Minding Their Own Businesses

By Adrian Shaheed and Rachel Vilsack
March 2011

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Minnesota has more than 31,000 minority-owned firms, and their numbers are growing as minority entrepreneurs embrace the risks and rewards of owning their own businesses.

Whether it’s an employer with a handful of workers or a solo entrepreneur, small businesses make a significant contribution to the economy. For many African-Americans, American Indians, Asians and Hispanics, starting a small business is a way to step out of a traditional 9 to 5 job and into a career passion. Likewise, many immigrant families see businesses as a way to become self-sufficient and provide a necessary—and often missing—service to their community.

In today’s economic climate, some people are finding themselves at a crossroads, trying to decide whether to continue working at a job that might not exist in a few years or to become their own boss. Data show that members of minority groups in Minnesota increasingly are taking the latter route by starting their own businesses.

Many are finding that research and networking may be more important than ever to ensure success.

Customer-Driven Service

What are the qualities of a successful minority business owner? According to research, there is no correlation between success in business and one’s personality traits, intelligence, education or family background. Business owners do not always have to make major sacrifices. Rather, they might take small steps to insure steady and consistent success. Offering an in-demand product or service helps, too.

Cynthia Wilson knows that all too well. Her passion to design and sell jewelry came from experience. While on vacation in Mexico, she purchased a bracelet that later broke. Because she couldn’t take the bracelet back to the merchant, she decided to repair it herself. She found that she had the skill to rebuild her bracelet to better condition than it was originally. In her home-based Minneapolis business—Designs by Cynthia—customer service is key.

“Knowing the customer is important,” Wilson said. “Get to know them. Individualize their shopping experience.”

Many entrepreneurs know that respecting their own work brings respect from others (even the competition) and attracts perhaps the best kind of advertising—word of mouth.

Respect is an important part of Tiffany Wilson’s business, too. In fact, for her it may be the single most important rule to owning a business. 

“Be true to yourself. Be open,” she said. “Respect others’ opinions and be sensitive. Everyone does not want to see you do well. Be OK with what comes your way.”

As a student at the University of Minnesota, Tiffany Wilson decided to do more with her education, combining her work experiences at a hair salon and as a model to start her own business. She is the owner and a stylist at V.I.P. Hair and Nail Salon in Minneapolis.

“I worked with my uncles, who owned their own businesses in the past. I enjoyed working with customers, but I thought it would be a good idea to incorporate my experiences along with cosmetology school to start my own business,” she said. “It was important to learn all areas of business for my success.”

Important Contribution

These are just two examples of the paths taken by minority business owners in Minnesota. In 2007, Minnesota had more than 31,100 minority-owned firms. These firms generated more than $5.8 billion in total sales, according to figures from the U.S. Census Bureau. Data on business ownership are collected through a survey of business owners conducted twice every 10 years.[1] The vast majority (86 percent) of minority businesses in Minnesota—like Cynthia Wilson’s—are nonemployers, or businesses with no paid employees.

Minority-owned firms account for 6.2 percent of all firms in Minnesota and 21.3 percent of all firms nationwide. Just 1 percent of firms in Minnesota were owned by Hispanics in 2007, compared with 8.3 percent nationally.

These numbers are growing, however. Firms owned by African-Americans, Asians, American Indians, Native Hawaiians or Hispanics grew by 43.1 percent in Minnesota between 2002 and 2007. Revenue at minority-owned firms expanded by 82.7 percent between 2002 and 2007. Revenue for Hispanic-owned firms increased nearly 300 percent during that period.

Table 1 breaks down minority business ownership in Minnesota by group in 2007. Table 2 shows growth of minority business ownership in the state between 2002 and 2007.

The largest numbers of minority-owned firms in Minnesota are in health care and social assistance (4,547), professional and technical services (4,326) and other services (3,886).[2]  The largest sector of minority-owned firms with paid employees, however, was the accommodation and food services sector. With 1,082 firms and 9,596 employees in 2007, this sector accounts for one in four minority-owned firms with employees in Minnesota. (See Figure 1 for a breakdown of minority-owned firms by industry in Minnesota in 2007.)

It should be noted that these data largely preceded the recession of 2007-2009. We’ll need to wait until the 2012 Survey of Business Ownership to identify any long-term effects of the recession on minority business owners in Minnesota.

Making a Statement

As a frequent employee in his parent’s businesses near Green Bay, Wis., Pheng Thao witnessed firsthand the importance of small business ownership, especially in the immigrant communities.

“My uncle [who emigrated from Laos] informed my parents that the only way to get ahead in life is with owning your own business,” he said. “Then my parents decided to start their own business selling clothes at the local Hmong soccer tournaments.”

It generated some income, but was a lot of work, he recalled. 

“We had to drive to wherever the tournament was held, set up tents early in the day and take everything down late at night. This was a continuous cycle for many summers during the early 1990s.”

The family’s passion turned into two businesses: an Asian-run clothing store and a grocery store.

“When my parents started both of their businesses, there was a need for [these] stores,” Thao said. “Not many individuals in the community were providing those commodities yet, and many were relying on driving far or having to search out of town for it. So there was a market for consumers once commodities were brought closer to them for purchase.”

Immigrant-owned businesses not only benefit the local community, but are a source of economic growth. It’s estimated that immigrant-owned business generated $331 million in net income in Minnesota in 2000.[3]  In fact, immigrants are almost twice as likely to start a business as native-born Americans.[4]

Regardless of birthplace, small business owners have a passion for the product or service they provide. And it may have been a lifelong interest.

As a child, Cynthia Wilson recalled collecting rocks that she’d break open with a hammer. Some contained beautiful crystals. Today, she designs jewelry with gemstones and semi-precious stones.

“Even though [jewelry-making] was a skill that I didn’t realize I possessed,” she said, “I realize I always loved gemstones.” 

Testing the Waters

New business owners might test their ideas first before launching their business. Or they might network with successful establishments in their community as a way of learning more about the marketplace. Watching and researching other successful businesses has long been important in establishing a strong foundation for a new business. Researching the market is key to answering questions like what does the business have to offer to customers, how is it unique, and, most importantly, why should someone support the business?

Thao agrees.

“There is a lot of research involved with what you are going to do business-wise, like looking at the market, competitors, trends, short- and long-term goals, and strategy,” he said. “All of these things and much more need to be looked at and analyzed. You need to know how to brand your business that allows it to be unique from others.”

Reaching out for help from organizations that specialize in helping small business may be a critical step in deciding how to structure a business and make it grow. 

“MEDA was very instrumental in helping me with my commercial real estate endeavors,” said Tiffany Wilson, referring to the Metropolitan Economic Development Association, a Minneapolis-based group that offers one-on-one business consulting to ethnic and minority businesses.

For Cynthia Wilson, learning about jewelry-making was a hands-on experiment. She is self-taught, relying on books and online tutorials and asking a lot of questions. 

“I’ve met so many people, including owners of bead stores, who shared good information and knowledge with me when I was just starting out,” she said.

Many organizations in Minnesota offer free or pay-for-service assistance to people thinking about starting a business. These resources help people throughout the process, from discovering if entrepreneurship is right for them, to hiring employees and even finding financing.

What to Expect

Seeking advice is important, because owning a business has many positive and negative sides. There isn’t a magic wand or formula that determines success, but there are many perks, like being your own boss and dictating how much time to put into the business. There are also some sacrifices associated with becoming a successful minority business owner.

“Make certain that when owning your own business, that it is a commitment to work 365 days a year,” Tiffany Wilson said.  “You do not get a break from it.”

It can also impact a family. 

“I think both of my parents worked very hard during those years and still do to maintain a family and run a small business,” Thao said.  “Graciously my grandparents were around and did the child care to allow my parents the opportunity to focus much of their attention on growing the family business.”

Success might not come easily. It might depend on what the economy looks like and what product or service is being provided to consumers. A flourishing business may or may not go hand in hand with a profit. 

“Some people may think this,” Tiffany Wilson said, “but of course you can make a profit. But you must be good with people.”

She cautioned, however, “Don’t think that you are going to make a lot of money.”

Ultimately, owning a business builds character, and the struggles faced by business owners help them and their businesses grow. For these business owners, personal growth is as important as financial success. 

Cynthia Wilson met a minority business owner who shared some advice.  “[The business] is important, but give back to others,” she said. “You must believe in what you do.”

Cynthia Wilson does just that. Last year she designed a line of jewelry for breast cancer awareness, and part of the sales were donated to the African-American Breast Cancer Alliance of Minnesota. This year she plans to work on a line of jewelry aimed at women who are searching for work. The tasteful line would be appropriate to wear at an interview.

“I want to make them feel good about themselves,” she said. 

The passion to help women in job transition stems from Cynthia Wilson’s “day” job working for HIRED, a Twin Cities provider of job-skills and employment training.

For Cynthia Wilson, marketing and growing her business is important. She has a 2011 marketing plan that will expand her business from selling her limited-edition pieces at craft shows and home parties to seeing her jewelry in specialty stores. Her website— www.designsbycynthia.net—also helps get the word out and connect with her customers.

Tiffany Wilson offered some words of advice. “You must always reinvent yourself and encourage people to reinvent themselves,” she said. “Your staff always needs to work towards something new. Do not become complacent. Take a look at yourself and remember that you never stop growing.”

ENDNOTES:
[1] Preliminary estimates from the 2007 Survey of Business Ownership were released in July 2010. More expanded data will be released throughout 2011.
[2] The other services industry includes repair and maintenance; personal services (like hair salons), dry-cleaning and laundry services; death care services; and religious, civic and professional organizations.
[3] Fennelly, Katherine, and Huart, Anne. “The Economic Impact of Immigrants in Minnesota,” March 2010.
[4] Ibid.
 

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