Free Essay On Minority Owned Businesses

Modern world if full of people who come from different backgrounds and from different cultures and the term minorities started to appear more often. Minorities plays a significant role in the economy of United States, and the number of businesses owned by minorities keeps growing every year. Thus, the statistics shows that the number of businesses owned by minorities grew by 46%, in the period from 2002 until 2007. This number represents a rapid growth, especially in comparison to the 10% growth of nonminority owned businesses (Ordonez, 2014). In such a way, minorities own approximately 15% of businesses in United States, which represents more than 3 million companies. Most of those companies are small businesses, and 42.7% are engaged in the services business (Entrepreneur.com).
As far as businesses owned by minorities are mostly small companies, all of them face various challenges of small business in combination with the challenges that minorities may face in everyday life. Small businesses always have a challenge to survive in highly competitive environment, and most of such businesses have quite a short life cycle. U.S. Department of Commerce has a division Minority Business Development Agency (MBDA), which assists in various issues connected to the growth obstacles and initiatives for the minority owned businesses. Thus, MBDA helps these businesses to build a foundation for further development and successful competition in global and domestic markets. MBDA, in cooperation with other strategic companies and business centers, provides consulting services, helps to find financing opportunities and provides various types of training for the startups initiated by minorities (Mbda.gov).
One of the major challenges that minority owned businesses face is finding financial support in order to invest in their companies to initiate further growth opportunities. The thing is that most of minorities does not have strong ties with the banking system, and in many cases, these minority representatives get refusal in credits. In this case, they have to look for other opportunities to support their businesses, and often they have to use several persona credit cards in order to get sufficient financial funds for investments in their ideas. Another significant challenge is keeping profitability and surviving in the market. It was already mentioned that most of small businesses have a short life cycle, and in order to survive the companies have to differentiate the products and services they offer very carefully. Profitability becomes a serious issue, because often minorities start businesses in the local communities, where it is hard to keep high profitability rates due to the income level of the community. Local communities of minorities often represent poorer communities, and this significantly decreases the potential of the business and its possible growth. Therefore, it is crucial for minority owned businesses to find financial opportunities to support their business in order to encourage future growth and make their business attractive to the customers (Ordonez, 2014).
In order to support minority owned business and encourage their development, U.S. Small Business Administration has launched Business Development Program. This program serves businesses owned by minorities with providing individual counseling for the starters, holding various workshops and technical tasks and guidelines. In addition, they offer various government contract possibilities for the minority entrepreneurs. By doing so, just like Minority Business Development Agency, the initiators of the program want these small businesses to have a competitive advantage and operate successfully (Sba.gov).
Let us turn to the challenge of financing opportunities in more details. National Small Business Association reports that approximately 50% of small businesses can get adequate finance resources, and this number keeps going down every year. The point is that banks carefully evaluate the idea and finance the ones that have almost one hundred percent chance to become successful. As it was mentioned before, it is even more difficult for minority entrepreneurs, because their connections with bank are not strong enough in most of the cases. In real life, minority businesses have to look for nontraditional ways in order to obtain financial support for their businesses. For instance, there is a small business consulting company in Portland, AVITA Business Center, which constantly tries to offer various financing opportunities for minority owned businesses. The consultants of this company often offer the minority entrepreneurs to participate in the competitions, the purpose of which is to identify successful business plans. There are various business plans and industry contests, in which minority entrepreneurs have equal chances for winning the financial support as nonminority ones (Brown, 2011).
Another financing opportunity for the development of minority owned businesses is getting individual grants or Small Business Innovation Research and Small Business Technology Transfer Program grants. Various consulting centers encourage minorities to participate in the programs that will results in grants, because currently the number is not that big, and minority entrepreneurs are struggling to find other development finance possibilities for their businesses. Individual grant program is called Individual Development Accounts, which is working based on savings and receiving a corresponding amount for developments. This IDA program requires entrepreneurs to complete the classes on financial education, and serves as a great opportunity for the minority businesses to find investments in their businesses (Brown, 2011).
It is also important to pay attention to the fact that most of the minorities have their own languages, and in the modern world with rapidly developing economy, many of those languages begin to extinct. Thus, there is a great controversy: from one perspective, minority owned businesses want to experience growth and to contribute positively to the economy of the country, while from the other perspective, the more successful economy growth is, the more likely minority languages will disappear in future. United States is a multicultural society, but economic development encourages more and more businesses to use only English language, and it leads to the situation, in which minorities start to eliminate the usage of their native language in business purposes. The studies have shown that in such an economically developed region as United States, many languages have already disappeared, and many are in huge danger. Moreover, the statistical analysis of GDP (gross domestic product) data and language diversity gave the results that an increase in GDP leads to the decrease in the country’s language diversity. Thus, we can see that language preservation represents a challenge for the minority business representatives (Businessinsider.com).
Therefore, we can obviously see that despite the fact that minority owned businesses number keeps growing every year, these entrepreneur still face many challenges for the appropriate development of the business. Overcoming the challenges requires hard work from the minority entrepreneurs and encourages them to look for the ways beyond traditional in order to support their ideas and make them competitive and successful. Taking risks and betting on the business idea is very important for minority entrepreneurs, because they strive to find their ways for prosperity in operating their own firms. Despite the obstacles and challenging issues that they face, they continue working on their businesses and creating job places and aim to bring value to the society. Strong support from different organization and strive for profitability and development in the business will help minority entrepreneurs to achieve success and keep improving the whole situation in the country’s minority owned business sector.

References

Brown, C. (2011, May 31). Six Capital Funding Sources for Minority Businesses. Retrieved March 24, 2015, from http://www.inc.com/guides/201105/6-capital-funding-sources-for-minority-businesses.html
Economic Growth Has Put A Quarter Of The World's Languages At Risk Of Extinction. (2014, September 3). Retrieved March 24, 2015, from http://www.businessinsider.com/afp-economic-growth-kills-minority-languages-study-2014-9
Minority Entrepreneurs - Minority Small Business Owners Statistics. (n.d.). Retrieved March 24, 2015, from http://www.entrepreneur.com/sbe/minority/
Minority-Owned Businesses. (n.d.). Retrieved March 24, 2015, from https://www.sba.gov/content/minority-owned-businesses
Minority-Owned Businesses Face Critical Challenges. (n.d.). Retrieved March 24, 2015, from http://www.mbda.gov/pressroom/press-releases/minority-owned-businesses-face-critical-challenges
Ordoñez, S. (2014, May 12). Minorities: The force fueling small-business growth. Retrieved March 24, 2015, from http://www.cnbc.com/id/101639528