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A Place at the Table
With a little help from their friends, female- and minority-owned businesses step up to the plate in state
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Business New Haven
4/5/1999
By: Sharon Cohen
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As increasing numbers of women and minorities open businesses in Connecticut, they are becoming a force that's getting attention.
Increasingly, both private and government organizations are starting new programs, or enhancing those already in place, to give these small-business owners added support and resources. The entrepreneurs appreciate the help, but hope that this is just the beginning of more to come.
As little as a decade ago, most women coming into a bank for start-up financing for a business would have departed empty-handed unless backed by some very strong - usually male-connected - collateral. Instead, these hopeful business owners would have to rely on credit cards or home-equity loans to get going. Today, an growing number of banks are welcoming these women into their offices.
In mid-1998, for example, BankBoston followed the lead of other initiatives such as the People's Bank Women's Business Center in launching its Women Entrepreneurs' Connection. The program provides those services female business owners say they need most from a financial institution: access to capital to start or grow their business, a vehicle to get information to help them make business decisions, and support with the issues they face as business owners.
“Women are an economic force that no bank can afford to overlook,” says Teri Cavanagh, director of the new venture. Products include funding through the connection's $100 million Women-Owned Business Loan Initiative ($53 million was lent during 1998), as well as information and support.
Says Sue Glasspiegel, president of the Connecticut chapter of the National Association of Women Business Owners and one of four principals of Flexible Resources, an employment agency with locations in Greenwich and Simsbury: “Financial institutions are recognizing that women are not bad credit risks after all. They also see that women, more so than men, are good candidates for cross-selling. Women owners look for a full line of services at one institution including credit, insurance and investments.”
Easier financing is only one reason why the number of female-owned businesses is rising in the state, says Glasspiegel. Many women - and men - lost their jobs as a consequence of early '90s downsizing and became independent contractors when they couldn't find other work. Also, more women are now inheriting businesses, since males are more inclined to give their business to a wife or daughter than they once were.
The U.S. Small Business Administration (SBA) has also introduced vehicles to support women and minority owners. Last year the Connecticut District SBA office announced the addition of the SBA Pre-Qualification Loan Program, designed to increase lending to women, minorities and other targeted groups.
Under the program, selected non- and for-profit groups work with loan applicants to develop viable business plans and credible loan packages. Once SBA that a borrower is eligible and creditworthy, it issues a pre-qualification letter to lenders indicating that the applicant appears appropriate for an SBA loan guarantee. In the usual process, applicants apply directly to a commercial lender before seeking the SBA guarantee.
State agencies are looking at ways to enhance opportunities for women-owned businesses as well. Connecticut's Permanent Commission on the Status of Women established the Women's Economic Development Initiative, for which women, legislators, government leaders and members of the business community meet every six weeks to enhance economic development opportunities for this growing market.
Out of this has emerged the first Entrepreneurial Action Day slated for April 26 at the state Capitol. The goal is for women “to leave with connections that can bring them more business,” says Barbara Potopowitz, the commission's public information officer.
Attendees will be able to meet with the representatives of the state's Set-Aside Program and SBA's Pre-Qualification Loan Program, as well as with state purchasing agents and business networking groups.
TThe Commission is also publishing a directory of Connecticut women-owned businesses. “We are always getting calls from state departments and businesses who want to work with these organizations,” says Potopowitz.
Potopowitz says it's now easier for females to get state contracts because of improvements to Connecticut's Minority & Small Contractors' Set-Aside Program. This was established about 25 years ago to assure that Connecticut small businesses have an opportunity to bid on a portion of the state's purchases.
Under this program, 25 percent of state-funded purchases are set aside for small businesses. In addition, 25 percent of that amount is reserved for small businesses that are owned by minorities, women and the physically challenged.
For some time, however, many business owners felt it was too difficult and time-consuming to get certified for the program. And a number of businesses which did get certified - especially those owned by females and minorities - found it difficult to know what contracts were up for bid and to get their business' name in front of the right purchasing agents.
Program Director J. Carlos Velez, says that Barbara Waters, commissioner of the Department of Administrative Services, recognized these problems and has charges him with making things better.
Technology has a lot to do with the resulting improvements, says Velez. The first change was streamlining the application process, which makes certification much easier.
Applications can be downloaded from a Web site (www.state.ct.us/das/busopp.htm), and the entire certification process takes only three weeks. Second, the whole list of certified small businesses is online. Any state agency can easily do a search for a specific commodity code such as “plumber” and get a list of certified small businesses. Private companies are using the Web site as well to hire contractors for state or federal jobs.
Third, certified businesses can search a list of all contracts open to bid and of active bid notices, as well as be alerted by e-mail whenever there is a bid in their commodity. Vendors can also get updated information from the Set-Aside automated phone, 860-713-5236.
Alisa Bowens, president of Brushworks Unlimited, a family-owned general contracting firm in New Haven, is certified with the SBA both as a minority business enterprise and women's business enterprise. Annual sales have been boosted through the SBA programs, she says.
Much progress has been made by women and minorities in contracting, but it's still a battlefield, Bowens adds. To further this progress, she sits on the New Haven Mayor's Ad Hoc Committee for Minorities and Women Businesses Concerned with Construction.
Elaine Thomas Williams, executive director of the Connecticut chapter of the National Minority Supplier Development Council, based in New Haven, says she sees steady growth of minority businesses in the state. Once again, technology is paving the way.
“There is an increasing number of minority businesses who are building Web-based businesses,” she explains. “This is a fairly easy way to start a business, plus it greatly increases accessibility.”
Ana Schneider heads two Branford small businesses, ASA Fastening Systems Tools & Supply Inc. and ASA Environmental Products Inc., which offers solutions for environmental waste management. Through certification by the Connecticut Minority Supplier Development Council, she has won several contracts with such companies as Pratt & Whitney and Northeast Utilities.
Schneider stresses that certification opens doors, but by no means guarantees success. “People talk about handouts, but no one gives me a contract just because I am a minority. I have to be competitive. And I have to have a good product that performs.”
Schneider adds, “We work hard for the work we get. And just don't give up. I'll sometimes make 60 calls over two or three years before I get my first order from a company.”
Other new programs are likewise opening doors for small-business owners. With SBA support, the New Haven Community Investment Corp. offers a micro-loan program that provides up to $25,000 to prospective small-business borrowers statewide.
Similarly, the Community Economic Development Fund, backed by banks and state funds, finances $5,000 to $500,000 loans to small businesses in 56 targeted disadvantaged communities.
Fernanda Barreiros Jacobs, associate legislative analyst of the state's Latino and Puerto Rican Affairs Commission, says that this minority population has not yet experienced the loosening of lending.
“New lending programs need to be started,” he says. “Mom-and-pop Latino stores usually don't qualify for funding, so many go to out-of-state financial institutions or private lenders who charge outrageous fees.”
In addition to financing, there ought to be more programs to help people break through the language and educational barriers, says Jacobs, as well as learn how to develop a business plan and build a business.
Business support is also a need for the African-American population, says Mustafa Abdul-Salaam, managing director with Smith Whiley & Co., a minority-owned investment advisor/brokerage firm in Hartford, where he is responsible for identifying and overseeing economic development opportunities in urban centers around the country.
Abdul-Salaam is also legislative analyst for the state's Commission on African-American Affairs. “Historically there have been barriers facing entrepreneurs of color,” he says. “These are diminishing, but still here.”
Abdul-Salaam explains that more private investors must recognize inner-city neighborhoods as an integral part of the regional economy, bustling with profitable firms, export-oriented businesses and entrepreneurs. Investments in these neighborhoods can attract small and labor-intensive businesses. And more capital “can tap into the huge, poorly served consumers of the urban market by financing the expansion of urban-focused retail and service businesses,” he explains.
Abdul-Salaam also says that entrepreneurism has to be promoted to black Americans. “For every 1,000 people in the U.S., there are only 18 African-American businesses. This compares to a total of 63 businesses per every 1,000 people nationwide.” (For Latinos, this number is 25, and for Asians, 47). “From an early age, minority children should be made aware of the value of entrepreneurism.”
Smith Whiley & Co. president and CEO Gwendolyn Smith Iloani exemplifies how minorities and women are making their mark on Connecticut. In 1994, she went from managing a $9.2 billion portfolio while at Aetna Inc. to running her own investment advisory firm offering alternative investment products in more diverse private-placement markets.
When she decided to go on her own, Aetna Investment Management Inc. invested $2.5 million in her firm as a one-third partner. In 1996, she bought them out. The firm now has more than $200 million in assets under management, which she hopes to raise to $1 billion over the next five years.
Iloani says that private equity and venture capitalists invest billions of dollars in foreign countries, taking on political, economic, social, legal, business and currency fluctuation risks by doing so. And elthough this doesn't always result in attractive returns, foreign markets are still viewed as viable investment opportunities.
“There are many investment opportunities in American cities,” she stresses. “In America, we all speak the same language, are under the same political and economic system and there is no currency risk.”
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