have had to overcome negative perceptions of being an MBE (percent who rated this as a significant or somewhat of a challenge).

•

One-third (34%) felt that cultural differences have had an impact on business practices (percent who rated this as a significant or somewhat of a challenge).

•

One-quarter (26%) agreed with the statement, I think some of my business contacts… treat me differently because I am a minority-owned business (percent who rated the statement as strongly agree or agree).

Those mentioning specific minority-related challenges included: •

Earning respect/being taken seriously (10% of all comments to an open-ended question)

•

Experiencing discrimination from suppliers and customers (6% of all comments)

One surprising note is that only three companies out of the 605 surveyed mentioned SB1070 as being a challenge to them. It should be noted that MBEs were not directly asked a question about SB1070. The three responses came from the open ended question asking about the challenges they face.

Greater business challenges, same minority issues – More MBEs mentioned business challenges (economy, finding more customers, and accessing capital) in 2012 than in 2007. On the other hand, comments specific to being an MBE did not change significantly during this time period, such as earning respect/being taken seriously (11% in 2007 and 10% in 2012).

I’ve been here 41 years and it’s funny because someone comes in and they are looking for a white person to talk to and they look you over like, “You’re the owner?” —Owner of an automotive repair company

NOTE:

All direct comparisons with 2007 survey data were

obtained from the 2007 SRP Arizona Business Study – Focus on Minority-Owned Businesses.6

CHALLENGES

section I • challenges

Challenges Facing MBEs All this year it’s about the economic problems of the nation. Everybody suffers from this problem. Nobody wants to buy… most of the businesses have closed because they are not making any profit. I work just to pay the rent. I can’t make enough money to survive. The banks make a profit for themselves and they don’t want to help other people. —Small business owner

Being certified as a minority owned business was an uphill battle. They asked to see bank statements and were not satisfied with the one that I showed them. They were very nitpicky on the amount of paperwork needed for certification and I almost said, “Forget it.” —Engineering company

(We have seen) … work that should of went to the minority business that went to a bigger business that put the bid out to the business and we were not given the time to bid it. They offered the work but had no intention of using the minority business. —Construction company

Since the change in the law (SB1070), many of our clientele who happen to be Hispanic leave or don’t come in…I don’t know the exact law change, but I know there is pressure on Hispanic people. —Body art company

I had no business knowledge when I started the business. In recent years, (SB1070) has created problems because many people assume that I’m here illegally. —Building repair company

CHALLENGES

section I â&#x20AC;˘ challenges

CHALLENGES

section I â&#x20AC;˘ challenges

STRATEGIES AND SUCCESSES

SECTION II • Strategies and Successes What steps have these businesses taken to succeed? Low financial cost/higher personal cost –

•

(44% agreed in 2007 to 57% in 2012)

The most often mentioned solution to the challenges MBEs face involved greater personal commitment to the business. The owners/managers mentioned working harder (27%) and were more persistent and did not give up (12%). This response was consistent with earlier comments about needing to “earn the trust” of their

In addition, two new questions in the 2012 study highlighted this leverage approach: •

right to stay in business. •

I use my minority-owned business status to pursue business opportunities (48% agreed in 2012)

customers, suppliers and peers. They wanted to convince customers that they will still be around tomorrow and have earned their

I try to network with other minority-owned businesses

•

I specifically try to target my business towards minority groups (36% agreed in 2012)

When asked what advice they would give a minority business person who was just starting, business owners/managers gave similar responses as above. The top two answers given were don’t give up/be persistent (22%) and work hard/work twice as hard (16%).

Doing business within my culture – While most could not recall specific advantages being an MBE (52%), some found it easier to conduct business with others in the same minority group (7%) and that the MBE certification provided opportunities to pursue specific contracts (7%).

Increase company exposure – In terms of specific strategies MBEs have taken to overcome their challenges, the owners/managers were more likely to have mentioned increasing advertising and networking efforts compared to 2007.

Survival equals success – Almost half of MBEs felt that their biggest success story was continuing to stay in business over the long term (46%). Others pointed to building a large, growing, successful business as their top accomplishment (28%).

More companies leveraging minority status – Another strategy MBEs appeared to take was to leverage their position as minority business enterprises. Businesses significantly increased their promotion and networking compared to 2007. •

I try to promote the fact that my company is a minorityowned business (29% agreed in 2007 to 46% in 2012)

Other measures of success mentioned by businesses included:

•

Having a good customer base (12%)

•

Employing great employees (11%)

•

Building the company from scratch (11%)

•

Receiving recognition and awards (11%)

STRATEGIES AND SUCCESSES

section II • STRATEGIES AND SUCCESSES

How Businesses Overcame Challenges? I primarily spend a lot of time giving free advice to people that contact me to establish my knowledge and experience in the field that I work in —Internet marketing company

We have had to reduce operating costs; some employees went back to school with the optimistic view that when the economy turns around you will have good people working for you. We also reduced our facility usage by relocating employees to their homes. —Engineering company

Just keep getting my name out, go to a lot of meetings. I belong to the Chamber of Commerce and I am a member of the Native American Business Association. I try to educate myself more on outreach and talking to procurement officers. —Construction company

I’m contacting some of my listing clients and I’m taking smaller jobs that I normally wouldn’t because they are very time consuming and don’t pay much. I look at them all now. — Interior design firm

The Hispanic Chamber of Commerce put me in touch with Local First. They help you get in touch with minorities nationwide who are small business owners. —Information technology company

Market and network ourselves. Train other people that work with me. Take current clients with us when we talk to prospective clients. —Bookkeeping/Healthcare company

STRATEGIES AND SUCCESSES

section II • STRATEGIES AND SUCCESSES

Accomplishments/Success Stories I have successfully been able to keep my doors open without any financial assistance for more than nine years with two shops. I have a very low rate of turnover in terms of my contractors. I still have a passion for what I am doing. —Hair salon

Being born in another country and being able to be accepted, being in business for the last 15 years by myself and surviving in this economy. Being able to participate in the American dream…if you push hard you can succeed. —Jewelry store

I survived the great recession, I have created an extremely diverse customer-base which is what keeps me safe through the recession, and I’m highly regarded in my field on a national and international level. —Glass art studio

Being able to do a startup minority business with no financial backing in a high-tech industry in hard times and not only surviving, but growing. — High tech company

Being able to develop the business from a few thousand dollars to over a million dollar asset business on our own. Being able to provide affordable housing to lower moderate income families. To be able to assist and provide our customers with services that enhance their life style. —Property management company

That my daughters graduated from college and my business allowed that to happen, and the second goal is that I am and have been here for the last 32 years. The third would be that I am accepted by my non-minority peers. —Civil construction company

STRATEGIES AND SUCCESSES

section II • STRATEGIES AND SUCCESSES

Benefits of being Minority-Owned

Easy to get the foot in the door with government contracts. We’re a subcontractor for subcontractors for the military. —Metal fabrication company

At my age, younger Hispanics look at us to see that it can be done; more like a mentor; a resource for other minorities that are looking to start a business. —Services company

Being a minority is the reason that my business is still surviving in this hard economy. —Paving company

We work very hard at it because being a minority we have to go the extra mile; nothing is given to us. We have to prove even more. —General contractor

Being bilingual and the consideration that the Spanish-speaking have the ability to talk to us, and the ability to work with non-profit organizations. Overall for a minority-owned company it’s a little more difficult but we have stayed out of the red. —Sales and service company

STRATEGIES AND SUCCESSES

section II • STRATEGIES AND SUCCESSES

Advice to Minority Start Ups Be polite as you can be and as nice as can be, even if they don’t deserve it. —Building contractor

The best thing is just planning…you need to have a plan when opening a business. If you don’t know how to do a business plan, there are places that will help you. —Advertising/Marketing company

Don’t be discouraged, just keep doing it and keep getting your name out there. Let people know that you are available. Don’t give up. You BUILD your business, you’re not given it. —Medical service provider

To have enough saved to not make a profit for two years. Advertise. Advertise. Advertise. Go to every committee and function you can. —Fine art gallery

Take full advantage of the programs that are available for minority-owned or small businesses. Establish or get credit. Make sure that the bills are paid. Have a good infrastructure such as an attorney and an accountant and a great business plan. —Electrical distribution company

Just because you’re Hispanic doesn’t mean anybody’s going to give you any business, and you’ve got to be as good or better than the other non-minority owned businesses, and keep it simple. —Consulting firm

Network, network, network… just keep going out there and meeting people. Meet people that will actually help you attain business. Do teaming agreements with larger companies. Use their experience as a mentor. —Construction

Be persistent. It takes time to actually become profitable. Don’t let the failure get you down. Recognize the value of your identity. —Newspaper

STRATEGIES AND SUCCESSES

section II • STRATEGIES AND SUCCESSES

STRATEGIES AND SUCCESSES

section II • STRATEGIES AND SUCCESSES

STRATEGIES AND SUCCESSES

section II • STRATEGIES AND SUCCESSES

business profile

Axis Employment Owner: Tran Tran Who is Axis Employment? Axis Employment is a full-service staffing firm placing temporaries, temp to hires, and direct hires in all areas of business including Administrative, Accounting, Clerical and Customer Service. Some of the companyâ&#x20AC;&#x2122;s clients include Liberty Mutual Insurance, First American Title, and Tri-West Healthcare Alliance (which manages healthcare for the military) as well as a range of mid-size manufacturing companies and small businesses.

What is the history of the company? After graduating from college with a Communication Degree, and finding myself not liking the field of broadcasting after a few internships- I was really unsure of the next step and what to do. My friend at the time, who is now my husband, introduced me to one of his patients who was a VP for a major staffing firm. I went to work for her as a sales/recruiting consultant and fell in love with the industry.

About a year later, I was recruited away

from that organization and became the Chief Operating Officer of a boutique staffing agency in Scottsdale that specialized in executive hires. After the September 11th tragedy, the staffing industry came to a halt as companies were hesitant to hire during times of national uncertainty. The company I was working for closed its door shortly afterwards. With so many ideas and goals that were never allowed in the corporate world, I knew it was time to do my own thing! In 2002, I decided to start Axis Employment Services with $30K borrowed from my credit cards. Most of my clients followed me to Axis Employment and I am proud to say that they are all still with me today! Photo by Andrea Contreras, Contreras Design

Photo by Andrea Contreras Design

Axis Employment Services, LLC Tran Tran

4710 N. 16 Street Suite 201, Phoenix AZ 85016 [602] 242.2626 axisemployment.com tran@axisemployment.com 11 years in business th

How did the economic downturn affect Axis Employment? I consider myself very fortunate that Axis Employment not only survived the economic downturn, but was able to prosper during this difficult time. We have experienced continuous growth and increased revenue year after year at a time when the industry struggled overall.

business profile

AXIS EMPLOYMENT • TRAN TRAN

To what do you contribute the success of the company?

What have been your biggest challenges as a minority-owned business?

I have held the same vision and philosophy for the past 11 years,

I do not feel that being a minority-owned business has created

Good Business Revolves Around Good People. I believe that

specific challenges. In fact, the MBE status has worked in our

the employees are the heart and core of a successful organiza-

favor. Traditionally, we have not promoted our business as a MBE,

tion. Traditionally, staffing companies are solely focused on the

but we do see the potential. As we look for opportunities, I think

client (i.e. the company looking to hire employees), but I wanted

our company’s MBE status will help open doors. We will have the

to position my company differently. Our focus is to find quality

opportunity to bid on certain projects that other companies without

candidates and make the fit for them based on their goals and strengths. We also value a balance of professional and

the MBE status would not have.

personal success for our candidates because a happy employee is a

We also find that our MBE status helps many of our clients to fulfill

productive and loyal employee! When we make a placement, it

their diversity goals and that brings an added value to partnering

is the right match for both candidate and client and the marriage

with us.

lasts! I think that is the foundation of any successful business and that has not changed for us at all; we continue to set our sights on that focus and on that goal. The vision of “focusing on the candidate” not only keeps our clients coming back, but has also generated new business. Many of our candidates have moved to higher level positions or to other departments and have become clients. 90% of our business is referrals from happy clients!

What advice would you give to someone starting up a business? Stay true to your vision— Set out a really clear focus and stay true to that. Avoid solely focusing on the bottom line. As businesses grow, they tend to lose sight of where they were and what they had initially set out to do. I think if you stay true to your vision, you will not help but be a success.

How has being a minority affected your outlook when running your business?

Have passion for what you do— Find what you love to do and

I was a refugee from Vietnam and came to the United States when

passion we have for making our clients and candidates happy is

I was eight years old with my parents and five siblings. Except for

what helps drive the company’s continued growth.

my father, no one in my family spoke English when we moved into a two-bedroom home in Phoenix, AZ. Although some might have seen our start as challenging, we always felt fortunate for the opportunities we had in America. My siblings and I have all graduated from college (and three completed medical school)

just plug away at it and don’t let anybody tell you no. I think the

Continue to persevere— In our office we have a “boulder” displayed with an inscription, “Daily We Must Toil.” The myth behind the boulder is the story of Sisyphus who was condemned to a life of labor by rolling the stone up a hill only to have it come

on scholarships and then achieved professional success. I have

rolling down at the end of the day. I think that is an important

learned through hard work and perseverance that, in this country,

reminder of the determination and focus that is needed each day

you have the opportunity to climb high.

when running a business.

resources and role models

section III • Resources and Role Models Which resources have MBEs relied upon to run their businesses? Not afraid to ask for help - Half of MBEs (52%) have sought assistance from government, trade and/or minorityrelated organizations to help their business.

Those mentioned

most often included:

• •

Community banks (5%) Line of credit from lending institution (not specific) (2%)

•

SBA loans (1%)

•

Small Business Association (SBA) – 21%

•

Bank, in general (1%)

•

Local Chamber of Commerce – 19%

•

City/State grant (1%)

•

Trade organizations – 16%

•

Specific minority-related organizations (e.g. Arizona Hispanic Chamber of Commerce) – 16%

Those who contacted the Minority Business Development Agency increased significantly from 4% in 2007 to 13% in 2012.

If you could have anyone visit.... – “If you could have any two (or three) people in this world visit your business, and their intentions were to specifically help your business, who would you want these people to be?” Among the top individuals mentioned were: •

President Barack Obama (15%)

•

Warren Buffett (6%)

•

Donald Trump (5%)

to grow the customer base (37%). Other top information requests

•

Oprah Winfrey (4%)

were how to gain access to capital/loans (18%), and wanting a

•

Bill Gates (4%)

How to find customers –

If customers did seek

assistance from outside organizations, the information they most often requested related to finding new customers – where to find bid opportunities, how to market/promote the business, and how

business mentor/needing more business training (8%).

In 2007, the top two names mentioned were Bill Gates (7%) and Donald Trump (7%). President Bush and Governor Napolitano

Need help applying for loans – For businesses

were also mentioned (4% each in 2007). Less than 1% mentioned

who applied for a loan, one-fifth did not feel they were treated

the up and coming politician Barack Obama in 2007.

with respect at the bank or financial institution (21% disagreed with the statement that they were “treated with respect”).

Among “categories” of potential advisors, politicians were mentioned most often (but not surprising during the 2012 election year):

MBEs self-fund – Most MBEs financed their business using their own money (24%) or from funds generated by the company (19% from sales/revenues/profit, 6% borrowing from accounts receivables). More “traditional” capital sources mentioned were: •

Commercial banks (11%)

•

Politicians (21%)

•

Business leaders (15%)

•

Business advisors for their specific industry (11%)

•

Financial resources/lenders/investors/bankers (11%)

resources and role models

SECTION III • RESOURCES AND ROLE MODELS

If you could have anyone in the world visit your business… 1. The President of the United States to prove and show how small business programs work. 2. The Vice President of the United States to continue to push small business programs 3. The Director of the Minority Business Association for increase in percentage set aside, projects for small businesses. —Utilities company

Oprah, I think she would be very influential. —Healthcare company

1. Steve Jobs- Apple CEO for his marketing expertise and customer focus (posthumously). 2. Warren Buffett- for financial perspective 3. Jamie Dimon- CEO of Chase - for finance perspective. —Construction company

1. Bill Gates- because he’s the richest person in the world and has a good foundation. 2. Hart Moreno- local Latino can relate to what you do. 3. The Pope- to give us his blessing. —Charitable organization

1. My grandmother, because she was the strongest little person you have ever known in her life. 2. Joe Montana- has a good sense of judgment, won five Super Bowls, and he is a team player. 3. My husband - the love of my life, investor and we work well together. —Real Estate Agency

Warren Buffett because he overcame a lot and rose from nothing. Donald Trump just to know how in the heck he got success. Martha Stewart because she is really successful, hardworking and she came out on top. —Accounting firm

resources and role models

SECTION III • RESOURCES AND ROLE MODELS

resources and role models

SECTION III • RESOURCES AND ROLE MODELS

resources and role models

SECTION III • RESOURCES AND ROLE MODELS

resources and role models

SECTION III • RESOURCES AND ROLE MODELS

BUSINESS CHARACTERISTICS

section Iv • Business Characteristics What are the characteristics of MBEs? A key screening criterion for survey participants was that the businesses had to have at least one full-time employee. In addition, small businesses represented the largest share of number of firms who were surveyed. The profile characteristics tended to reflect smaller size businesses.

of all businesses, in general. As a point of reference, a similar business study was conducted from August – November, 2011 by Salt River Project.7 These respondents were a representative cross section of both minority and non-minority businesses in the Phoenix metropolitan area. Results from the MBE study were rebased to only those in the Phoenix area for comparison purposes. While the two populations are not directly comparable (the MBE study was conducted one year after

Companies surviving the economic downturn - A profile of the typical minority-owned business included: •

the SRP study), the figures highlight similarities and some differences between the two groups. Compared to the Phoenix-area businesses, minority-owned busi-

One-third (33%) were sole proprietorships; one quarter (24%) were S Corporations.

•

Median revenue was $215,000 in 2011.

•

Staff size was 4 employees (median number).

•

Median age of the business was 12 years old.

•

More than half were family-owned (56%).

•

Almost half (44%) were home-based businesses

•

One-third (37%) were women-owned businesses

Slightly more employees; slightly lower revenues – The profile of MBEs generally mirrors a picture

nesses were: • Approximately the same when it came to type of ownership (e.g., 32% sole proprietorships for Phoenix-area minority-owned businesses and 33% among all Phoenix-area businesses) and percent home-based businesses (42% minority-owned, 40% Phoenix-area businesses). • Slightly larger in terms of number of employees (median number of 4 employees among Phoenix-area minority-owned businesses vs. 3 employees among Phoenix-area businesses). • Smaller in terms of annual revenues ($207,200 median annual revenue Phoenix-area minority-owned businesses, vs. $241,400 Phoenix-area businesses).8

Business Characteristics

SECTION IV • Business Characteristics

What are the characteristics of MBEs? Revenues increase slightly over five years - MBEs experienced some changes in firmagraphics over

• Not all of the business went to Mexico - A total of 13% conducted business internationally. Among

the past five years. Compared to 2007, the 2012 businesses

those who did business outside of the U.S.:

experienced: • Slightly higher revenues ($201,000 median revenue during 2006 compared to $215,000 in 2011); this represented a 7% increase over the five year period.

•

41% conducted business in Mexico

•

30% in Europe

•

29% in Canada

•

20% in Asia

• Growing percentage of home-based businesses (38% in 2007, 44% in 2012).

MBEs still budget for marketing/ advertising – Most MBEs spent money on advertising;

• Growing percentage conducting business in the U.S. outside of Arizona (32% in 2007,

however, the amount they spent decreased over the past five years.

38% in 2012).

Business

beyond

Arizona

borders

–

A significant percentage of Arizona MBEs conducted business

Businesses used the Internet as their top advertising media. •

some type of advertising during 2011. The median

beyond the state’s borders.

amount spent was $3,000, which was down from

• Closer to home – Among the 38% who conducted

$5,000 in 2006. A total of 19% marketed in Spanish;

business nationally… •

Most conducted business in the Southwest (82%) in the states surrounding Arizona.

•

Between 15% - 19% conducted business in the Northwest, Northeast, Midwest and Southeast; 17% said they conducted business in all states.

Two out of three businesses (65%) spent money on

no other language received more than four responses. •

Among companies that did advertise: •

69% used the Internet to market their business

•

53% promoted their business through their website

•

11% used online services such as GROUPON

Business Characteristics

SECTION IV â&#x20AC;˘ BUSINESS CHARACTERISTICS

MINORITY BUSINESSES 2007

2012

663

605

Sole Proprietorship

38%

33%

Corporation

23%

19%

S Corporation

17%

24%

Partnership

11%

14%

$201,000

$215,000

BUSINESS DESCRIPTIONS

9 yrs.

12 yrs.

Family Owned

64%

56%

Inherited from Family

n/a

20%

Home-Based

38%

44%

Non for Profit

Retail Consumers

n/a

49%

Business

n/a

55%

Goverment

n/a

42%

Conducts Business Internationally

16%

13%

Conducts Business Nationally

32%

38%

Sample Size OWNERSHIP

LLC MEDIAN REVENUE MEDIAN NUMBER OF EMPLOYEES

CUSTOMER DESCRIPTIONS

GEOGRAPHIC SCOPE

Bolded figures are statistically different.

Business Characteristics

SECTION IV • BUSINESS CHARACTERISTICS

PHOENIX-AREA BUSINESSES TOTAL

MINORITY-OWNED

833

361

Sole Proprietorship

33%

32%

Corporation

17%

19%

S Corporation

18%

26%

20%

15%

$241,400

$207,200

14 yrs.

10 yrs.

Home-Based

40%

42%

Non for Profit

Sample Size OWNERSHIP

Partnership LLC MEDIAN REVENUE MEDIAN NUMBER OF EMPLOYEES MEDIAN AGE OF COMPANY BUSINESS DESCRIPTIONS

Bolded figures are statistically different.

Business Characteristics

SECTION IV • BUSINESS CHARACTERISTICS

Business Characteristics

SECTION IV • BUSINESS CHARACTERISTICS

Business Characteristics

SECTION IV • BUSINESS CHARACTERISTICS

Business Characteristics

SECTION IV • BUSINESS CHARACTERISTICS

Business Characteristics

SECTION IV • BUSINESS CHARACTERISTICS

OWNER CHARACTERISTICS

section v • Owner Characteristics Who owns these minority business enterprises? Educated, higher income, multi-lingual and middle-aged — Characteristics of the owners of MBEs included:

•

degree9 compared to 50% among owners. •

•

Half had college degrees (50%).

•

Middle age – Median age was 52 years old.

•

Two-thirds were born in the U.S. (69%).

•

Half of the owners’ families have been living in the U.S. for three or more generations (51%).

•

Median annual income in 2011 was $72,300.

•

Three out of four (71%) spoke another language besides

2009 Arizona education attained — 25.6% college

2011 Arizona median household income — $46, 70910 compared to the $72,300 among owners.

Another impact from the economic slowdown — In general, the demographics of MBE owners did not change significantly over the past five years. One figure that declined slightly was median income of the owners from $76,800 in 2007 to $72,300 in 2012.

English. * Note: The income for MBE owners is not a direct compari-

Compared to the general population —

son with the overall household figures because the state’s 2011 median income accounts for multiple wage earners in the home

MBE owners were twice as likely to have a college degree and

compared to the MBE owner’s individual income. The difference

had 50% higher annual income compared to the state’s median

of MBEs household income would be even greater than Arizona

household income *.

household income.

OWNER CHARACTERISTICS

SECTION V â&#x20AC;˘ OWNER CHARACTERISTICS

MINORITY BUSINESSES 2007

2012

663

605

49 YRS.

52 YRS.

46%

50%

$76,800

$72,300

Born in U.S.

65%

69%

Second Generation

21%

16%

Third Generation or Higher

43%

51%

Speak Another Language besides English

N/A

71%

Sample Size Demographics Median Age Percentage with college degree or more Education Median Household Income Culture/Language

Bolded figures are statistically different.

THE FUTURE

section vI • The Future What do these owners think about the future of their business? Businesses remain optimistic — Two out of three

Businesses plan to expand — Businesses’

MBEs (63%) felt that their financial situation will improve in the next

optimism was further evident with 60% mentioning that they

12 months. Only 10% anticipated that their situation will become

had plans to expand their business in the next few years. The

worse.

percentage of businesses planning on expanding was also 59%

• Drop from 2007 - Optimism declined from 2007

in 2007.

(72% felt their financial situation would improve when

• More jobs - Two out of three (65%) planned to add

surveyed prior to the recession); however, the 63% rating

jobs in the next two years; the median number of jobs

in 2012 was still relatively high considering what these

they planned to add was five employees. Only 2%

businesses experienced during the prior five years.

planned on cutting jobs in the next two years.

The Future

SECTION VI • THE FUTURE

THE FUTURE

SECTION VI • THE FUTURE

business profile

Just For You Transportation Service Inc. Owner: Willie Gray Who is Just For You Transportation Service? Owner Willie Gray describes Just for You Transportation Service as a company that offers a range of services that focuses on transporting people from â&#x20AC;&#x153;point A to point B.â&#x20AC;? The company offers charter bus, limousine and town car services to businesses, special interest groups and individuals. A few major clients include the Arizona Department of Economic Security in which his company provides services for disability, rehab, and Child Protective Services. Just for You Transportation Services also have a contract with the Aireon agency to transport individuals back and forth to senior day programs and refugee programs.

Photo by James E. Garcia, AZHCC

Just For You Transportation Service Inc. WILLIE GRAY 917 E. Buckeye Rd., Phoenix, AZ 85034 [602] 477.8256 justforyoutransportation.com willie.gray@justforyoutransportation.com 15 years in business

business profile

just for you transportation service inc. • WILLY GRAY

What is the history of the company?

includes government municipalities, private businesses, special

My fascination with vehicles started at a young age while I grew

from contract work, we were able to focus on other segments to

up riding the city buses in Chicago, Illinois. After relocating to Phoenix, I started working as a van driver for the Social Services Department.

interest groups, and individuals.

When revenue was declining

increase revenue.

I really enjoyed driving and after a few years, I

decided I could do this on my own. In 1997, I bought my first van and began transporting seniors to the grocery store and to doctor appointments. To supplement my work, I decided to start bidding on “contract work.” I learned how to write proposals and began bidding on transportation services contracts. Soon after, I landed my first two contracts: one with the Gila River Indian community and the second for VOC Rehab with the State of Arizona. These two clients helped jump start my business and we continue to serve these two clients today.

What are some of the biggest challenges your business has faced? One of my biggest challenges is finding qualified workers.

have found it difficult to find individuals who are motivated, enjoy working with people and care about the client. In this profession, my employees have to deal with some difficult situations

What have been your biggest challenges as a minorityowned business? We have not run into any major challenges associated with being a minority-owned business. The MBE status has opened opportunities for some government contracts, but generally has not adversely affected the company’s operations. I position this firm “just like any other company.” Our company has attracted and retained loyal clients by providing exceptional service, not because it is an MBE.

What have been your biggest successes as a company? Every day is a successful one when my doors are open. I enjoy being able to run my own business and I am proud that the company has endured over 15 years. I really like what I do and I enjoy it, so I get up and come to work every day having fun, doing what I need to do…I don’t look at it as a challenge.

and people, and finding individuals who will act with the utmost respect at all times can be challenging. Like most companies, we have faced some challenges during the economic downturn, particularly with the contract business.

What advice would you give to someone starting up a business?

Every agency that contracted with us cut its budgets by at least

I would advise those starting a new business to save money, you

25 percent during the recession. Agencies were paying less for

need enough money to last for at least a year, and to be vigilant

transportation services and reducing the number of clientele they

about cash flow. I would suggest trying to get your customers to

were transporting, which led to a significant drop in revenue for

pay in a timely manner, which will allow you to have enough cash

the company.

flow to pay your employees and other business expenses. I would also recommend having an in-depth knowledge of your

How were you able to overcome?

customer base. Have a good clear understanding about who your customers are and who you are serving….know how to

I believe one of the primary reasons we survived the economic

provide that service in a timely manner and always be 100%

downturn was because of how diverse we are. Our clientele

professional.

ANALYSIS BY TARGET GROUPS

analysis TARGET GROUP 1 • acculturation How does acculturation have an impact on opinions? In reviewing the survey results, a number of questions surfaced

The following are some differences and similarities that surfaced:

related to a business owners’ level of acculturation, such as, “Do first generation owners use different methods to achieve success?” “Do more acculturated owners position their minority status differently?” Identifying these differences could affect the strategies on how to help these owners.

Obvious differences – Some generational differences could be expected based on the number of generations living in the U.S. Compared to later generations, first generation owners were more likely to:

One indicator of acculturation is the number of generations living in the U.S. For definition purposes:

•

Mention challenges of being taken seriously/trying to earn the respect and having language barriers.

1st generation – Owner born outside the country

•

Have significant challenges overcoming negative

2nd generation – Parents were born outside country/Owner born

perceptions being a minority and overcoming cultural

within the U.S.

barriers.

3rd generation plus – Earlier generations born within the U.S.

•

Speak another language besides English.

1st Generation Born outside U.S. n=176

2nd Generation Parents were born outside U.S. n=99

3rd Generation Earlier generations born outside U.S. n=306

Mentioned challenges being taken seriously/trying to earn respect

16%

Mentioned having language barriers

10%

Rated overcoming negative perceptions being a minority as “significant”

22%

12%

11%

Rated overcoming cultural barriers as significant

20%

Bold numbers are significantly different than underlined categories * Some owners indicated more than one minority group.

ANALYSIS BY TARGET GROUPS

TARGET GROUP 1 • ACCULTURATION More subtle differences – Some generational differences were more subtle. Compared to later generations, first generation owners were: •

More likely to have completed post graduate work.

•

More likely to conduct business in Maricopa County.

•

More likely to be Asian; Hispanics tend to be spread evenly between generations; African Americans were more likely to be at least third generation.

•

Less likely to rely upon outside organizations for help, such as the Small Business Administration.

1st Generation Born outside U.S. n=176

2nd Generation Parents were born outside U.S. n=99

3rd Generation Earlier generations born outside U.S. n=306

Completed post-grad work

29%

17%

16%

Conduct business in Maricopa County

79%

60%

57%

Heritage * – Top responses: Hispanic Asian African American American Indian

50% 46% 3% 2%

86% 8% 4% 4%

58% 4% 19% 19%

Contacted SBA for assistance

13%

25%

23%

Bold numbers are significantly different than underlined categories * Some owners indicated more than one minority group.

Interesting similarities – Overall, most opinions and demographics were similar between first, second and third or later generations. Businesses appear to position their minority status in similar ways for each generation. First generation businesses were just as likely as later generations to: •

Promote their minority status

•

Network with other minority businesses

•

Use their minority status to target business

Another figure that surfaced is that first generation owners are slightly more likely to agree that they do not target business to others within their minority group.

ANALYSIS BY TARGET GROUPS

TARGET GROUP 1 â&#x20AC;˘ ACCULTURATION

Percent Strongly Agree/Agree

1st Generation Born outside U.S. n=176

2nd Generation Parents were born outside U.S. n=99

3rd Generation Earlier generations born outside U.S. n=306

Promote their minority status

46%

41%

47%

Network with other minority businesses

53%

61%

59%

Use minority status to pursue business

45%

51%

Do not target business to minorities

69%

56%

59%

Bold numbers are significantly different than underlined categories * Some owners indicated more than one minority group.

Implications 1. First generation businesses should be pointed to outside government organizations and support organizations for initial assistance. 2. Help first generation businesses to leverage their minority status. 3. Promote the benefits of minority status across generations.

ANALYSIS BY TARGET GROUPS

analysis TARGET GROUP 2 • MINORITY GROUPS How do minority groups differ? The number of businesses responding from specific minorities was large enough to provide some comparisons between four groups – Hispanics, Asians, African Americans and American Indians.

Minority challenges/association •

significant challenges overcoming their negative minority

The most obvious difference is the number of Hispanic companies

perceptions/stereotypes.

compared to other minority groups. The most recent Survey of Business Owners from the U.S. Census identified that Hispanic

•

businesses represent 59% of all Arizona MBEs, followed by Asians (18%), African Americans (11%), and American Indians (10%).11 The final survey results were re-weighted by this distribution. General opinions, business practices, and firmagraphics were similar between these four major minority groups; however, a closer review of responses by minority groups did highlight some differences worth noting.

American Indians were more likely to strongly agree that they promote their MBE status.

•

Asians were more likely to agree that they do not target business towards minority groups.

•

Hispanics generally represented the status quo among minority groups when it came to specific issues and associations as an MBE.

hispanic n=380

asian n=52

african american n=86

african INDIAN n=53

Significant challenge overcoming negative minority perceptions

11%

19%

27%

Promote MBE status – Strongly agree

10%

18%

27%

Do not target minority group – Percent agree*

59%

78%

64%

42%

Sample sizes listed are unweighted. Bold numbers are significantly different than underlined categories * American Indians’ response is also significantly lower than the other three minority groups.

African Americans were more likely to have had

ANALYSIS BY TARGET GROUPS

TARGET GROUP 2 • MINORITY GROUPS

Seeking assistance — Among companies seeking assistance from outside organizations, African Americans were more likely to reach out to the local chamber of commerce and organizations such as the ASBA than other groups. American Indians were most likely to seek assistance from other organizations within their minority group.

Contacted organization

hispanic n=380

asian n=52

african american n=86

african INDIAN n=53

ASBA

16%

Local Chamber of Commerce

19%

16%

33%

13%

Minority Organization *

14%

23%

30%

Sample sizes listed are unweighted. Bold numbers are significantly different than underlined categories * African Americans MBEs are also significantly more likely to seek assistance than Asians MBEs.

Most optimistic about the future — AAfrican American companies were most likely to feel the economy will improve in the next 12 months, especially compared to Asian businesses.

Economy will improve *

hispanic n=380

asian n=52

african american n=86

african INDIAN n=53

63%

46%

76%

68%

Sample sizes listed are unweighted. Bold numbers are significantly different than underlined categories * African American MBEs are also more likely to feel the economy will improve compared to Hispanic MBEs

Implications 1. African American businesses were most likely to have experienced challenges as MBEs, but were also more likely to seek assistance from outside organizations. 2. American Indian businesses were most likely to promote their minority status and also seek assistance from other minorityrelated organizations. 3. Asian businesses seemed to be taking a mainstream approach in their strategy and less likely to have positioned their MBE status to gain business advantages. 4. Hispanic businesses are in a position to provide some leadership with MBEs due to sheer size of the market they represent.

ANALYSIS BY TARGET GROUPS

analysis TARGET GROUP 3 • COMPANY SIZE How different are MBEs by size of company? A key to helping MBEs is determining if different strategies

latest U.S. Census Survey of Business Owners.

are required based on the size of the company. While there

1 – 4 employees

were clear firmagraphic differences between small and large companies (e.g. smaller companies have lower revenues

5 – 9 employees

than larger companies), there were also different approaches

10 – 19 employees

regarding the positioning of minority status when comparing these firms.

20+ employees

One way to delineate company size is based on the

WestGroup

number of employees that work at the firms. During the data

order

collection, quotas were set by four employee size categories that

comparisons. The data was re-weighted to match the actual MBE

coincided with actual distribution of MBEs in Arizona from the

distribution when reporting the total results.

oversampled have

the

enough

larger

responses

company to

sizes

provide

some

Leveraging minority status - Larger companies were more likely to position themselves as MBEs compared to smaller companies. Companies with 20+ employees were more likely to promote their MBE status and use their status to pursue opportunities.

1 – 4 employees n=352

5 – 9 employees n=121

10 – 19 employees n=67

20+ employees n=62

Promote MBE status – Percent agree

38%

52%

56%

62%

Use minority-owned business status to pursue business – Percent strongly agree

10%

13%

20%

28%

ANALYSIS BY TARGET GROUPS

TARGET GROUP 3 • COMPANY SIZE

More likely to grow – While companies of all sizes tend to be optimistic about the economy, larger companies were significantly more hopeful about the future and were more likely to say they plan to expand and add jobs. The percentage of those planning on expanding was 18 points higher for companies with 20 or more employees compared to those with one to four employees. The median number of jobs planning to be added in the next few years was 20 employees among larger companies and one employee among smaller companies.

1 – 4 employees n=352

5 – 9 employees n=121

10 – 19 employees n=67

20+ employees n=62

Economy will improve

60%

63%

68%

75%

Plan to expand

55%

59%

74%

73%

Plan to add jobs

59%

67%

75%

82%

Median number of jobs adding Sample sizes listed are unweighted. Bold numbers are significantly different than underlined categories

Relying on outside assistance – Larger companies were more likely to have sought assistance from outside organizations compared to smaller companies. Companies with 20+ employees were more than twice as likely to have contacted the SBA for assistance compared to smaller companies.

1 – 4 employees n=352

5 – 9 employees n=121

10 – 19 employees n=67

20+ employees n=62

Contacted SBA for assistance *

16%

20%

30%

Contacted at least one governmental, trade, or minority organization

46%

58%

60%

Sample sizes listed are unweighted. Bold numbers are significantly different than underlined categories * 20+ employee MBEs are more likely to contact SBA than the 5 – 9 employee MBEs.

ANALYSIS BY TARGET GROUPS

• COMPANY SIZE Customer bases differ by company size – Smaller companies were more likely to focus on retail customers than larger companies while larger companies were more likely to work with businesses and government customers.

Contacted organization

1 – 4 employees n=352

5 – 9 employees n=121

10 – 19 employees n=67

20+ employees n=62

Retail customers

54%

47%

41%

36%

Businesses

50%

62%

58%

66%

Government

40%

38%

46%

58%

Sample sizes listed are unweighted. Bold numbers are significantly different than underlined categories

Natural differences by size – Company size across the board has influence on firmagraphics. For example, compared to larger companies, smaller operations were more likely to be home-based businesses and not as likely to spend money on advertising. The owners’ 2011 annual income is less than half of the larger companies.

1 – 4 employees n=352

5 – 9 employees n=121

10 – 19 employees n=67

20+ employees n=62

56%

33%

28%

12%

Median revenue **

$89,000

$406,000

$1,396,000

$2,015,000

Spent on advertising

57%

73%

72%

86%

$2,000

$5,000

$8,000

$10,000

$62,000

$74,000

$80,000

$134,000

FIRMAGRAPHICS Percent home-based businesses *

Median amount spent ** Owner 2011 salary **

Sample sizes listed are unweighted. Bold numbers are significantly different than underlined categories * 20+ employee MBEs are significantly less likely to have home-based businesses than all other categories **All dollar amounts listed are significantly different.

Implications 1. Larger companies use their minority status more than smaller companies to their advantage. Companies focusing on providing support to MBEs might look to the larger organizations to take the lead in showing other companies how they can benefit from this status. Smaller companies need help learning how to leverage their minority status. 2. Recovery from the economic slowdown will be led by larger companies rather than smaller companies. 3. Smaller companies generally are busy with day-to-day operations and do not have the time or see the value of seeking help from outside organizations. Those seeking to provide support to smaller MBEs need to take “aggressive” steps to reach these companies in terms of educating the value of these organizations, offering business tools, and promoting networking opportunities.

Study History and Methodology

Study History and Methodology What is the history behind the study?

also serves as a reminder to Arizona’s leaders in private indus-

Dr. Loui Olivas began conducting research with Hispanic

depends everyday on the entrepreneurial vitality of its minority

businesses in 1990 as an annual project with the Hispanic Research Center at ASU.

In 2005, the study expanded

try and government that the economic sustainability of our state communities.

significantly when Salt River Project (SRP) became the corporate sponsor. The methodology was switched from a mail to telephone surveys and the sample size of businesses increased at this time. The study evolved from 2005 to 2007 to include both Hispanic and non-Hispanic minorities as well as women-owned businesses. From 2007 to 2011, ASU and SRP chose not to conduct the research after earlier trending analyses identified minimal changes in demographics and attitudes from year-to year. The Phoenix MBDA Business Center and Arizona Hispanic Chamber of Commerce became the primary project coordinators for the 2012 study. This year’s research is a statewide study of Arizona

What businesses participated in the survey? This study focuses on businesses in Arizona that have at least one full-time employee. It is important to note that the definition of what is considered a “business” varies widely among sources and might present a challenge when comparing data and findings. A total of 605 randomly chosen MBEs were interviewed. The overall survey results have a margin of error of +/- 4.0% at the 95% confidence level. Subgroups with smaller sample sizes have a larger margin of error.

women and minority businesses enterprises (MBEs). Results were

The following is a breakdown of various groups that participated

compared with previous years when applicable.

in the research.

The results of the women-owned business will be presented in a separate report in the spring of 2013.

MINORITY GROUP REPRESENTATION

Unweighted Percent response

Why are the Phoenix MBDA Business Center and Arizona Hispanic Chamber of Commerce conducting this research?

Hispanic

63%

African American

14%

The Phoenix MBDA Business Center and Arizona Hispanic

American Indian

Asian

Native/Hawaiian or Other Pacific Islander

Other

Chamber of Commerce commissioned this report in order for it to serve as a resource for government officials, planners and analysts; business and community leaders; and educators who want to understand the needs of minority-owned companies. This research is designed to provide a voice to minority-owned businesses and facilitate business-to-business relationships between minority- and non-minority owned businesses. The study

Study History and Methodology

STUDY HISTORY AND METODOLOGY

NUMBER OF PAID EMPLOYEES 1 to 4

58%

5 to 9

20%

10 to 19

11%

20 or more

10%

Donâ&#x20AC;&#x2122;t know/refused

<1%

Note: Rounding results in totals greater or equal to 100%

Unweighted Percent response

WOMAN-OWNED MBEs

Percent response

Women-owned

37%

Not women-owned

63%

Study History and Methodology

STUDY HISTORY AND METODOLOGY

Who was interviewed for the survey?

What methods were used to conduct the research?

Telephone interviewers screened respondents in order to reach

The survey was conducted through telephone interviews. Due

the “highest level” person in the organization. In most cases,

to the high incidence of Hispanic businesses, respondents were

interviews were conducted with the owner/Chief Executive Officer

given the option of participating in the interview in Spanish.

or President.

When was the survey conducted?

POSITION

Percent response*

Owner/CEO/president

80%

Administrator/manager

11%

Board member/executive management

The surveying began on August 24, 2012, and was completed on October 3, 2012.

Was an incentive used to encourage participation? Respondents were given the option to include their name for a drawing for one of 10 $100 gift certificates.

Other

* Note: Some respondents listed more than one position within the company.

Which studies were used to compare findings with this year’s 2012 findings? The 2007 SRP Arizona Business Study —Focus on Minority-

Where/how was the sample drawn for the study? The sample used for this study was purchased from Scientific Telephone Samples. The following organizations supplemented the sample by providing contact lists:

•

Arizona Hispanic Chamber of Commerce

•

Phoenix MBDA Business Center

•

Associated Minority Contractors of America

Owned Business Study12 was the previous study that was used to compare with the 2012 study. In addition, results from the 2011 Metro-Phoenix Business Study13 were used as comparison points with general businesses (both minority and non-minority businesses).

END NOTES

End Notes 1

Jeffrey S. Passel et al., “91.7% — Minorities Account for Nearly

Salt River Project, 2011 Metro-Phoenix Business Study - New

All U.S. Population Growth,” PewResearchCenter - The Databank,

Strategies for Success, 2011, http://www.srpnet.com/energy/powerwise/busi-

March 25, 2011, http://pewresearch.org/pubs/1940/hispanic-united-states-popu-

ness/area/BRC/phxbizstudy.aspx.

lation-growth-2010-census. 8

Ibid 7.

www.cbsnews.com/8301-201_162-57435957/census-more-minority-u.s-births-than-

United States Census Bureau, Education Attained by State,

white-now/.

The 2012 Statistical Abstract, The National Data Book, 2012,

The Associated Press, “Census: More minority U.S. births than

white now,” CBSNews.com, May 17, 2012, 12:49 AM,

http://

http://www.census.gov/compendia/statab/cats/education/educational_attainment.html. 3

United States Census Bureau, “Census Bureau Reports Number

of Minority-Owned Firms Increased at More Than Double the Rate

of All U.S. Businesses From 2002 to 2007,” Newsroom, June 7,

States 2010 and 2011,” American Community Survey Briefs, Unit-

2011,

ed States Census Bureau, September 2012.

http://www.census.gov/newsroom/releases/archives/business_ownership/

Amanda Noss, “U.S, Census Bureau, Household Income for

cb11-103.html. 11 4

United States Census, “Statistics for All U.S. Firms by Industry,

United States Census Bureau, “Statistics for All U.S. Firms by

Gender, Ethnicity, and Race for the U.S., States, Metro Areas,

Industry, Gender, Ethnicity, and Race for the U.S., States, Metro

Counties, and Places,” 2007 Survey of Business Owners, http://

Areas, Counties, and Places: 2007,” 2007 Survey of Business

factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=SBO_200

Owners, SB0700CSA01, http://factfinder2.census.gov/faces/tableservices/

7_00CSA01&prodType=table

jsf/pages/productview.xhtml?pid=SBO_2007_00CSA01&prodType=table. 12 5

The National Bureau of Economic Research, Business Cycle Dat-

Salt River Project, 2007 SRP Arizona Business Study — Focus

on Minority-Owned Businesses, 2007.

ing Committee, Sept. 10, 2010, nber.org/cycles/sept2010.html. 13 6

Salt River Project, 2007 SRP Arizona Business Study — Focus on

Minority-Owned Businesses, 2007.

Salt River Project, 2011 Metro-Phoenix Business Study - New

Strategies for Success, 2011, http://www.srpnet.com/energy/powerwise/business/area/BRC/phxbizstudy.aspx.

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