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Next to be Cut: State Aid to Women and Minority Business Owners

What the Feds giveth women business owners, the states taketh away. Even as the Small Business Administration makes it easier for women business owners to snag federal contracts, New Jersey Gov. Chris Christie just scuttled its Division of Minority and Women Business Development. Such departments are easy targets for budget-cutting politicians -- even as they claim that improving the business climate is a top priority.

Moving the certification function to the Dept. of the Treasury is part of an overall reorg, says Andy Pratt, Treasury Communications Director. Now it is up to Lt. Gov Kim Guadagno's office to reinvent the state's efforts to cultivate women and minority owned businesses -- or not. "The idea is not to do worse with helping women and minority owned businesses, but to do much, much, much better," Pratt told me yesterday.

In the past, New Jersey's efforts have been hamstrung, he explained, by a legal challenge that barred the state from awarding contractors specifically because of woman or minority business ownership. That hasn't stopped the Feds from successfully fostering the launch and growth of women and minority owned businesses. As new state legislators take up their budget axes, programs that serve women and minority businesses are likely to be among the first to fall. Here's why.

Lack of focus. With the proliferation of groups purporting to further women in business it's not obvious why states need their own offices. I'd argue that states shouldn't be replicating programs that other groups already do well.

Lack of accountability. The most recent annual report for the now-defunct New Jersey Division of Minority and Women Business Development indicates that non-minority women-owned businesses received 5% of state payments for fiscal 2008, totaling $152.1 million. While the report lists the state divisions that buy the most from women and minority owned businesses, it doesn't explain which specific programs work, which ones don't, and exactly what the plan is to better fulfill the mission. If your state's annual report is a similar exercise in status quo, your state's department might not be worth saving.

Lack of leadership. I've yet to see a state department led by an experienced businesswoman who can rally politicians, staffers and women business owners to catalyze real change. This is a perfect opportunity for the first wave of retiring baby boomer women. Meanwhile, departments that can't explain why they exist are likely to get axed -- rightly so.

Is your state's department of women and minority business worth fighting for? It is if:

  • It collects, compiles and clearly communicates data about women and minority owned businesses that is otherwise not available.
  • It has the authority to hold state purchasing staffers accountable for making equitable contracting decisions. As I've posted in the past, the SBA's new model works well and is expanding. A big part of equitable contracting is ensuring that certification is efficient and meaningful. When my firm got certified by Wisconsin, I was grilled by a staffer in person about who really wears the pants at Wilson-Taylor Associates. Though my firm has been incorporated since 1998 and my husband serves as CFO, I was actually worried that we might be turned down. We weren't....but every state should have a process that thorough.
  • It catalyzes substantive policy and culture changes that foster measureable change in the number, size, employee headcount and revenues of women-owned and minority businesses. This is accomplished by working with regional women's business development centers and associations that represent the biggest and fastest-growing industries in each state, and state and local economic development departments and groups.
Like the SBA did with contracting, New Jersey has an opportunity to reinvent how a state can remove barriers to business formation and growth. It even has a ready made platform for announcing its first efforts: the Governor's Conference for Women scheduled for May 3. What will Gov. Chris Christie have to say to the women business owners of New Jersey? Equally important, what will women business owners tell Gov. Christie?
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