Programs for minority-owned businesses that give entrepreneurs a leg up are more myth than substance. Two extraordinary business owners measure success differently, but they have one thing in common: They earned it. No special favors.
Sheraz Kahan is an Italian-trained chef who favors the flavors of Caribbean food. She was born in Toronto to Chinese-Indian parents. Menu items at Sweet Mamma’s Island Cuisine, her restaurant in Naples, Florida, have names like Alligator Bites, Rasta Pasta and Curried Goat.
When her landlord lost the property and committed suicide, Kahan had to close. Success for her came the day she rehired 12 employees, reopened at a new location and added Shrimp Etouffee to the menu.
David Steward started his own business in 1990 with four employees. Steward grew up in Clinton, Missouri, went to college and worked for several Fortune 500 companies before he jumped out on his own.
Success for Steward came last year when his St. Louis company, World Wide Technology, became the largest minority-owned company in the U.S. He now employs about 1,400 people, and his company grossed over $3.5 billion last year.
Minority-owned businesses apply for the same loans and government programs and get the same tax benefits as other small businesses. Minority businesses do have some advantage if they're selling to the government.
No special loans
Specific loan programs for minority-owned businesses do exist. But they are generally the same loan programs available to anyone, “including minority-owned businesses.”
Illinois, for example has a Minority, Veteran, Women, and Disabled Participation Loan Program (MVWD/PLP). But even that apparently targeted program is described as “a variation of the conventional PLP.”
No extra tax benefits
There are no special tax benefits for minorities. If you’re a Caucasian male and think you’ll get a tax break if you make your Hispanic wife the majority stockholder in your business, forget it. Not only is it fraud, there’s simply no tax benefit in it. The taxes you pay are the same that anyone pays.
There are, however, tax credit programs (.pdf) for people who invest in minority businesses and low-income communities.
No special programs
The U.S. Department of Commerce’s Minority Business Agency is, as the name indicates, specifically for minority business owners. But they offer essentially the same services as Small Business Development Centers (SBDCs), which serve all small businesses.
Selling to the government
The one significant advantage minority-owned businesses do have over other businesses is when it comes to contracting with the government.
In 1968, the SBA established the 8(a) program to encourage federal purchases from socially or economically disadvantaged businesses. Being a woman doesn’t qualify you for 8(a) status unless you also meet other criteria, by the way. To see what contracts the program awarded in 2011, and for what, review the data the government shares about its contracting activities online. They amount to almost $25 billion.
To learn about contracting, mentoring and training opportunities available to 8(a) business owners, contact a business opportunity specialist or Procurement Center representative at your SBA district office. Online resources are available from the GSA, the SBA’s SUB-Net listing of subcontracting solicitations and the Federal Procurement Database System.
Running a business is rewarding in a lot of ways. But it’s hard work, and there’s no free lunch. Except, occasionally, at Sweet Mama’s, if you can’t afford to pay.
Tom Harnish is a serial entrepreneur. He learned what works and what doesn't by leading projects, products and companies to success. He can't play a lot of musical instruments.
Photo credit: iStockphoto/leaf