Minorities Build Businesses by Building Relationships

Filed under Management, Minorities

management

Travis Powers is the first to admit business success is all about relationships.

While many small companies try unsuccessfully for years to nab large contracts, Power’s human capital management and technology services company won a government assignment one month after it opened its doors in 2003, thanks to a personal contact, Powers said.

Seven years later, Powers’ contact has left the government, but Escendent, the firm Powers co-founded, still has government work plus contracts with major corporations.  “More than targeting the clients, what we’ve done is leverage relationships,” Powers said.

With an 85 percent annual growth rate and a target of $7.5 million in revenue this year, Escendent is growing five times faster than the average minority-owned firm, according to U.S. Census data.  Often, start ups are turned down for corporate or government contracts because the small firms lack capacity. But without large-scale work, it’s difficult to move to the next level and it can become a vicious cycle.

“Unless you are connected to agencies and part of a network, it is difficult to navigate the process,” said Shelia Hill, president and chief executive officer at the Chicago Minority Supplier Development Council.

The Council strives to break down barriers by facilitating relationships among minority businesses and those corporations looking to do business with them, Hill said. The group certifies minority businesses, because many organizations are looking for certification when they dole out contracts.  It also holds diversity fairs, which bring corporations together with minority entrepreneurs.

Many corporations want to boost thenumber of women- and minority-owned firms they do business with, but don’t know how to find and vet them.  As the nation’s minority population grows, corporations are realizing the importance of diversifying not just their work force but also their supplier base, said Leonard McLaughlin, president of Aon Cornerstone Innovative Solutions, a strategic initiative of giant Aon Corp. dedicated to partnering with minority businesses.

Aon launched the initiative last April to help its corporate clients meet supplier diversity goals by connecting them with qualified minority businesses in risk management and consulting sectors.  In later January, it announced a partnership with Magic Johnson Enterprises to help identify minority businesses well suited for the initiative. To be considered, minority businesses should have at least three employees, a business plan for the next three to five years, insurance, and a code of conduct, McLaughlin said.

Aon Cornerstone provides training and mentoring for minority businesses in the program, plus backup support to help them qualify for large contracts. Ultimately, the initiative should spur job growth as the minority firms expand to keep up with new corporate demand. “We have a platform and plan to create wealth for minorities and jobs in the community,” McLaughlin said.

“Doors are being closed on minority businesses on a daily basis by the Fortune 2000 because they don’t feel they have the (necessary) scope or scale,” McLaughlin said. “Now the closed door becomes an open door because they can see there’s this relationship with Aon.”

Research shows teaming up with a larger partner is one way to for small businesses to boost their success rates, said Ivonne Cunarro, chief knowledge officer at the U.S. Department of Commerce’s Minority Business Development Agency.  “Minority businesses should consider strategic alliances to grow” and access capital and larger contracts, Cunarro said.

Connecting with Aon has been invaluable, said Powers, whose firm is part of the Cornerstone program. But Powers, who is on the board of the Chicago Minority Supplier Development Council, also partners with other minority enterprises to offer clients a broader array of services.

Beyond that, Escendent also is participating in Accenture Corp.’s Diverse Supplier Development program, an 18-month executive mentoring program that helps minority businesses gain insight into Accenture’s needs and way of doing business. “We’ve gained visibility from Accenture,” which is Escendent’s  longest-standing corporate client, Powers said.

What counts more than minority status is fulfilling clients’ needs, he said. “You have to understand your relevance,” he said.

Minority certification will only take you so far, said Jim Cabrera, president and chief executive of United Building Maintenance Companies, a certified minority enterprise based in Carol Stream. “Our success is knowing our business and knowing the market,” he said.

Cabrera got his first break while attending a business opportunity fair that the Chicago Minority Supplier Development Council offers each year. He pitched his cleaning service to an executive at Commonwealth Edison who had trouble keeping good cleaning contractors. Cabrera recalls that the executive told him,  “`You’ll be one of the ones who come and go,'” to which Cabrera replied, “Oh, yeah?”  United Building Maintenance still has the utility as a customer, he said. It has added AT&T, BP and United Airlines as well.

With $24 million in annual sales and 1,000 workers, including Cabrera’s three grown children, United Building Maintenance has grown not just by adding clients, but also by expanding its offerings to provide “bundled services,” he said.

Cabrera, who previously worked in marketing and management for Illinois Bell, launched the company in 1979, offering janitorial services. It has since added painting, snowplowing and landscaping as well as heating, air conditioning and electrical services for Fortune 500 corporations.  After clients kept asking whether United Building Maintenance provided landscaping, Cabrera said, “I got tired of saying no.”

While the climb has been steady during the past 31 years, Cabrera takes nothing for granted. He emphasizes quality throughout the company and focuses on meeting customers’ needs. “Part of it is survival,” he said. “In a nutshell, we’ve been very fortunate. It’s been beyond my wildest dreams.”

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