Beruflich Dokumente
Kultur Dokumente
SPONSORED BY: US SENATOR SHERROD BROWN CITY OF CLEVELAND MAYOR FRANK JACKSON THE OHIO DEPARTMENT OF TRANSPORTATION
THE FIRST IN A SERIES OF FIVE INSTALLMENTS THAT DETAIL PARTICIPANT DISCUSSIONS AND CONCLUSIONS.
TABLE OF CONTENTS
Forum Series Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Introduction: Event Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Executive Summary: Key Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Session Breakout: Challenges Challenge: Limited Access to Capital . . . . . . . . . . . . . . . . . . . . . . . 12 Challenge: Limited Access to Opportunities . . . . . . . . . . . . . . . . 13 Challenge: Limited Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Conclusion: A Call to Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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EVENT STRUCTURE
The forum series leverages the strengths of leaders in of each sector of our community. Public sector leaders will work to identify the challenges to effective economic inclusion. Nonprofit organizations, funders and mission-driven organizations will build on the work of the public sector by designing recommendations. Private sector executives will design metrics and create a tactical plan. Throughout the forum series, insight from minority and women entrepreneurs will inform the discussion. Finally, representatives from all sectors will come together to ensure accountability and evaluate progress as the region successfully moves the needle on economic inclusion in 2012.
NORTHEAST OHIO ECONOMIC INCLUSION FORUM PHASE TWO: DEFINING SOLUTIONS PERSPECTIVES FROM THE NONPROFIT SECTOR SEPTEMBER 1ST, 2011 Approximately 150 executives from the nonprofit sector, including foundations, arts and research organizations, universities, as well as CDCs and traditional economic development organizations, discuss how current best practices can be applied and existing resources utilized to address challenges identified in the public sector forum.
Sixty-one elected and appointed officials from the public sector, including federal, state and local government offices, take the essential first step to improvement by identifying the barriers to economic inclusion across our region and our state.
Top executives from the regions business community assess all forum feedback to date, using previous forums as a guide to design an overarching economic inclusion strategy, a concrete and measurable tactical plan and associated success metrics.
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NORTHEAST OHIO ECONOMIC INCLUSION FORUM PHASE FIVE: MOVING THE NEEDLE COLLABORATIVE ENGAGEMENT FROM LEADERS ACROSS NORTHEAST OHIO WINTER THROUGHOUT FALL 2012 Although the forum series is a historic first step to designing a regional framework for economic inclusion in Northeast Ohio, the most important element of the initiative is collective action. After having framed the issue, uncovered the challenges, designed recommendations and a tactical plan, leaders from across the region will work toward defined success metrics to literally move the needle substantially driving growth among the regions diverse suppliers.
Throughout 2012, economic inclusion milestones will be documented and evaluated. Public, private and nonprofit sector organizations will work individually and collectively to enact the Northeast Ohio Regional Economic Inclusion Plan.
Most importantly, at the conclusion of this process, a substantial number of diverse suppliers across our region will have improved survivorship rates, achieved sustainable growth and profitability strategies, increased capacity, expanded social capital, and attained better access to financial capital.
DID YOU KNOW? According to the U.S. Census, minority and women entrepreneurs are the fastest growing segment of small business, collectively owning more than 50% of all small businesses.
Over 65% of the jobs in the U.S. were created by small businesses Small businesses created 31% of U.S. export value in 2007 Roughly 37% of all minority businesses are owned by women Women-owned businesses have sales receipts of over $1.7 trillion
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On March 31, 2011, leaders from across the state and beyond took the first step in creating a regional framework for inclusion in Northeast Ohio. The first consideration was that, although tens of millions of dollars have been invested in inclusion initiatives in recent years, leaders agree that very few diverse firms in the region have achieved revenues over $1 million, even fewer over $5 million. In fact, only a small percentage of these small firms can boast rigorous strategic plans for sustained growth and increased profitability, year-after-year. Why the discrepancy between investment and results? How do we leverage existing programs and organizations focused on inclusion and what are the strategic gaps that these organizations have not filled? Most importantly, where is the regional strategy for economic inclusion in Northeast Ohio? The Northeast Ohio Inclusion Forum Series Phase I: Identifying Challenges brought the regions top public sector leaders together to uncover the unique challenges faced by women and minority entrepreneurs and their companies. A brainchild of the Ohio Department of Transportation, this first of a four-part forum series was held at Cleveland State Universitys Nance College of Business.
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EVENT OVERVIEW
Session Highlights
The historic event opened with remarks from Senator Brown, who welcomed participants by providing powerful comments around the need for collaboration across levels of government, organizations and industry sectors in order to effectively move the economic inclusion effort forward. Following the welcoming remarks, speakers noted the significant regional investment in business and infrastructure and the positive impact robust economic inclusion practices will have on economic development, education, and workforce development. Participants learned about strategic best practices in federal, state and local agencies and offices from a range of public sector luminaries. Participants were then divided into three breakout sessions that focused on identifying historic barriers to success for diverse entrepreneurs. Several themes emerged from the breakout sessions; Cuyahoga County Executive Ed FitzGerald synthesized the findings and shared participant insights.
Major corporations are beginning to understand that supplier diversity is inextricably linked to economic development and the consumer market.
~ Boston Consulting Group (2005)
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Collaborative Engagement
The forum was designed to engage key leaders from all levels of government, who control several billions of dollars in annual procurement across the State of Ohio.
Keynote Speakers
U.S. Senator Sherrod Brown City of Cleveland Mayor Frank G. Jackson Kevin Schmotzer spoke on behalf of Mayor Frank Jackson Deputy Director Myron Pakush, Ohio Department of Transportation District 12 Cuyahoga County Executive Ed FitzGerald
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Public sector leaders were tasked with documenting challenges to effective economic inclusion in Northeast Ohio. Through the intensive breakout sessions, common themes emerged from several challenges identified. Specific issues ranged from institutional challenges, such as limited access to capital, bonding and financing, to more firm-specific concerns, such as limited capacity. From the numerous issues identified, the following themes emerged from the session. Historically disadvantaged firms are challenged by:
Limited Access to Capital
Many diverse business owners are first-generation entrepreneurs with short tenures in business. Participants noted that, for women and minorities with historically lower net worth and creditworthiness challenges, access to capital can be a tremendous burden. This, combined with increasingly tightened lending requirements, leaves minority and women-owned firms with far less access to bonding required to take advantage of contracting opportunities.
Limited Capacity
Several diverse businesses lack the required capacity for sustained topline growth and effective bottom-line profitability. Internal challenges include limited resources to drive operational, technological, financial and human resource excellence. These challenges are often manifested in the perceived inability to consistently deliver excellence to the marketplace. External challenges include limited marketing and marketing research capability. Additionally, relationships with key decision-makers, often a pre-requisite for consistent sales growth, are in short supply for these entrepreneurs. Understanding these challenges is imperative to developing an effective inclusion plan to be adopted by the entire region.
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Surety Bonding
Because at least $2 billion of Northeast Ohios current infrastructure projects involve construction, participants cited the lack of bonding capacity as a major concern for many firms. In order to bid projects, most firms are required to obtain performance bonds, which provide a guarantee that a contractor will fully perform and offer protections against breach. Participants noted that these firms have difficulty obtaining bonding because they lack experience, tenure, credit or collateral. The direct correlation between wealth and income, and an owners ability to acquire adequate financing and/or the required bonding to participate in projects is undeniable, and so is the impact on corporate survivorship. Across industry sectors, firms that start with higher amounts of capital tend to have higher levels of assets, revenues and employment throughout the life of the business.
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Challenge: Access to Procurement Opportunities Fair and equal access to contracting opportunities for all qualified vendors strengthens the vitality of the regions economy. Forum participants agreed that sufficient access to business networks, the existence of strong incumbent relationships, lack of transparency and duplicative certification requirements can prohibit diverse vendors from having equal access to opportunities.
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Transparency
Participants also discussed the need for improved communication. Some specifically referenced the need for open dialogue among public sector partners across all levels of government. Some lamented backdoor deals that continue to destroy trust. Increased transparency was the most commonly suggested solution to this issue. Participants also suggested that consistent communication regarding current and future projects and inclusion goals and outcomes could improve the propensity for success of diversity initiatives. Unfortunately, participants noted, some otherwise ineligible firms slip through the cracks and take advantage of projects set aside for historically disadvantaged groups. These are (sometimes certified) majority-owned firms masquerading as firms owned by minorities or women, called front companies. Finally, participants discerned that building genuine business networks requires more than participation in diversity outreach or matchmaking events. Some lamented there is little follow-through after these events and purchases are rarely made in these settings. Building sustainable, effective business networks requires consistent effort. It also requires minority and women entrepreneurs to be equally proactive in effectively communicating their unique value to the marketplace so that they may build strong relationships with decision-makers and potential clients.
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Challenge: Limited Capacity While the burden for providing equal access to capital and business opportunities lies with the public, private and nonprofit institutions, this burden should be shared with the diverse suppliers they seek to assist. Improving survival rates, driving sustainable business growth, adding value to the marketplace and to employees, and building capacity is also the responsibility of each business enterprise, regardless of the race or gender of the owner.
Market-based Capacity
Fewer than 3% of minority-owned businesses and fewer than 2% of women-owned businesses in the U.S. achieve annual revenue of more than $1 million. However, these million dollar firms make up over 60% of the total revenues for each designation. Growing diverse businesses serve as a powerful engine for the new economy. They revitalize urban areas, increase the tax base and create jobs. However, participants recognized that for these firms to truly drive economic returns for our communities, they have to survive and grow. Strong business networks, social capital, market intelligence and marketing expertise and access to strategic alliances are all powerful tools to grow small enterprises. Participants stated that, though their organizations can help with some of these tools, historically disadvantaged firms also need to be transparent about their shortcomings in order to overcome them. For example, some participants lamented the quantity and quality of strategic alliances and joint ventures including or among diverse firms. These partnerships are generally formed to allow small enterprises to enhance their capacity to enter new markets or undertake larger projects; however, lack of trust within the minority business community often derails these alliances before they can start, while lack of resources for adequate due diligence can derail the alliances soon after they start.
Isolated successes are not enough. To change the trajectory of economic inclusion in our region, we need a cross-sector, collaborative approach to economic inclusion.
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Operational Capacity
Although many small business owners possess tremendous experience and acumen in their professional area of expertise, many lack expertise in administration, operations, information technology, human resource management and finance. Management strength in these areas can make the difference between survival and lack thereof, and between annual revenues of $100,000 and $100,000,000. Forum participants noted throughout the forum that although they may possess a terrific new innovation, an incredible creative talent or a tremendous product, many women and minority entrepreneurs businesses were less than stellar in terms of their ability to deliver a quality product or service, on time and within budget. Even though majority-owned firms may experience very similar limitations of capacity, the perception that diverse firms deliver less than the highest quality on time and within budget is a challenge throughout the community of historically disadvantaged firms.
Past and current efforts while successful in making broad gains will prove inadequate in resolving the remaining disparity and in achieving future progress. Efforts must be consolidatedhone in on the most promising and powerful opportunity: Building [Diverse] Businesses of Size
~ Boston Consulting Group (2005)
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Look for the results from these discussions to be detailed in the next white paper, The Northeast Ohio Economic Inclusion Forum Phase II: Defining Solutions.
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SUPPORTERS
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APPENDIX A:
Disadvantage Business Enterprise (DBE) The Ohio Department of Transportation identifies a Disadvantaged Business Enterprise (DBE) as a for-profit small business concern that is: At least 51% owned by one or more individuals who are both socially and economically disadvantaged; and Whose management and daily business operations are controlled by one or more of the socially and economically disadvantaged individuals who own it Furthermore, a firm is not considered small business concern if it has annual gross receipts in excess of $20.4 million for general construction or in excess of $4.5 million for engineering, architectural and surveying firms averaged over the previous three fiscal years. An economically disadvantaged individual is one whose personal net worth does not exceed $750,000. Personal net worth excludes the individuals ownership interest in the applicant DBE firm, and the individuals equity in his or her primary place of residence (Ohio.gov).
Minority Owned Business (MBE) According to the Ohio Department of Administrative ServicesEqual Opportunity Division, a Minority-Owned Business Enterprise (MBE) is designed to assist minority businesses in obtaining State government contracts through a set-aside procurement program for goods and services. In order to be certified as a MBE, the business owner(s) must be member(s) of one or more of the following groups: Blacks, American Indians, Hispanics and Asians. Furthermore, a MBE in Ohio: Must be a for-profit entity Must have been in business at least one year prior to applying for certification Must be at least 51% owned and ultimately controlled by one or more of the person(s) belonging to the target groups one year prior to applying for certification Must be owned by an Ohio resident Must be owned by a U.S. citizen Women Owned Business (WBE) A women-owned small business is SB which is at least 51 percent owned by one or more women or, in the case of publicly owned business, at least 51 percent of the stock owned by one or more women; and whose management and daily operations are controlled by one or more women.
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APPENDIX B:
WORKS CITED
Boston Consulting Group (2005) THE NEW AGENDA FOR MINORITY BUSINESS DEVELOPMENT
Min, H. (2009). The best-practice supplier diversity program at Caterpillar. Supply Chain Management: An International Journal. 14(3), 167-170.
Cleveland, C. o. (n.d.). City of Cleveland Ohio. Retrieved May 14, 2011, from Mayors Office of Equal Opportunity: http://www.city.cleveland.oh.us/CityofCleveland/Home/ Government/CityAgencies/OfficeofEqualOpportunity
Ohio.gov. (n.d.). Frequently Asked Question. Retrieved May 14, 2011, from Ohio.gov-Department of Transporation: http://www.dot.state.oh.us/Divisions/EqualOpportunity/Pages/ DBE.aspx
Commission on Economic Inclusion, a program of the Greater Cleveland Partnership. Available at http://www.gcpartnership.com/Media-Center/~/ media/Files/Inclusion/Access%20to%20capital_web.ashx
Talton, Rachel (2010) Collaborative Engagement: The Critical Link in the Supply Chain MBE Magazine May/June 2010 Issue
Institute for Entrepreneurial Thinking, Ltd., (2005) Greater Cleveland Supplier Diversity Initiative Final Report. Available at http://srhgrafx.com/pc/suppliers.pdf
Kim, W. Chan and Mauborgne, Renee, Blue Ocean Strategy: From Theory to Practice (2005). California Management Review, Vol. 47, Issue 3, p. 105-121 2005. Available at SSRN: http://ssrn.com/abstract=1506787
U. S. Department of Commerce (2010) Women-Owned Businesses in the 21st Century Available at: http://www.commerce. gov/blog/2010/10/04/commerce-department-releases-reportwomen-owned-businesses-21st-century
MBDA (2000), The Emerging Minority Marketplace,US Department of Commerce, MBDA, Washington, DC, September Available at: www.mbda.gov/documents/purchasing_power.pdf
Utilizing Supplier Diversity to Achieve Business Goals 90th Annual International Supply Management Conference, May 2005 (Richards and Ballenger)
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