Reading (& Writing) Excerpts

In the last month, we’ve come across a variety of articles that seem to touch on topics of importance for SDMWVLGBTBEs (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) owners.  The first that sparked a gut reaction was about generational wealth. The Founders of Color believe, “If wealth inequity is to be remediated, entrepreneurship is the only true path.”  And, we’d have to agree, strongly! And, we plan to continue to support the mission to lift up diversely owned business.

But, later in the piece, the authors say ” … supplier diversity era has enabled thousands of minority-owned firms to access business opportunities that would otherwise not be available. That said, the supplier diversity model is broken.” The authors reference State of Supplier Diversity data reported and made available by CVM Solutions in which respondents shared negative performance metrics.

Needless to say, this made us sit up and take notice. The initial reaction was to look up the actual definition of “generational wealth” while quietly questioning how supplier diversity could be tasked with making that happen. Typically, when people talk about generational wealth, they’re talking about financial wealth that can be passed down to the next generation. And, all our research points at a generation being about 25 years. If supplier diversity really got underway in the 1980s, then that first generation seems to have been hitting maturity around 2005. Our company started in 1983, so we’re 36 years in and we do have two generations employed. We have put stock into the next generation, a few shares per grandchild. Guess that means we’re passing on generational wealth.

Ultimately, the article left us wondering, whose responsibility is passing on generational wealth anyway? And, what if the entrepreneurial endeavor fails? According to the Small Business Administration (SBA) about 66% of small businesses will survive their first two years. So that means about one-third of total businesses will fail during the first two years. The SBA also notes that about 50% of businesses fail during the first year in business. Do we blame that on weak supplier diversity programs, poor management by the entrepreneur, a bad economy or whatever else we could dream up as the reason for the high percentage of business failures? What if the entrepreneur started a consumer to consumer business that never interacts with supplier diversity? Being able to make money and build wealth depends on many factors in the business world. Managing that earned wealth in a manner that lets us pass it along depends on the individual’s capabilities to save and plan.

We keep reading articles about access to capital.  This seems to be cited as the single largest barrier to starting a new business.  Yet, a recent blog article at Supplierty News that reported: In a recent survey of 600 small business owners, about one third of respondents stated that they started their business with less than $5,000. In addition, 58 percent started with less than $25,000.  The survey was conducted by the financial platform Kabbage.  So, how do the SDMWVLGBTBE entrepreneurs raise their capital?  Personally, we used savings and credit cards in an era when the interest rate was often 20% or more (the mid-1980s weren’t kind to borrowers) until we secured an accounts receivable line of credit.  When we needed more on the credit line, we learned how to shop for a good banking relationship.  While those options remain valid today, there are all sorts of things available that didn’t exist in 1984 … including the internet, crowd funding and blog posts!

Crowd funding comes in all shapes and sizes.  There’s:

• CrowdSupply.com that partners with creators using the service and provides mentoring that resembles a business incubator.
• Experiment.com that is an online platform for funding and sharing scientific discoveries.
• GoFundMe.com to raise money for events ranging from life events to challenging circumstances.
• iFundWomen.com a crowdfunding platform designed for female entrepreneurs.
• KickStarter.com for creative projects has helped make multi-million dollar Hollywood movies (like a personal favorite of ours, Veronica Mars).
• Indiegogo.com for innovations in tech, design and social entrepreneurship.

Then there’s new lending programs: Kiva.org the world’s first online lending platform connecting online lenders to entrepreneurs; or alternative lenders like Credibly, Kabbage, LoanBuilder and OnDeck.

Funding & Generational Wealth: If we can fund it to make it and learn to manage it properly then we can pass it along to the next generation – who can lose it, use it or multiply it as their talents permit.