9 Ways to Solve Minnesota’s Minority Business Paradox

By Bruce P. Corrie
Friday, January 22, 2016

Newly released data from the 2012 Survey of Business Owners reveals a paradox: Minority firms are growing in numbers faster than other firms, yet their sales have been a flat 1% for over a decade. What can we do about this?

According to the survey, there were over 47,000 minority firms with almost $8 billion in sales in 2012. One can easily see the transformation of inner city neighborhoods by minority businesses, whether on University Avenue, Lake Street or Brooklyn Boulevard. Minority businesses are also an important engine for economic growth in rural Minnesota. Minority business presence can be found in two thirds of counties and 166 cities in Minnesota. There is a very strong entrepreneurial energy in minority communities. While the growth in non-minority firms declined by 3%, minority businesses increased by 52%. Minority businesses are creating jobs, especially in their own communities and neighborhoods. Minority firms as a group employed 58,765 people.

Minnesota’s challenge will be to grow the pipeline from startups to large companies. A recent study on African immigrant entrepreneurs revealed the kind of assistance needed are tools to grow and market their businesses. Minority firms as a whole are smaller than non-minority firms with average sales being $165,000 as compared to $557,000 for non-minority firms. We need to continue to build capacity in these areas:

  1. Expand ethnic specific technical assistance and training as pioneered by NDC (Neighborhood Development Center)
  2. Expand mentoring and business growth programs such as those delivered by MEDA (Metropolitan Economic Development Corporation)
  3. Develop stronger supplier channels to large and small corporations such as the work of NCMSDC (North Central Minority Development Council)
  4. Create financial tools for growing companies such as alternative loan funds and equity crowdfunding tools like MNVEST, which allow businesses to sell securities online to Minnesotans
  5. Implement fully MN state statute 16C calling for greater utilization of small and minority businesses in state spending
  6. Allocate 0.5% of all state transportation project dollars to build capacity of small businesses and communities impacted by these projects
  7. Support the new economic development strategy using cultural assets to grow ethnic businesses such as Little Mekong and Little Africa
  8. Connect minority entrepreneurs in rural Minnesota to resources and the deliver these resources in culturally intelligent ways
  9. Incorporate cultural intelligence into policies and programs serving small businesses to make them more accessible

Minority business development is one of the most effective and powerful strategies for economic development. Let’s keep this engine of economic growth humming in Minnesota.

For more information and a report on a recent forum on this topic see recent articles in Chai.News.


Bruce Corrie, PhD blogs at chai.news and is a professor of economics at Concordia University ‑ Saint Paul.