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Survey Says: Minority-Owned Suppliers are Faring Well in 2020

Aug. 24, 2020
New study reveals minority-owned suppliers are showing greater financial stability and resiliency than non-minority owned businesses during the global pandemic.

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Minority suppliers are in a healthier financial position and are more resilient than their non-minority supplier counterparts, according to a new predictive analytic modeling study conducted by Rebirth Analytics and the Northwest Mountain Minority Supplier Development Council (NWMMSDC).

After analyzing about 300 privately-held minority suppliers across seven states representing more than $8.1 billion in gross revenue, the organizations found that minority suppliers are outperforming both their publicly-traded and privately-held counterparts.

The study, which compared private companies to their industry peers leveraging financial information from corporate balance sheets and financial statements, focused on 12 industries, including manufacturing, technology, mining, and professional and scientific services, among others.

Enthusiastic About the Findings

Founded in 1978, the NWMMSDC is a nonprofit organization certifying, developing and connecting Minority Business Enterprises (MBEs) with major corporations and public agencies. 

NWMMSDC defines minority suppliers as companies owned, operated and controlled by at least 51% Asian, Black, Hispanic or Native Americans.

Rebirth Analytics and NWMMSDC both say they’re “enthusiastic” about the initial study findings and have commissioned additional analysis to layer other elements such as credit scoring, access to capital and large enterprise employment of minority suppliers into the study. 

“Financial health metrics are the best indicators of how a supplier will perform through disruptive market events, like the COVID-19 pandemic,” said Chonchol Gupta, CEO of Rebirth Analytics. “Our study reveals that minority-owned businesses are displaying extremely high levels of resiliency through the crisis, and should emerge in a stable position post-crisis.”

Rebirth Analytics says the context of its study’s findings is also relevant to government agencies, which have reported an under-representation of minority companies accessing the Small Business Administration’s Paycheck Protection Program (PPP) loans.

“Minority suppliers account for $14.6 billion in economic output, 90,352 jobs, and over 47,000 ethnic minority jobs,” Fernando Martinez, president and CEO of NWMMSDC, pointed out in a press release, “but 4.9 out of 10 minority suppliers who applied for PPP loans were denied.”

A Stable Supplier Pool

Despite the perception that minority suppliers are unstable through changing economic conditions, the organizations say that their findings offer a “stark reminder” that minority businesses are operating with resiliency and can continue to be relied upon by the large enterprises they service.

“In terms of revenue growth, minority suppliers in 10 out of the 12 industries we analyzed outperformed their non-minority privately-held peers,” Gupta said, “as well as their publicly-traded peers in three sectors - manufacturing, construction, and technology.”

“Increasing year-over-year revenue growth indicates that the minority suppliers are picking up more contracts and playing a more significant role in the companies they service,” Martinez added, “which in the Northwest include corporations such as Boeing, Costco, Microsoft, Nike, Starbucks, and T-Mobile.”

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About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.