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January 2007 Presentations

Women & Minority Business: Panel Discussion

January 16, 2007

GCVA’s first meeting of 2007 was charged with energy and insight as a panel of business leaders discussed the challenges facing women and minority businesses in Cincinnati. Moderated by Dr. Mel Gravely, Director of the Institute for Entrepreneurial Thinking, the panel addressed issues of financing, economic impact, and changing the mindset of corporations.

Panelists were Kevin Lynch, Amantea Nonwovens; Tillie Lima, Best Upon Request; William Scott, The Fortress; and Anne Chambers, MaMe/Red.

Dr. Gravely started the discussion by asking what people think when they think of woman and minority-owned enterprises: “A lot of things come to mind – perceptions in the marketplace, the growth rate of these businesses, their economic impact.” He stated his goal, and the goal of the panel, as education to “enlighten and drive more interest in relationships with woman and minority businesses.”

His first question dealt with financing, asking panelists what their perception of the environment is for all different types of financing in Cincinnati. Anne started the conversation by saying she has had only positive experiences: “It’s a perfect time for entrepreneurs in general,” she said, “since we are driving the economics of our country.” She says the banks in Cincinnati have been very friendly to her company, and they have also had great conversations with venture firms.

Tillie agreed, saying the recent recognitions she and the company have received have resulted in unsolicited letters of interest from banks.

Kevin felt the market is excellent for entrepreneurs and that there is “a lot of cash out there, a lot of opportunities for investors to get involved in minority enterprises.” He continued to say the economic opportunity and the reality do not match: “There are too few deals happening, we need to focus on creating more.”

One of the reasons he believes this is true is a lack of infrastructure in the area. “I can bring a deal to the table,” he said, “entrepreneurs want to do business with Fortune 500 companies, but we don’t have the credit structure.” He feels the evaluation criteria prevent minority enterprises from getting through the door. “There is an opportunity to bridge this gap, to allow minority businesses access to capital. It happens in other areas – New York, California, Detroit. Companies are working directly with entrepreneurs to help them get going. We employee individuals from the community, build a tax base. We’re important because jobs are leaving the area. We can be competitive and provide opportunities for individuals, but we need the infrastructure.”

Will agrees opportunities could be better. He sees many people leaving Corporate America, opening businesses. “It’s different for entrepreneurs to secure funds,” he explained. “The banking industry is a real challenge. Venture capital provides a great opportunity, but it’s a challenge to get to VCs. Companies need help.” He described the dynamics of working with a bank: “You’re trying to expand, between Year 1 and Year 5, and you need help to grow. You need someone to take the risk with you, but banks have specific criteria you need to meet. You can’t meet them at that level. Even if a banker things you have a sound opportunity and wants to invest in you, he can’t.”

At this point, Dr. Gravely jumped in with a question: “If it’s a good opportunity, why can’t these organizations invest? What’s the issue?”

Will answered, “Even if you have good credit and some collateral, you have no revenue to support your debt. You have to grow revenue before you can afford your debt. No matter what your plan is, no matter your previous experience, you just can’t meet the criteria.”

Dr. Gravely agreed, but also pointed out, laughing, “In that situation, even a white guy can’t get money!”

Anne agreed wholeheartedly with this. She said, “It’s not a white/black/woman issue – when you need money, you can’t get it until you prove your company. Early funding is usually Friends and Family. You have to prove the concept, which can be a huge challenge.”

Tillie jumped in, saying, “Your friend becomes your Angel because of her belief in you. She’s not looking at the dollars.”

Kevin brought the discussion back to the economics minority businesses bring to the table: “The quantitative side is the credit matrix,” he believes. “The qualitative side is not factored into it with woman and minority-owned businesses. What are we giving back to the community? A lot.” He explained that “the future of the residents who exist here today are greatly affected by what we are doing. There are a lot of problems in minority communities; how do we address them? One way is to build strategic relationships across the country.”

Dr. Gravely’s next question dealt with the key elements to success in growing rapidly. Will started the conversation saying companies need to give small business a chance: “If a startup is asking for business, do your due diligence but give them the opportunity.” He said many times he’ll see a small company given a fraction of the business an established company receives. “Companies need to be given the chance to show they can deliver.”

Tillie believes leadership and looking carefully at your management team is key. “Can your team make a go of it, do you have a culture to attract and retain employees? A strategy to measure key results? To invest in sales and drive growth?” She sees more evidence of large companies being willing to partner with startups which, if terms are right, can help a startup grow very quickly.

Kevin’s pick was relationship-building: “Established companies have relationships and are able to get on the phone and call the CEO of Target and say, ‘We have a deal here, let’s get on it.’” He said PNC is their bank because of the relationships they could bring to the company. “We interviewed 10 banks, and PNC was very creative and focused on relationship-building. We’re now on the fast-track as a result of a groundswell of creativity from PNC, P&G, the State of Ohio.”

In launching their new company, Bright Future Foods, Anne has found identifying a story to tell has been the way to accelerate their growth. “We tell a small story that is results focused, how we built someone else’s business. That really gives us credibility.”

The discussion up to now led naturally into Dr. Gravely’s question, “How do you change the mindset of Corporate America to say, ‘We’re willing to take a little less profit and add some risk?’ in order to help minority and woman-owned businesses?” Anne jumped right in, saying, “One way is to go out and find customers, those who need what you have to offer. If you take some of the risk yourself, develop a partnership, then you can go and get the financing. Your customer reflects back on you and helps you get going.”

Will feels large companies must step out of the mold they are in. “They must get involved, do their due diligence. You need to invite them in and let them ask the hard questions. Be ready for them,” he says. “Also, bring in your peers who work with you. Introduce opportunities to your CEO by identifying companies who can deliver a better level of the same service. Lots of times, companies are just as competitive because maybe they have less overhead.”

Kevin was a bit more philosophical about the question. “How do you change a bank’s philosophy?” he asked. “Or the State and local government infrastructure of lending? You try to manage where banks and VCs get their return by looking at other sources. North America is sitting on cash yet looking for opportunities.”

Tillie was also philosophical as she addressed responsibility. “Now that we’re certified, we have to surpass expectations of quality. You need to reduce the company’s risk, mitigate the fear. I feel responsible to be a role model.” She feels change must come one success story at a time: “It’s important for us to be mentors to one another, to give back when we have made it.”

Kevin also added that the participation in various groups by other companies is increasing: “CEOs like A.G. Laffley [of P&G] are committed to helping minority businesses grow. More and more CEOs of Fortune 500 companies are committed to helping us grow.”

The next question dealt with WMBE going “head to head” with non-WMBE companies: “Did anything ever ‘feel funny’ to you?” asked Dr. Gravely. Kevin’s answer was “absolutely.” Both women said no, they have never experienced this.

A question was asked about what happens when two companies merge, diluting the WMBE ownership – how is this addressed. Dr. Gravely answered this himself, saying, “There are organizations that specialize in certifying businesses – consult them. Most importantly, focus on growing the business, no matter what. Only 3-4% of all sales are from WMBE businesses. This should not be the focus, growing the company should.”

A question was asked about small businesspeople, specifically inventors, finding mentors and support. Will began the conversation, saying, “This type of person is not going to have the same economic history as a non-minority. They have no source for Friends & Family funds, they may only own 5% of their home versus receiving $100,000 from relatives to put down, they don’t have high-level contacts that can help get the job done.” He says meeting people and asking the right questions is key. “Get to know your vendors, introduce yourself to new people. We have great stories – we need outlets to tell them.”

Tillie echoed this, adding that there are many possible opportunities at the Chamber. She also mentioned a unique database in Columbus called “Business First of Columbus,” which hooks mentors up with entrepreneurs.

Dr. Gravely changed direction, acknowledging the growth of all the panelists’ companies and asking what current challenges are as they look for more success. Kevin says, “Business is always a challenge. We’ve been fortunate in our industry but it’s always challenging to find employees and train them. Universities need to connect to local agencies, to prepare individuals who are ready to go into the workplace. People are leaving the area, so how do we retain expertise?”

Anne focused on the challenge of keeping her product on the shelf: “People want it, so we have to raise money to keep it on the shelf. We’ve accomplished this through $4 million in venture capital and a partner who already has shelf space.”

Tillie said her focus is on her organizational chart: “What do my clients need, and how can I serve both my clients and my employees?” she asks.

Will’s business is capital intensive. They are looking for more traditional financing.

Then Dr. Gravely asked what keeps each panelist here in Cincinnati doing business. Tillie says this is her home: “I could go anywhere – I have employees working from their home in Michigan, we can use the human resources wherever they are. But I love Cincinnati. I’ve invested time in Leadership Cincinnati and we serve as ambassadors for the city.”

Will grew up here but has lived other places, most recently Boca Raton and San Diego. “On paper, Greater Cincinnati is one of the greatest opportunities for entrepreneurs,” he says. “But look at the reality – for instance, Covington vs. Cincinnati. I’m here to make a difference, to employee people, someday to help with crime.”

Anne loves Cincinnati because of its ease for networking and navigation. “It’s a great size,” she says.

Kevin finished off by adding, “Cincinnati’s a great place to do business. It’s easy versus the red tape in Chicago, LA, New York … Is there more we can do? Absolutely. We’re losing business to competing states – why? There is the potential for the city to do great things. We have the infrastructure, we need to connect the dots. I’m here to help build an incubating type of atmosphere.”

The final question was one of practicality – how do you take advantage of your minority status without giving up anything on the flip side? Tillie was firm in saying, “When you share your MBE or WBE status, that’s added value but NOT the reason for a company hiring you. You must go in first as a quality organization.”

Will agreed. “Not every ME is the greatest or perfect – rules apply here as in general. You need to promote yourself as a great company that happens to be minority-owned. In all cases, you must deliver on all promises for future satisfaction.”

Kevin also agreed, but focused his answer on working specifically with companies willing to bring WMBE companies into the supply chain: “It takes a lot of research. Look at companies who participate with the Minority Business Council, for example.”

Dr. Gravely pointed out that it is easy for a WMBE business to get a minority tag: “This perception can end up as baggage,” he says.

He asked the panel to end the discussion with a quick survey on several different items. Panelists could answer Positive, Negative or Neutral on their feelings about each item:

General economy in Cincinnati:
All Positive

Availability of educated workforce in Cincinnati
Anne – Neutral
Will – Positive
Tillie – Positive
Kevin – Negative

Access to leadership in Cincinnati
Anne – Positive
Will – Neutral
Tillie – Positive
Kevin – Neutral

Access to Capital
Anne – Positive
Will – Negative
Tillie – Neutral
Kevin – Positive

Cost of Living
All Positive

Climate for Women Entrepreneurs
Anne – Positive
Will – Neutral
Tillie – Positive
Kevin – Positive

Climate for Minority Entrepreneurs
Anne – Positive
Will – Negative
Tillie – Neutral
Kevin - Negative