For several years, New York City (NYC) has been developing and implementing different initiatives aimed at assisting local small businesses and Minority-Owned businesses, such as those owned by Black entrepreneurs.
Black-Owned businesses have been an integral part of NYC for centuries, providing a pathway for wealth generation among Black families. However, Black entrepreneurs face significant obstacles and are underrepresented among the city's business owners. Despite making up more than 20% of NYC's population, only 3.5% of its businesses are owned by Black entrepreneurs.
What has NYC done to empower Black-Owned businesses?
In 2019, the city launched the BE NYC Accelerator, a program that aims to support Black entrepreneurs in New York City by providing them with access to resources, training, and mentorships. The program served a total of 105 businesses over the course of three cohorts, generating a total of $25.8 million in revenue and creating 271 jobs.
As the top challenges identified by Black entrepreneurs were access to capital (40%), lack of preparation and background on how to run a business (15%), and lack of reliable resources to help (13%), the city and Goldman Sachs, a BE NYC’s partner, gave the participating groups access to capital and business education.
In 2020, the "You Do It With Your Heart”: Black Business Solidarity Initiative was launched, in response to the COVID-19 pandemic and the social unrest following the murder of George Floyd. This initiative highlights the economic power of Black New Yorkers and the cultural significance of Black-owned businesses, which have long been a cornerstone of NYC neighborhoods.
As a way to define the direction of the BE NYC’s initiative, the city combined insights from historical research, scholarly articles, public data, and, most importantly, the voices of more than 1,500 Black entrepreneurs, business leaders, community leaders, and advocates from every borough and across industries in the 2020 Report: Advancing Black Entrepreneurship in NYC.
In 2021, the city announced three new mentorship programs: “Small Business Mentors NYC”, “BE NYC Mentors” and “M/WBE Mentors”, which provided industry experts as guides for entrepreneurs seeking to start and grow their businesses in the post-COVID era.
During the same year, former Mayor Bill de Blasio and NYC Department of Small Business Services (SBS) launched “Shop Your City: BE NYC”, a program to support Black-owned businesses and encourage new yorkers to shop locally.
Later, the city launched the “BE NYC Startup Intensive", a no-cost, 40-hour intensive instructional course that provided Black entrepreneurs with the knowledge and skills they need to launch and run successful businesses in NYC.
Also, it partnered with EY (Ernst & Young), a global professional services firm, to connect Black entrepreneurs with world-class resources and guidance. This provided pro bono consulting services to Black-owned businesses and offered expertise in a range of business areas to help these businesses overcome challenges and grow.
It appears that NYC has taken significant steps that directly impact Black and Latino-owned businesses' inclusion, development, and growth. However, we need to consider whether these initiatives and programs have genuinely supported Black-owned businesses.
Recently, New York City Comptroller, Brad Lander, has presented the “Annual Report on M/WBE Procurement: FY22 Findings and Recommendations” which can help us analyze if the measures taken by NYC government have served their purposes correctly or if there is still a lot to be done.
First, it’s important to understand that the city’s Minority and Women-owned Business Enterprises (M/WBEs) Program is currently governed by Section 6-129(b) of the NYC Administrative Code, which codifies Local Laws 174 and 176 enacted by the City Council in 2019. The Mayor has designated agencies to conduct equity assessments under Local Law 174 (LL174), which requires special attention to race, gender, income, and sexual orientation.
The government agencies that hired the most M/WBE firms subject to LL174 were the Department of Small Business Services (90.1%), the Department of Cultural Affairs (85.2%), and the Department of Buildings (79.6%). The ones that had the lowest share of hires regarding this program were the Department of Finance (7.4%), the Department of Environmental Protection (7.9%), and the Department of Transportation (10.6%).
While several government agencies have made progress in awarding more contracts to M/WBEs, these businesses continue to receive much smaller contracts on average: in Fiscal Year 22 (FY22), the average value of a new contract awarded to a non-certified firm was $5.01 million, while the average value of a new contract awarded to an M/WBE was only $679,000.
The report highlights that in FY22, Black and Latino-owned businesses received less than 2% of the city's contract dollars, and only 5% of all new city contracts and purchase orders registered during that time were awarded to city-certified minority or women-owned businesses.
Mayor Eric Adams responded to the report by stating that his administration had awarded more than 25% of eligible contracts to M/WBE contractors in the first three-quarters. However, he also acknowledged that there is room for improvement to achieve greater equity.
Earlier this year, Mayor Adams outlined a "Working People's Agenda" in his second State of the City address, promising to “double the city's current rate of contracting with minority- and women-owned business enterprises (M/WBEs) and award $25 billion in contracts to M/WBEs over the next four years and $60 billion over the next eight years” also announcing “the Small Business Opportunity Fund, a $75 million loan fund that will be the largest in New York City history."
We can only wait for the new government directives this year to evaluate if the government programs, initiatives, and directives of New York City are adequate to empower Black-owned businesses or whether more significant measures are necessary.
This blog was written by Gisela Montes, GovTech Community Lead at Glass.