The changing nature of BLACK BUSINESS
To Charles James, the 1880 presidential campaign of James A. Garfield represented a business opportunity.Skip to next paragraph
Subscribe Today to the Monitor
In the months preceding election day, the enterprising young James trudged from door to door in his hometown, Charleston, W.Va., peddling a line of assorted political souvenirs. The election passed and the bottom dropped out of the political-button-and-banner market, but James took his earnings and bought manufactured goods and bartered for fresh produce at surrounding farms.
From this humble beginning, James soon became the proud owner of a thriving food distributorship. Three generations later -- after prospering, failing, and reviving -- C. H. James & Co. employs 30 people, and last year it grossed $5 million selling food to supermarkets, restaurants, and hotels in the Charleston area. It is one of the oldest black-owned enterprises in the United States.
Near Tysons Corner, Va., in one of those low, unobtrusively modern buildings that all technology firms seem to occupy, Robert Quinichett runs one of the newest and fastest-growing of America's black-owned businesses.
An Ohio State University graduate with a degree in math, Mr. Quinichett worked for North American Aviation, Computer Sciences Corporation, and the Department of Agriculture before striking out on his own. In 1977, he founded Sterling Systems Inc., a company that sets up data-collecting computer systems. With 1981 receipts estimated at $17 million, Sterling ranks 27th on Black Enterprise magazine's list of the top 100 US black companies.
''I worked seven days a week, around the clock. I didn't think about not succeeding,'' he says. His hard work has carried him to a top-floor suite with that whisper of elegance that says ''chief executive officer.'' But Sterling Systems, like many other companies, now faces a challenging period of transition forced by cutbacks in government aid to minority businesses.m
Over the past 20 years, as the wall of racial discrimination has crumbled, black entrepreneurs have entered increasingly varied fields. If C. H. James represents a more traditional black firm -- family-run, seller of a basic commodity, oriented to a distinct geographic turf -- then Sterling Systems, with its high-technology products, could be seen as a symbol of many new black businesses.
The black economic community has made much progress since the 1960s. But, along with the problems faced by all small- and medium-size enterprises, black-owned businesses still face obstacles their white counterparts don't have to scale.
''These businesses have established that they are around, they are going to survive, they are going to be part of the free-enterprise system,'' says Earl Graves, publisher of Black Enterprise. But it's still ''a day-to-day effort to convince people that doing business with a minority firm is not some kind of adventure.''
From 1972 to 1977, the latest period for which Census Bureau data are available, the number of black businesses increased 22.9 percent, to 231,000.
From 1972 to last year, total sales of companies listed in the Black Enterprise 100 rose 81 percent after inflation, to $1.9 billion. These larger black-owned firms expanded three times as fast as the US gross national product.
But compared with the largest white-owned firms, black businesses are mostly small- and medium-size concerns. Motown Industries, first on the Black Enterprise list, with 1981 sales of $91.7 million, wouldn't even make Fortune magazine's second 500. And small business in general is suffering under the burden of high interest rates.
In addition, two-thirds of black companies are types of businesses highly vulnerable to the economic cycle. Thirty-nine percent of total receipts come from retail trade -- one of the first areas to go flat in a recession. Twenty-nine of the top 100 black concerns on the Black Enterprise list are auto dealers or garages. Many black businesses cater to black consumers, whose purchasing power, as a group, has been slashed by 18.7 percent unemployment.
Combined, these facts indicate that black businesses suffer disproportionately in any recession, black economists say.
''Even on the upswing, they won't feel a recovery as quickly,'' says Dr. William Bradford, professor of finance at the University of Maryland.
But the traditional black business is changing. The result could be a business sector more resistant to recession and better positioned for long-term growth.
''On balance, by the end of the decade I see stronger black-owned companies, '' says Dr. Alfred Osborne, head of the MBA program at the University of California, Los Angeles.
For one thing, the black consumer is becoming a less important market for these companies. In 1969, blacks spent 13.5 percent of their income at black-owned firms. By 1977, the figure had fallen to 9.9 percent.