2012 MBE Report

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ArizonA Minority Business enterprise report

ArizonA HispAnic cHAmber of commerce

pHoenix mbDA business center

november 16, 2012

presented by

WestGroup reseArcH

research conducted by:

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WELCOME

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

welcoMe to Az MBe report

602.707.0050 | westgroupresearch.com | [email protected]

“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.

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ACKNOWLEDGEMENTS

AcknowledgeMents

ArizonA HispAnic cHAmber of commerce

ArizonA public service

pHoenix mbDA business center

WestGroup reseArcH

collaborating organizations

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.

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ACKNOWLEDGEMENTS

CarMen G. Martínez, Graphic Design Director

terri MorGan, Production Manager

JaMes e. GarCia, Editor

MoniCa Villalobos, Co-Editor

bC GraphiCs, Printer

production teaM

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

SPECIAL THANKS

GonzAlo A. De lA melenA, Jr.Arizona Hispanic Chamber of Commerce (AZHCC)

JAmes e. GArciA Arizona Hispanic Chamber of Commerce (AZHCC)

Dr. loui olivAsArizona State University

Glenn iWAtAWestGroup Research

KAty GAllert WestGroup Research

research teaM

acKnoWledgeMents

All rights reserved. T1-2059©2012 PetSmart Store Support Group, Inc.

PetSmart® Proudly Supports theArizona HispanicChamber of CommerceAs 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.

T1-2059_Hispanic-Chamber-of-Commerce.indd 1 10/31/12 2:00 PM

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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?

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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tABle oF contents

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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.

study HigHligHts

CHALLENgESSurviving 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.

STrATEgIESBack to the basics –• To address the economic downturn, MBEs top strategies are to work harder, cut back their expenses, and increase their companies’

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 lever-aging their minority status more than in prior years.

Larger companies (20+ employees) were more •likely to promote their minority status than smaller firms (1 – 4 employees).

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STUDy HIGHLIGHTS

rESourCES/roLE ModELSSeeking help – • Half of MBEs have sought help from government, trade, and/or minority-related orga-nizations to help their business. The type of informa-tion they seek is:

Sales/marketing • (37% mentioned) – Where to find bid opportunities, how to market/promote, how to grow the customer base.Capital/loans• (18%) – How to gain access to capital and loans for the business.Business training• (8%) – Address questions about running the business such as accounting, legal, tax and human resources. Also mentioned was want-ing a mentor to help answer questions.

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% men-tioned the up-and-coming Barack Obama in the 2007 study.

BuSINESS CHArACTErISTICSSmall businesses, big impact –• The profile of the typical MBE reflects the firmagraphics of small businesses in general, especially considering that 78%

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).

On the other hand, the cumulative impact of all of •

these Arizona MBEs was reflected in $14.1

billion in receipts last reported in the 2007 Survey

of Business Owners. Even though MBEs are

primarily small businesses, their overall numbers

carry a significant fiscal impact on the state.

Using the Internet –• Two out of three MBEs

advertised in 2011; 69% of those who did advertise

used the Internet to market their business.

owNEr CHArACTErISTICS•Itpaystoown– 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 FuTurEStrong optimism –• MBEs remain optimistic

about the future.

63% feel their financial situation will improve in •

the next 12 months.

60% plan to expand their business in the next few •

years.

65% plan on adding employees in the next two •

years (median number they plan to add is five

employees).

study highlights

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CONCLUSIONS

conclusions1. 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

the strategies for survival have changed over time. After the

recession hit full force in late 2007, most businesses spent

the following few years cutting back their operations, laying

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

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

first focus on addressing their basic business needs – how to

rebuild these businesses during the slow recovery.

2. FoCuS PoINTS – 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

customer bases as a critical first step in the

economic recovery.

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

they are still looking for access to capital, espe-

cially if they plan to expand in the coming years.

C. IntErnEt/SoCIAL MEdIA/WEB-SItES – 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.

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 cases, more MBEs are relying on their minority status to promote, network, and target their busi-nesses. Larger size companies (20+ employees) seem to be most likely to take advantage of their 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 their customers, suppliers, peers, and lenders. MBEs with first generation owners were most likely to mention having problems in this area. MBEs 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 and running their business. Some firms (e.g., smaller size companies) are so busy with the day-to-day operations that they do not have time to ask for help. Outside organizations, such as the SBA, ASBA, or minority-based chambers of commerce, might consider taking a more aggressive strategy 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. High-lighting these stories could provide a great source of motivation to future entrepreneurs, business startups, minority groups and the business

community in general.

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BUSINESS PROfILE

broWn and White, inc.owNEr: PETE grANILLo

Photo by Joe Ramirez, Area520

BroWn And WhItE, InC.PEtE grAnILLo

501 e. 30th street, tucson, az 85713[520] 624.9860

[email protected]

30 years in business

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. pete’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.

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BUSINESS PROfILE

wHAT HAvE BEEN your BIggEST CHALLENgES AS A MINorITy-owNEd BuSINESS?

the economic downturn hit the company hard. as the size and

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

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

perceptions of being a minority-owned business. i have had to

battle the perceptions that the only reason we won a particular

contract was because we are a minority-owned business.

i have to prove to customers that brown and White is a

well-run company that does good work and also happens to be

a minority-owned business. bidding requirements on government

contracts have opened doors, but we still have to work twice as

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

come back to brown and White if we only relied on our Mbe

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

How HAvE you ovErCoME THE CHALLENgES oF BEINg MINorITy-owNEd BuSINESS?

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

been to build relationships, especially with those who initially have

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.

wHAT HAvE BEEN your BIggEST SuCCESSES AS A CoMPANy?

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

employees grow over the past 30 years. 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

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

employees whose commitment to organization has helped the

company succeed over the years.

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:

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

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

learn the methods. after a few years, step out and create

your own methods.

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

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

ficult to find banks and bonding companies who are willing

to support startups.

Being a minority – there are significant advantages being

a minority business person. i speak two languages. i can

navigate in two different cultures. i have learned to survive

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

ity has been a blessing for me.

Staying involved/Giving back – brown and White spon-

sored 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

solutions to their business challenges. We can show these

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

to be successful.

broWn and White, inc. • pete granillo

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STUDy BACKGROUND

study BAckground

the Arizona Minority Business Enterprise Study is an important next step to understanding this minority majority dynamic. The natural outgrowth with minorities living in the U.S. has been to start their own businesses and contribute to the overall economy. fueled by strong population growth, minority-owned business owners have created a subsequent “second growth wave” by filling the marketplace with com-panies in virtually every industry.

In the most recent figures released by the U.S. Census Bureau, the number of minority-owned businesses increased by 46% in Arizona (as well as nationwide) between 2002 and 2007. This increase was more than double the 18% national growth rate of all businesses during the same time period.3 The U.S. Census has conducted national studies of American businesses every five years and is currently in preparation for the next study.

The 2007 Survey of Business Owners highlighted the size and impact of Arizona minority business enterprises at that time.

Arizona had 85,227 minority-owned businesses, •

which represents the total number of firms with or without paid employees. (A total of 12,292 minority-owned businesses had paid employees.)

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

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

The Arizona Minority Business Enterprise Study is designed to reach behind these numbers and gain a better understand-ing of these entrepreneurs. What challenges have they faced being a minority-owned business? How have they overcome these challenges? What types of businesses do they run? Who are these owners? What plans do they have for the future?

While the next U.S. Census Survey of Business Owners is still being planned, this study helps bridge the information gap during the post-recession recovery and provides a platform to identify ways to help minority businesses enterprises suc-ceed in Arizona.

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.

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 exCellenCeL e a d i n g t h e W a y i n S u p p L i e r d i v e r S i t y

AmericAn expressArizonA public service (Aps)

ArizonA stAte university (Asu)At & t

bAnk of AmericA

centurylinkcity of phoenix AviAtion

cox communicAtionshensel phelps construction co.

pepsico

sAlt river project (srp)southwest GAs

sundt constructionuniversity of phoenix

wAlmArt

2012 inDuCtees

19

CHALLENGES

detAiled Findingssection i • challenges

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 reces-sion 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).

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

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 custom-•

ers (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).

note: all direct comparisons with 2007 survey data were

obtained from the 2007 srp arizona business study – Focus on

Minority-owned businesses.6

wHAT TyPES oF CHALLENgES HAvE MINorITy BuSINESS ENTErPrISES (MBEs) FACEd?

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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

21

CHALLENGES


22

CHALLENGES


23

STRATEGIES AND SUCCESSES

section ii • strategies and successes

Low financial cost/higher personal cost –

the most often mentioned solution to the challenges Mbes face

involved greater personal commitment to the business. the own-

ers/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

customers, suppliers and peers. they wanted to convince custom-

ers that they will still be around tomorrow and have earned their

right to stay in business.

When asked what advice they would give a minority •

business person who was just starting, business own-

ers/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%).

Increase company exposure – in terms of spe-

cific strategies Mbes have taken to overcome their challenges,

the owners/managers were more likely to have mentioned in-

creasing advertising and networking efforts compared to 2007.

More companies leveraging minority sta-tus – another strategy Mbes appeared to take was to leverage

their position as minority business enterprises. businesses signifi-

cantly increased their promotion and networking compared to

2007.

I try to promote the fact that my company is a minority-•

owned business (29% agreed in 2007 to 46% in

2012)

I try to network with other minority-owned businesses•

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

in addition, two new questions in the 2012 study highlighted this

leverage approach:

I use my minority-owned business status to pursue •

business opportunities (48% agreed in 2012)

I specifically try to target my business towards minority •

groups (36% agreed in 2012)

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 certifica-

tion provided opportunities to pursue specific contracts (7%).

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%).

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%)

wHAT STEPS HAvE THESE BuSINESSES TAKEN To SuCCEEd?

24



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

25



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

26



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

27



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

28



29



30



31

BUSINESS PROfILE

axis eMployMentowNEr: 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 company’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.

Photo by Andrea Contreras, Contreras Design

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!

How dId THE ECoNoMIC dowNTurN AFFECT AxIS EMPLoyMENT?

i consider myself very fortunate that axis employment not only sur-

vived 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.

AxIS EMPLoyMEnt SErvICES, LLCtrAn trAn

4710 n. 16th street suite 201, phoenix az 85016[602] 242.2626

[email protected]


Photo by Andrea Contreras Design

32

BUSINESS PROfILE

To wHAT do you CoNTrIBuTE THE SuCCESS oF THE CoMPANy?

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

good business revolves around good people. i believe that

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

tion. traditionally, staffing companies are solely focused on the

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

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

candidates and make the fit for them based on their goals

and strengths. We also value a balance of professional and

personal success for our candidates because a happy employee is a

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

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

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!

How HAS BEINg A MINorITy AFFECTEd your ouTLooK wHEN ruNNINg your BuSINESS?

i was a refugee from vietnam and came to the united states when

i was eight years old with my parents and five siblings. except for

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)

on scholarships and then achieved professional success. i have

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

you have the opportunity to climb high.


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

specific challenges. in fact, the Mbe status has worked in our

favor. traditionally, we have not promoted our business as a Mbe,

but we do see the potential. as we look for opportunities, i think

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

opportunity to bid on certain projects that other companies without

the Mbe status would not have.

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

their diversity goals and that brings an added value to partnering

with us.

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.

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

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

passion we have for making our clients and candidates happy is

what helps drive the company’s continued growth.

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

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

reminder of the determination and focus that is needed each day

when running a business.

axis eMployMent • tran tran

33

RESOURCES AND ROLE MODELS

section iii • resources and role Models

not afraid to ask for help - half of Mbes (52%)

have sought assistance from government, trade and/or minority-

related organizations to help their business. those mentioned

most often included:

Small Business Association (SBA) – • 21%

Local Chamber of Commerce – • 19%

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.

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

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

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

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

need help applying for loans – For businesses

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

with respect at the bank or financial institution (21% disagreed with

the statement that they were “treated with respect”).

MBEs self-fund – Most Mbes financed their business us-

ing their own money (24%) or from funds generated by the compa-

ny (19% from sales/revenues/profit, 6% borrowing from accounts

receivables). More “traditional” capital sources mentioned were:

Commercial banks• (11%)

Community banks• (5%)

Line of credit from lending institution (not specific)• (2%)

SBA loans• (1%)

Bank, in general• (1%)

City/State grant• (1%)

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%)•

Oprah Winfrey • (4%)

Bill Gates• (4%)

in 2007, the top two names mentioned were Bill Gates (7%) and

Donald Trump (7%). President Bush and Governor Napolitano

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

the up and coming politician Barack Obama in 2007.

among “categories” of potential advisors, politicians were

mentioned most often (but not surprising during the 2012 election

year):

Politicians • (21%)

Business leaders• (15%)

Business advisors for their specific industry• (11%)

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

wHICH rESourCES HAvE MBEs rELIEd uPoN To ruN THEIr BuSINESSES?

34



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

35



36



37



38



39

BUSINESS CHARACTERISTICS

section iv • business characteristics

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.

Companies surviving the economic downturn - a profile of the typical minority-owned business

included:

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

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

the srp study), the figures highlight similarities and some differ-

ences between the two groups.

compared to the phoenix-area businesses, minority-owned busi-

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 employ-

ees 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

wHAT ArE THE CHArACTErISTICS oF MBEs?

40


revenues increase slightly over five years - Mbes experienced some changes in firmagraphics over

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

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.

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

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

38% in 2012).

Business beyond Arizona borders – a significant percentage of arizona Mbes conducted business

beyond the state’s borders.

Closer to home –• among the 38% who conducted

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.

not all of the business went to Mexico -• a

total of 13% conducted business internationally. among

those who did business outside of the u.s.:

41% conducted business in Mexico•

30% in • Europe

29% in • Canada

20% in • Asia

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

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

businesses used the internet as their top advertising media.

two out of three businesses (65%) spent money on •

some type of advertising during 2011. the median

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

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

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


wHAT ArE THE CHArACTErISTICS oF MBEs?

41



sample size

oWnership

Sole Proprietorship

Corporation

S Corporation

Partnership

LLC

median revenue

MEdIAN NuMBEr oF EMPLoyEES

BuSINESS dESCrIPTIoNS

Family owned

Inherited from Family

Home-Based

Non for Profit

CuSToMEr dESCrIPTIoNS

retail Consumers

Business

goverment

gEogrAPHIC SCoPE

Conducts Business Internationally

Conducts Business Nationally

MINORITY BUSINESSES

2007 2012

663

38%

23%

17%

11%

9%

$201,000

4

9 yrs.

64%

n/a

38%

4%

n/a

n/a

n/a

16%

32%

605

33%

19%

24%

9%

14%

$215,000

4

12 yrs.

56%

20%

44%

3%

49%

55%

42%

13%

38%Bolded figures are statistically different.

42



sample size

oWnership

Sole Proprietorship

Corporation

S Corporation

Partnership

LLC

median revenue

MEdIAN NuMBEr oF EMPLoyEES

MEdIAN AgE oF CoMPANy

BuSINESS dESCrIPTIoNS

Home-Based

Non for Profit

PHOENIX-AREA BUSINESSES

TOTAL MINORITY-OWNED

833

33%

17%

18%

9%

20%

$241,400

3

14 yrs.

40%

8%

361

32%

19%

26%

8%

15%

$207,200

4

10 yrs.

42%

3%Bolded figures are statistically different.

43



44



45



46



47



48

OWNER CHARACTERISTICS

section v • oWner characteristics

Educated, higher income, multi-lingual and middle-aged — characteristics of the owners of Mbes

included:

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

english.

Compared to the general population — Mbe owners were twice as likely to have a college degree and

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

household income *.

2009 arizona • education attained — 25.6% college

degree9 compared to 50% among owners.

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.

* note: the income for Mbe owners is not a direct compari-

son with the overall household figures because the state’s 2011

median income accounts for multiple wage earners in the home

compared to the Mbe owner’s individual income. the difference

of Mbes household income would be even greater than arizona

household income.

wHo owNS THESE MINorITy BuSINESS ENTErPrISES?

49

OWNER CHARACTERISTICS

section v • oWner characteristics

sample size

demographics

Median Age

Percentage with college degree or more Education

Median Household Income

culture/language

Born in u.S.

Second generation

Third generation or Higher

Speak Another Language besides English

MINORITY BUSINESSES

2007 2012

663

49 yrs.

46%

$76,800

65%

21%

43%

n/a

605

52 yrs.

50%

$72,300

69%

16%

51%

71%

Bolded figures are statistically different.

50

THE fUTURE

section vi • the Future

Businesses remain optimistic — two out of three

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

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

worse.

drop from 2007 • - optimism declined from 2007

(72% felt their financial situation would improve when

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

in 2012 was still relatively high considering what these

businesses experienced during the prior five years.

Businesses plan to expand — businesses’

optimism was further evident with 60% mentioning that they

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

percentage of businesses planning on expanding was also 59%

in 2007.

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

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

they planned to add was five employees. only 2%

planned on cutting jobs in the next two years.

wHAT do THESE owNErS THINK ABouT THE FuTurE oF THEIr BuSINESS?

51

THE fUTURE


52

THE fUTURE


53

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 transport-

ing people from “point a to point b.” 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.comwillie.gray@justforyoutransportation.com


54

BUSINESS PROfILE

wHAT IS THE HISTory oF THE CoMPANy?

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

up riding the city buses in chicago, illinois. after relocating to

phoenix, i started working as a van driver for the social services

department. 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. i

have found it difficult to find individuals who are motivated, enjoy

working with people and care about the client. in this profes-

sion, my employees have to deal with some difficult situations

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.

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

25 percent during the recession. agencies were paying less for

transportation services and reducing the number of clientele they

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

the company.

How wErE you ABLE To ovErCoME?

i believe one of the primary reasons we survived the economic

downturn was because of how diverse we are. our clientele

includes government municipalities, private businesses, special

interest groups, and individuals. When revenue was declining

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

increase revenue.


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.

wHAT AdvICE wouLd you gIvE To SoMEoNE STArTINg uP A BuSINESS?

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

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

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

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

flow to pay your employees and other business expenses.

i would also recommend having an in-depth knowledge of your

customer base. have a good clear understanding about who

your customers are and who you are serving….know how to

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

professional.

Just For you transportation service inc. • Willy gray

55

ANALySIS By TARGET GROUPS

AnAlysistarget group 1 • acculturation

How doES ACCuLTurATIoN HAvE AN IMPACT oN oPINIoNS?in reviewing the survey results, a number of questions 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 differ-

ently?” identifying these differences could affect the strategies on

how to help these owners.

one indicator of acculturation is the number of generations living

in the u.s. For definition purposes:

1st generation – owner born outside the country

2nd generation – parents were born outside country/owner born

within the u.s.

3rd generation plus – earlier generations born within the u.s.

the following are some differences and similarities that surfaced:

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:

Mention challenges of • being taken seriously/trying to

earn the respect and having language barriers.

have significant challenges • overcoming negative

perceptions being a minority and overcoming cultural

barriers.

speak another language besides english.•

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

Mentioned challenges being taken seriously/trying to earn respect

Mentioned having language barriers

rated overcoming negative perceptions being a minority as “significant”

rated overcoming cultural barriers as significant

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

16%

10%

22%

20%

7%

1%

12%

4%

7%

2%

11%

7%

56



Completed post-grad work

Conduct business in Maricopa County

Heritage * – Top responses:HispanicAsianAfrican AmericanAmerican Indian

Contacted SBA for assistance


n=176


ouTSIdE u.S.n=99


n=306

29%

79%

50%46%3%2%

13%

17%

60%

86%8%4%4%

25%

16%

57%

58%4%

19%19%

23%

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.

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.

target group 1 • acculturation

57



Promote their minority status

Network with other minority businesses

use minority status to pursue business

do not target business to minorities


n=176


ouTSIdE u.S.n=99


n=306

46%

53%

45%

69%

41%

61%

45%

56%

47%

59%

51%

59%

percent strongly agree/agree

Implications

First generation businesses should be pointed to outside government organizations and support organizations for initial 1.

assistance.

help first generation businesses to leverage their minority status. 2.

promote the benefits of minority status across generations. 3.

target group 1 • acculturation

58


AnAlysistarget 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.

the most obvious difference is the number of hispanic companies

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.

Minority challenges/association

african americans were more likely to have had •

significant challenges overcoming their negative minority

perceptions/stereotypes.

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.

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.

Significant challenge overcoming negative minority perceptions

Promote MBE status – Strongly agree

do not target minority group – Percent agree*

HISPANICn=380

ASIANn=52

AFrICAN AMErICANn=86

11%

10%

59%

19%

8%

78%

27%

18%

64%

AFrICAN INdIANn=53

9%

27%

42%

59


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.

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.

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.

ASBA

Local Chamber of Commerce

Minority organization *

HISPANICn=380

ASIANn=52


9%

19%

14%

8%

16%

8%

16%

33%

23%

contactedorganization

AFrICAN INdIANn=53

3%

13%

30%

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

Economy will improve *

HISPANICn=380

ASIANn=52


63% 46% 76%

AFrICAN INdIANn=53

68%

Implications

african american businesses were most likely to have experienced challenges as Mbes, but were also more likely to seek 1.

assistance from outside organizations.

american indian businesses were most likely to promote their minority status and also seek assistance from other minority-2.

related organizations.

asian businesses seemed to be taking a mainstream approach in their strategy and less likely to have positioned their Mbe 3.

status to gain business advantages.

hispanic businesses are in a position to provide some leadership with Mbes due to sheer size of the market they represent. 4.

60


AnAlysistarget group 3 • coMpany size

How dIFFErENT ArE MBEs By SIzE oF CoMPANy?

a key to helping Mbes is determining if different strategies

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

were clear firmagraphic differences between small and large

companies (e.g. smaller companies have lower revenues

than larger companies), there were also different approaches

regarding the positioning of minority status when comparing these

firms.

one way to delineate company size is based on the

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

collection, quotas were set by four employee size categories that

coincided with actual distribution of Mbes in arizona from the

latest u.s. census survey of business owners.

1 – 4 employees

5 – 9 employees

10 – 19 employees

20+ employees

Westgroup oversampled the larger company sizes in

order to have enough responses to provide some

comparisons. the data was re-weighted to match the actual Mbe

distribution when reporting the total results.

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.

Promote MBE status – Percent agree

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

1 – 4 EMPLoyEESn=352



38%

10%

52%

13%

56%

20%

20+ EMPLoyEESn=62

62%

28%

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 opportuni-

ties.

61


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

Economy will improve

Plan to expand

Plan to add jobs

Median number of jobs adding




60%

55%

59%

1

63%

59%

67%

5

68%

74%

75%

5

20+ EMPLoyEESn=62

75%

73%

82%

20

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.

Contacted SBA for assistance *

Contacted at least one governmental, trade, or minority organization




16%

46%

20%

58%

30%

60%

20+ EMPLoyEESn=62

30%

60%

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.

relying on outside assistance – larger companies were more likely to have sought assistance from outside organiza-

tions 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.

target group 3 • coMpany size

62


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

retail customers

Businesses

government




54%

50%

40%

47%

62%

38%

41%

58%

46%

contactedorganization

20+ EMPLoyEESn=62

36%

66%

58%

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.

Percent home-based businesses *

Median revenue **

Spent on advertising

Median amount spent **

owner 2011 salary **




56%

$89,000

57%

$2,000

$62,000

33%

$406,000

73%

$5,000

$74,000

28%

$1,396,000

72%

$8,000

$80,000

FirMagraphics 20+ EMPLoyEESn=62

12%

$2,015,000

86%

$10,000

$134,000

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.

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.

Implications

larger companies use their minority status more than smaller companies to their advantage. companies focusing on providing 1. 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.

recovery from the economic slowdown will be led by larger companies rather than smaller companies. 2.

smaller companies generally are busy with day-to-day operations and do not have the time or see the value of seeking help 3. 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.

• coMpany size

63

STUDy HISTORy AND METHODOLOGy

wHAT IS THE HISTory BEHINd THE STudy?

dr. loui olivas began conducting research with hispanic

businesses in 1990 as an annual project with the hispanic

research center at asu. in 2005, the study expanded

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 re-

search after earlier trending analyses identified minimal changes

in demographics and attitudes from year-to year.

the phoenix Mbda business center and arizona hispanic cham-

ber of commerce became the primary project coordinators for the

2012 study. this year’s research is a statewide study of arizona

women and minority businesses enterprises (Mbes). results were

compared with previous years when applicable.

the results of the women-owned business will be presented in a

separate report in the spring of 2013.

wHy ArE THE PHoENIx MBdA BuSINESS CENTEr ANd ArIzoNA HISPANIC CHAMBEr oF CoMMErCE CoNduCTINg THIS rESEArCH?

the phoenix Mbda business center and arizona hispanic

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 be-

tween minority- and non-minority owned businesses. the study

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

try and government that the economic sustainability of our state

depends everyday on the entrepreneurial vitality of its minority

communities.

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.

the following is a breakdown of various groups that participated

in the research.

study History And MetHodology

Hispanic

African American

American Indian

Asian

Native/Hawaiian or other Pacific Islander

other

uNwEIgHTEdPErCENT rESPoNSE

63%

14%

9%

9%

3%

1%

Minority grouprepresentation

64


women-owned

Not women-owned

PErCENT rESPoNSE

37%

63%

WoMan-oWnedMbes

1 to 4

5 to 9

10 to 19

20 or more

don’t know/refused

uNwEIgHTEdPErCENT rESPoNSE

58%

20%

11%

10%

<1%

nuMber oF paideMployees

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

study history and Metodology

65


wHo wAS INTErvIEwEd For THE SurvEy?

telephone interviewers screened respondents in order to reach

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

interviews were conducted with the owner/chief executive officer

or president.

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 •

wHAT METHodS wErE uSEd To CoNduCT THE rESEArCH?

the survey was conducted through telephone interviews. due

to the high incidence of hispanic businesses, respondents were

given the option of participating in the interview in spanish.

wHEN wAS THE SurvEy CoNduCTEd?

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.

wHICH STudIES wErE uSEd To CoMPArE FINdINgS wITH THIS yEAr’S 2012 FINdINgS?

the 2007 srp arizona business study —Focus on Minority-

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).

Contact Us

For more information about the research, please email your

questions or requests to: [email protected].

study history and Metodology

owner/CEo/president

Administrator/manager

Board member/executive management

other

PErCENT rESPoNSE*

80%

11%

7%

4%

position

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

67

END NOTES

1 Jeffrey s. passel et al., “91.7% — Minorities account for nearly

all u.s. population growth,” pewresearchcenter - the databank,

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

lation-growth-2010-census.

2 the associated press, “census: More minority u.s. births than

white now,” cbsnews.com, May 17, 2012, 12:49 aM, http://

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

white-now/.

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,

2011, http://www.census.gov/newsroom/releases/archives/business_ownership/

cb11-103.html.

4 united states census bureau, “statistics for all u.s. Firms by

industry, gender, ethnicity, and race for the u.s., states, Metro

areas, counties, and places: 2007,” 2007 survey of business

owners, sb0700csa01, http://factfinder2.census.gov/faces/tableservices/

jsf/pages/productview.xhtml?pid=SBo_2007_00CSA01&prodType=table.

5 the national bureau of economic research, business cycle dat-

ing committee, sept. 10, 2010, nber.org/cycles/sept2010.html.

6 salt river project, 2007 srp arizona business study — Focus on

Minority-owned businesses, 2007.

7 salt river project, 2011 Metro-phoenix business study - new

strategies for success, 2011, http://www.srpnet.com/energy/powerwise/busi-

ness/area/BrC/phxbizstudy.aspx.

8 ibid 7.

9 united states census bureau, education attained by state,

the 2012 statistical abstract, the national data book, 2012,

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

10 amanda noss, “u.s, census bureau, household income for

states 2010 and 2011,” american community survey briefs, unit-

ed states census bureau, september 2012.

11 united states census, “statistics for all u.s. Firms by industry,

gender, ethnicity, and race for the u.s., states, Metro areas,

counties, and places,” 2007 survey of business owners, http://

factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=SBo_200

7_00CSA01&prodType=table

12 salt river project, 2007 srp arizona business study — Focus

on Minority-owned businesses, 2007.

13 salt river project, 2011 Metro-phoenix business study - new

strategies for success, 2011, http://www.srpnet.com/energy/powerwise/busi-

ness/area/BrC/phxbizstudy.aspx.

end notes

The MBDA Business Centers in Phoenix and Pasadena, serves minority-owned firms seeking to penetrate new markets, domestic & global, and growing in size and scale. Whether it’s securing capital, competing for a contract, identifying a strategic partner or becoming export-ready, your success is our priority.. We assist in securing large public and private contracts and financing transactions, stimulating job creation and retention, and facilitating entry to global markets for eligible minority business enterprises (MBEs).

MBC serves eligible MBEs with annual revenues of over $1,000,000 or, firms in a high-growth industry (e.g. green technology, clean energy, health care, infrastructure and broadband technology, and such).

255 East Osborn Road, Suite 202, Phoenix AZ 85012 602-248-0007 155 N. Lake Avenue, Suite 870, Pasadena, CA 91101 626-664-4880

www.phoenixmbdacenter.com; Operated by the Arizona Hispanic Chamber of Commerce

Services to Grow your business: Global Entrepreneurship; Access To Capital/ Financing; Access to Procurement/ Bid Opportunities; Access to Markets

Marketing; Bidding; Networking; Minority Certifications; Management Consulting

www.phoenixmbdacenter.com

255 East Osborn Road., Ste. 201 | Phoenix, Arizona 85012 | 602-279-1800 | www.AZHCC.com

For more than 60 years, the Arizona Hispanic Chamber of Commerce has helped the state's Latino-owned businesses—now an estimated 60,000 strong—grow and prosper.

As an AZHCC member, your company will join forces with the fastest growing segment of the Arizona economy. The state's booming Latino market is a $35 billion annual powerhouse.

Membership also connects you to our

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• Minority Business Enterprise Summit

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• Black & White Ball and Business Awards

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To learn how to join the AZHCC, contact us

at 602-279-1800 or [email protected].

www.azhcc.com

We speak the language. The Language... of BUSINESS.

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AZHCC MEMBER

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