The South Dakota Black History Museum is in Sioux Falls. The state score in the Black Business Affinity Index is one, ranked 50th among the states.
More than half of the states have statewide business inclusion initiatives. For policymakers and citizens who wonder how effective those efforts are, our annual state by state evaluation is a useful way to ascertain best practices.
We have distilled those into the ten key factors for black business success. Rating each state on a ten point scale for each factor, the State of Black Business arrives at a single rating which is then comparable to other states around the nation.
We have argued that there must be a shift from a compliance mentality to an economic development approach in order to create the jobs needed to undergird black neighborhoods.
In lean budget times, governors and legislatures of both parties are demanding results from business inclusion efforts. States which scaled these operations back have reversed course and put more resources into it.
The earlier chapters show both the potential and the unmet challenges of business inclusion. Public policy does create business opportunities for underrepresented companies. However, settling for raw revenue figures does not translate into opportunities in the fields which create the most jobs in the communities where they are needed most.
These are the factors which count:
Executive Leadership – Among the ten states with the greatest procurement spending with black-owned businesses, five are governed by Democrats and five are led by Republicans. Supporting business growth transcends ideological boundaries.
Legislative Authority – Many states have a legislative history of more than 30 years in support of business inclusion. These statutes have been maintained through party shifts, because they represent a broad consensus of state and local leadership.
Federal Procurement Success – States are taking a greater role to pursue business from the world’s largest customer, the U.S. federal government. Black businesses have federal contracts in every state in the nation.
Monitoring of State/Local Contracting – The states with the most success in providing supplier diversity have quarterly monitoring of results with specific breakdowns for African-American businesses, including new attention to spending with African-American female-owned businesses in some states.
Access to Capital – In Chapter 2, we described how states are stepping into the breach to provide loans and guarantees which can provide African-American businesses with the cash flow to compete. The need for this resource also crosses party lines.
Rate of Growth – The velocity of self-employment growth among African-Americans is an indicator of the policy environment that individual owners perceive. We’ve tracked these statewide figures for the past 10 years.
One-Stop Access – Minority businesses need a clear point of contact with government such as the mdminoritybusiness.com maintained by the Governor’s Office of Minority Affairs. As we travel around the country, we encounter many entrepreneurs unaware of services available in their own state or locality.
Ratio of black/white self-employment – Another statistical measure of how African-American businesses are included in the overall economy of a state. We find this number is closely correlated with disparate rates of unemployment.
Cultural Tourism – More than half of the states actively promote and preserve their African-American historic sites with festivals, museums, historic markers and online/print guides as a way to stimulate economic development.
Large-Scale Enterprises – Our focus on Job Creation and Innovation recognizes that millions of manufacturing jobs lost by African-Americans will not be replaced by small retail establishments alone. Communities need employment anchors based on manufacturing which responds to the basic needs of local, regional and global markets. Where these firms exist, smaller companies have a much greater chance to succeed.