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Minority report

Business owners say road to success has been steep and rocky

Proud of the state's pioneer heritage, a growing group of modern-day business trailblazers looks forward to the time when they, too, will be able to point and proclaim, "This is the place."

But for now, Utah minorities say they face barriers that prevent them from successfully owning or leading businesses.

Whether it's finding capital for startups or expansion, procuring government contracted work or attracting diverse clientele, minority business owners say the road to success has been steep and rocky.

Robert Craig, owner of EnMax Corp., came to Utah about a decade ago. A Michigan native and ardent Republican, Craig said he was persuaded to come to Utah by friends in the political arena.

What he found when he arrived was a bit of an awakening, Craig said. When he tried to find funding for his start-up technology company, he was rejected for a government-backed loan. He has yet to win a bid to do contract work with the state or the Salt Lake Organizing Committee.

EnMax has been involved in contract work on the closed combat technical training system for the federal government. Its subsidiary, EnvironMax, has created software that monitors and tracks hazardous materials.

"We've been bidding," he said. "We do business all around the U.S., but we can't seem to get business here."

Social stereotyping also came into play, and the former IBM and ITT executive said he found himself in an environment of exclusion.

"There are still a lot of biases in the state of Utah as far as minorities are concerned," Craig said. "And there's a long divide to cross over yet within the Utah area for minorities in the business arena. I see improvements, or efforts at improvement being made. Whether it's lip service or true action is yet to be seen."

According to figures released this year by the U.S. Commerce Department's Census Bureau, Utah's 8,600 minority businesses comprised 5.1 percent of total businesses. That ranked Utah 37th in the nation in a measure of minority businesses as a percent of all firms statewide.

Josie Valdez, director of the SBA's minority business enterprise division here, conceded Utah lags behind other states in both the number of minority businesses and the cultural acceptance of those businesses.

"I think that numbers mean power," Valdez said. "Numbers automatically translate into facility of entry in the business arena. We're still pioneering the way for minority businesses here."

That can be a tricky process for the intrepid execs and entrepreneurs.

"We're not where some states are, where you have second- and third-generation business owners, where minorities can learn the business from their families," Valdez said. "Many of the experiences of our minority business owners are first-time experiences. They're learning by trial and error."

They're also not getting enough help, said Steve Martinez, owner of the Minority Business Alliance in Ogden.

The MBA was established 18 months ago as a way to partner major corporations with minority businesses in the facilities services industry. Doing a lot of business out-of-state, Martinez said Utah has a long way to go to "play with the big boys."

Minority initiatives at Utah companies are sorely lacking, he said, as is support from local and state governments.

"In the states where minority initiatives are strong, that puts more pressure on corporate America," Martinez said. "Utah really doesn't have a strong minority drive. It is my opinion that they are far behind in meeting or preparing for any type of minority assistance or programs to help minorities progress and be successful."

They also don't have ready access to funding, Martinez said.

"The biggest barrier is economics, I think," he said. "Minorities are far behind the eight ball in being able to get capital."

Gordon Dew can attest to that. The owner of Distinctive African American Art in downtown Salt Lake City, Dew said he struggled to convince banks his gallery was worth the investment.

"I've been turned down by so many banks," he said. "They say they want to lend money to businesses, especially minority businesses. But then they make the bar so high. The requirements are so high that basically you have to not need the money to get the money."

Wells Fargo Bank spokeswoman Rita Garry Esposito said that bank devotes significant resources to help minorities and women.

"Wells Fargo is the top lender to small businesses among all banks and uses the same lending criteria for all small business owners," Esposito said. "Wells Fargo also has multibillion-dollar lending initiatives for small businesses owned by women and minorities."

The bank is one of few nationwide to establish a national Latino Loan Program, she said, and in most markets is an active SBA partner helping business owners identify alternative sources of funding. Wells Fargo also has a $10 billion lending commitment to women business owners over 10 years.

Dew said he finally received some funding through a microenterprise loan for remodeling. And business is picking up.

"We've already doubled our sales from last year," he said. During the upcoming Olympics, Dew expects to bring in artists from around the country to display their art.

Money isn't the only barrier minority business leaders have had to hurdle. They also face stereotyping and cultural bias.

"Minorities are not getting the true share of the business they should be getting," Craig said. "Being a black Republican, it's hard for me to say this, but it is a climate that most of the powers that be here in Utah have a lack of exposure to.

"Maybe it's because of their lack of dealing with successful minorities, and their lack of dealing with competent minorities, that has led to the bias that minorities are not capable of doing the job. Those biases have become the norm over many decades, and they're hard to get rid of," Craig said.

Though Utah still has a long way to go, SBA's Valdez said the number of Utah firms that receive government loans and contracts is growing. In fiscal year 2000, there were 45 firms that qualified under SBA guidelines for contracting opportunities with the federal government. This year, there already are 57, she said.

"I think we're making progress," Valdez said. "As more and more people get comfortable with the differences that exist between us and realize that we are really more alike than we are different, that we really do share common values, the barriers will fall away. People will become more comfortable with the differences and accept them as a positive thing that we're building — like a quilt, made up of all different kinds of patches, all different sizes and shapes. They'll realize that we're quilting a beautiful multicolored quilt and that that quilt provides comfort and warmth and safety."

Maybe so. But Martinez said it might take a marked demographic change in Utah to force cultural change and create opportunities for minorities in business.

"Any time you're starting a new business or are a minority company, you do run into barriers," Martinez said. "I do see them coming down across the country. Utah is going to be more sensitive to the issues as the demographics start changing noticeably. So far, they just haven't felt the need. They haven't felt the pressure yet.

"It's a shame that it has to be that way, but I really think it will take a demographic change to force their hand. And it's sad because businesses have dropped the ball. They're missing out on a good pool of workers and good business opportunities."

E-mail: jnii@desnews.com