Gloria Castillo’s Loop-based small business has all the markings of an established enterprise.
The firm, Monarch Graphics, which produces promotional products, registered $2.5 million in sales last year, up from $1.2 million in sales when Castillo became involved in the business eight years ago. Started more than two decades ago by Castillo’s mother, Mona, the company now employs 11 people, up from two full-time employees and one part-timer eight years ago.
Despite the success of her firm and many others like it, Castillo, a Mexican American, says perceptions of minority businesses have not changed much since her business was started.
“We think we’re becoming a colorblind society, but that’s not the case,” said Castillo. “Even though we have a successful track record, I feel like our firm is scrutinized more than a majority company would be.”
For example, one of the biggest challenges still facing minority firms today is finding capital, whether for starting a business or expanding, said Castillo and others involved in minority businesses.
“I believe minority businesses have a tougher time obtaining access to capital because there’s always that element of perceived risk,” said David Vega, regional director for the Minority Business Development Agency of the U.S. Department of Commerce in Chicago. “That perception stems from the sense of higher costs that can be associated with operating in the inner city, such as security.”
Others believe such prejudicial attitudes exist simply because most lending institutions are run by white males. “There are socialized perceptions about minorities out there,” said Castillo. “And (if a lender) has had a negative experience with a minority business, they tend to carry that with them.”
“You don’t have to go far to find minority business owners who had to go to multiple locations before they could find a banker sensitive enough to take the risk to invest in their company,” said Ralph G. Moore, an African American who is president of his own management and information systems consulting firm in Chicago.
“People have a negative perception of a minority’s ability to be successful,” said Angelo Velasquez, a Mexican American and president of the Cicero-based A&R Janitorial Service Inc., which has been operating since 1963 and employs 500 people. “When a minority entrepreneur fails, that failure is highlighted. But when a non-minority business fails, it’s chalked up to `doing business’.”
Even government and private-sector programs put in place to bolster minority businesses have been saddled with negative perceptions, said officials.
“People have stereotypes about `giveaway’ programs that aren’t going to work,” said Velasquez. “But I’ve advocated for a number of years that until there’s true parity in the business community, you’ve got to have these assistance programs (for minority businesses).”
One example of such a program is the Chicago-based Minority Enterprise Growth Assistance (Mega) Center, an extension of the U.S. Department of Commerce’s Minority Business Development Agency.
The center, funded by a $1.8 million U.S. Department of Commerce cooperative contract and $700,000 in private-sector funds, is a “one-stop” business consulting center, working with nearly 400 businesses in the Midwest.
“We provide basic business-development services in the area of management, marketing, finance, certifications and so on,” said George Herrera, president of David J. Burgos and Associates Inc., the contractor that operates the center.
The Mega Center, however, is not a “government giveaway,” said Herrera. “We do not provide free services,” he said. “All clients are charged a fee for the services they receive.”
Herrera said the center’s most active division is its construction-assistance and bonding division, where “we have been able to develop a couple of creative concepts,” he said.
Earlier this year, the center unveiled a program that resulted in $50 million in construction bonds for its clients. “For minority construction firms, the biggest obstacle in penetrating bidding on construction is lack of having access to bonding,” he said.
There are numerous other programs geared toward helping minority businesses. The U.S. Small Business Administration has general small-business programs as well as contracting and loan programs geared specifically for minority firms, said John L. Smith, Chicago district director for the SBA.
Minority business executives and advisers said such programs are important to boost the number of minority-owned businesses to a level more reflective of the percentage of minorities in the population. “We are at least looking for a level playing field,” said Castillo, who has used the Mega Center to help produce expansion plans and financing options.
The negative perceptions of minority businesses are especially unfortunate when one considers what minority firms contribute to the economy, said minority-business advisers.
Because most minority-owned businesses are part of America’s small-business sector, they’re a driving force of the economy, said Vega. “We all know that small businesses make up the backbone of the economy,” he said.
“Contrary to what most people think, minority businesses-as well as small businesses-make a tremendous contribution as far as dollars to the payroll of the economy,” said Velasquez. “In addition, so much of our progress that we’ve made in research and development stems from small business.”
In the Chicago area, there are about 30,000 minority-owned businesses, according to 1990 U.S. Census information. That’s up from about 25,000 firms in 1982.
Vega said that locally, minority businesses have been flourishing. “The Asian community has especially shown a tremendous increase in the last 10 years,” he said.
Minority-owned businesses make other types of contributions, said the industry observers.
For instance, these firms are more likely to set up shop in inner-city communities. “Minority companies tend to hire from the minority community, where help is needed the most,” said Vega. “A mega-corporation is not likely to do that.”
Successful minority-owned businesses also create role models for the minority community, said Vega.
Minority-owned businesses are trying to contribute in other ways, said minority-business advisers. For example, the face of minority-owned businesses is slowly but surely changing, as more startup firms try to venture away from the service industry, a traditional area for minority companies.
“Minority businesses are improving in manufacturing but they’re still under-represented,” said Vega. “And there hasn’t been much progress in high technology.”
In addition to government and private programs, minority business executives and advisers also hope to change perceptions through self-promotion.
“I contend that the stereotypes will go away when we, as minority people, stand up and make them go away,” said Moore. “We have to take charge of our own communities.”
