Thomas A. Bourelly has little time to spare and even less to talk. The phone is ringing and orders must be taken. He`s no different from other entrepreneurs running a small operation.
”I`m out to make a living, to make some gains in my business, provide employment and beat out the competition,” says Bourelly, whose Evanston-based All-Fresh Foods makes and sells cooking oil. ”It`s called survival, whether you`re a black, white or purple entrepreneur.”
Bourelly is black, and like fellow black entrepreneurs who have hung out shingles in the last 10 to 15 years, he selected a business that goes beyond black consumers to establish a place in the mainstream economy.
Black-owned businesses have increased more than 40 percent nationwide, from 231,203 in 1977 to 339,239 in 1982, according to the U.S. Census Bureau`s most recent survey of minority-owned businesses. It is estimated that black women own approximately one-third, or 100,000, of these businesses.
Growth in black-owned firms was equally impressive for Illinois. The census report said 16,214 black-owned businesses were started in 1982, up from 12,284 in 1977. While the statistics do not indicate whether these businesses are located in predominantly black neighborhoods, economists say some of the newer black entrepreneurs are choosing locations in the ”money districts.”
Black-owned institutions founded in the 1800s, such as insurance companies, savings and loans and banks, were based in black neighborhoods and grew from the need to provide services generally denied blacks by white establishments. Black entrepreneurs who hope to have a wider reach are choosing locales both in and outside black communities and heading a range of businesses.
Of the 16,214 black-owned businesses in Illinois, 83 were agriculture-related, 795 were in construction, 169 in manufacturing, 1,024 in
transportation and public utilities, 160 in wholesale trade, 4,821 in retail trade, 785 in finance, insurance and real estate, 7,353 in services and 1,024 unclassified.
Behind the statistics are people like Bourelly, who heads All-Fresh Foods; Lafayette Jones, who heads Smith, Jones & Associates, which manages trade associations; and John Rogers Jr., whose brainchild is Ariel Capital Management Inc.
Some economists and historians say the new directions are for the better, perhaps long overdue.
”The more prominent businesses started by blacks, like insurance, savings and loans and banks, were started because blacks were often denied these services by white-owned firms,” said David Abner, a business professor and historian at Howard University in Washington.
Abner said the landscape of new businesses and acquisitions in black America has changed in the last decade.
”Unless you`re producing a product specially designed for blacks, there`s no sense to confine one`s self to a particular group in seeking a consumer audience,” Abner said. ”The key to economic growth is to serve the larger community, and black entrepreneurs are choosing businesses commensurate with their experience and goals.”
Bourelly is one such entrepreneur in the Chicago area whose privately held company is geared toward a larger audience.
Bourelly purchased All-Fresh from its founder in 1975. The company is housed in a two-story brick structure in Evanston and manufactures and sells cooking oils. It was founded in 1952 and was white-owned.
”The owner of the firm did not care about my race,” Bourelly said. ”He was looking forward to getting out. He was over retirement age, and his children were not interested in the firm.”
Bourelly`s race, however, was a concern for longtime workers, some of whom were white and in their early 60s.
”Oh, there was nothing subtle about the way they felt,” Bourelly said.
”There was outright hostility toward me. I tried to deal with the friction by reacting with my mind and not my heart. I know how to sell myself, and I was confident that my experience and background would help get me through. As far as customers, they were mostly white at the time I purchased the firm.”
Bourelly said his customer base is largely white, and the company counts General Foods Corp. and its subsidiary, Entenmann`s Bakeries Inc., among its largest clients.
Bourelly said the dissatisfied workers eventually took early retirement, but not before badmouthing the company to customers, telling them, ”You know this is a black company now. Things have changed.”
Bourelly said the changes that have taken place have been for the better. ”In the beginning, we sold largely to small bakeries, but these small businesses are disappearing. There weren`t many blacks in the bakery business. We`ve made adjustments here by diversifying our interests into other cooking areas, like frozen dough, shortening and margarines, and implemented technological changes to help us become more efficient. We`ve become a premium house that sells to larger firms.”
All-Fresh also exports to Canada and the Caribbean.
Although Bourelly is a native of Haiti, he said: ”I`ve been in Chicago since 1956. Nothing is different for me as a black businessman because I immigrated from Haiti. It`s been a struggle. I made a personal investment of $3,000 to purchase the business and had about 100 percent debt money, which has been paid back.”
Bourelly, 47, received his master`s in business administration from the University of Chicago in 1969. He worked as a financial analyst with Armour Industrial Chemical Co. and later went to Citibank in New York as a consultant.
”We may be competing for customers in the mainstream, but many of us are unable to really enter the mainstream of business, because we lack adequate financing tools,” Bourelly said. ”The venture capital funds are for the glamor businesses. They aren`t interested in the small guys like us in the industry I`m in, and many banks have eliminated their minority financing divisions.”
Another entrepreneur, John Rogers Jr., didn`t waste any time. After graduating from Princeton University and spending three years at William Blair & Co., an investment firm, Rogers set up shop in 1983.
Rogers got a running start with a $150,000 investment from his parents, both lawyers, and raised additional funds by asking close friends and other relatives to help in starting Ariel Capital Management Inc.
Rogers said Ariel, an equity investment management company and investment fund, is the only minority-owned firm in the Midwest that manages investments for institutions.
Located at 307 N. Michigan Ave., Ariel manages $155 million in investments for institutions and some individual clients.
”I wanted to be able to develop an investment philosophy and test it against other firms,” said Rogers, 29.
Rogers said the firm`s clients include the Washington, D.C., Retirement Fund, the Kraft Foundation, Peoples Energy Corp., Leo Burnett Co. Inc., Howard University, the United Negro College Fund, Adolph Coors Co., Wayne State University, the Chicago Municipal Retirement Fund, Cook County Retirement Fund and Laborers Retirement Fund of Chicago.
”We have white and black clients, really a range of clients,” Rogers said. ”We`re interested in management and investments for institutions.”
Rogers said firms like his are typically paid 1 percent or less of the amount they manage of a company`s or individual`s assets.
”It makes sense for a company like this to be centrally located and near the city`s financial district,” Rogers said.
Richard J. Thane, dean of external affairs of the graduate school of the University of Chicago, said: ”Black students that go through a business program are thinking in the sense of a broader world market. They are not restricting themselves to an enterprise that serves one particular race. Their focus becomes global. Their interest in business goes beyond opening a neighborhood grocery store.”
James Fletcher, who heads The Neighborhood Fund, a venture capital minority small-business development group based on the South Side, said he has no argument with ”the global interest” of blacks in starting firms but stressed the need to locate these businesses in neighborhoods such as the South Shore community to aid in the area`s development.
The Neighborhood Fund is a spinoff of South Shore Bank, which Fletcher also heads as president.
”It`s been a problem for us, but we`re not only talking about the mom-and-pop kind of business or grocery store. We`re talking about the kind of business that lends itself to growth so that the neighborhood can also benefit,” Fletcher said.
”I`m not criticizing those who start new businesses in the financial districts of the city, because the nature of some businesses may call for that location, but there are still those businesses that can put headquarters here and still go after a more diverse consumer base,” Fletcher said.
Agreeing that the nature of some businesses determines their locations, Professor Abner said: ”Black entrepreneurs are just that–entrepreneurs. Being an entrepreneur means expansion, growth and essentially being in the money districts.
”Unfortunately, that takes some of them away from the black community in order for them to grow. The neighborhoods that need black entrepreneurs the most can`t really support them. It`s a dilemma, a Catch-22.”
Fletcher said about one-third of the 30 businesses that have been funded by The Neighborhood Fund since 1978 are located in the South Shore community. The Neighborhood Fund invests in start-ups and existing businesses that plan to expand. Fletcher said only two businesses have failed.
The venture capital group funds a range of operations, including franchises, wholesale distributors and retail firms.
”We`re not opening family businesses in neighborhoods to the extent the Vietnamese and other groups are, but it`s happening,” said Charles Branham, a historian and professor at Northwestern University.
”Blacks are opening the video stores, and some are moving on to their third and fourth locations. They`ve recruited relatives and made it a family business.”
One way in which business starts have come into the community has been through franchise ownership.
A survey conducted by the U.S. Department of Commerce said minority ownership of franchises increased 13 percent in 1985 from 1986. Of the 2,090 franchisers surveyed, 616 reported a total of 9,147 units owned by minorities, 3,399, or 37.2 percent, of them by blacks.
The most popular franchising sectors of minority-owned businesses are restaurants, auto products and services, food retailing and business aids and services.
Fred Rasheed, the NAACP`s director of economic development, said the increased number of blacks owning franchises can be attributed to their growing interest in working for themselves and to corporate reductions of personnel in which blacks are often the first to lose their jobs.
”Many blacks are experiencing corporate burnout, and some black managers who are threatened with corporate cutbacks and downsizing are turning to franchising,” he said.
Rasheed said one of the largest black franchisees in the country is Charles A. Davis, who owns Inner City Foods Inc., a 16-store Burger King establishment.
For those blacks logjammed in middle management positions, franchise operations, acquisitions of small firms and joint ventures make it possible for them to realize goals they couldn`t at white-owned firms.
”Many of the blacks starting businesses today were on the middle rung of white America`s corporate ladder,” said Lafayette Jones, president of Smith, Jones and Associates.
Jones, 43, started his business with 20 years of marketing management experience at Lever Brothers Co., General Foods, Pillsbury Co., Norton Simon Inc., and Johnson Products Co., which is black owned.
Jones` firm, which has offices in Chicago, Washington and Los Angeles, manages trade associations and professional organizations.
Founded in 1981, Jones` firm is affiliated with Smith, Bucklin & Associates, a white-owned firm located at 111 E. Wacker Dr. Smith Bucklin is considered the country`s largest association management firm.
”They`ve been in business 40 years, and they`ve helped us cut the learning curve in getting started,” Jones said.
”The picture isn`t completely rosy, but opportunities do exist” for black entrepreneurs, said Jones, who encourages blacks to explore partnerships to help them make acquisitions and to look into joint ventures.
While black economists and historians say the trend is toward more blacks leaving white businesses to go into business for themselves, the trend doesn`t necessarily mark a black exodus from white corporations.
Abner said most business schools have been geared toward the development of entry-level management people aimed at providing graduates for corporate management.
”In the last couple of years, we have developed a program in entrepreneurship, because we recognize the need to stimulate blacks to think in terms of going into business for themselves,” Abner said.
But Abner warned: ”Entrepreneurship should not be touted as the be-all and end-all way to economic strength. It is one means.”
