Philadelphia Minority Business Development CenterTM
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Philadelphia Minority Business Development CenterTM - Fall Newsletter
The $1.3 Trillion Dollar Minority Market share
The minority community already represents a $1.3 trillion dollar market share in our nation’s economy. Based upon
newly released statistics from the U.S. Census Bureau, 90% of the nation’s population growth is occurring
within the minority community and the corresponding increase in expandable income is expected to reach
$4.5 to $6 trillion in less than 50 years. This demographic shift represents an unprecedented opportunity,
especially for minority businesses, which are uniquely poised to service this new marketplace.
According to Courtland Cox, National Director of the Minority Business Development Agency (MBDA), on his visit
to Philadelphia for local MEDWeek activities, the $1.3 trillion dollars represents 20% of the $6.5 trillion total
U.S. consumer purchasing power. Mr. Cox, however, noted that while the minority population has
increased its purchasing power, of the 3.2 million U.S. minority firms, only 15% have annual sales
in excess of $100,000 and that those same firms represent 87% of all minority business sales.
Even more revealing is that 17.9% of non-minority firms control 90% of total U.S. gross sales and
86% of minority firms still lack adequate capital.
National MEDWeek 2000
Minority Enterprise
Development (MED) Week is an annual celebration to honor the contributions and achievements of
America’s minority entrepreneurs along with those individuals and organizations that actively
support minority business development. Every year, since 1983, through Presidential Proclamation,
one week has been designated to honor the success of minority businesses. MEDWeek took place
in five regions across the country and culminated at the National MEDWeek conference held in
Arlington, VA between September 24-27, 2000. The PMBDC staff attended the national conference
and brought back reports, newly released census data and new resources to assist local minority
entrepreneurs. One such report, entitled “THE MINORITY BUSINESS CHALLENGE: Democratizing
Capital for Emerging Domestic Markets” is the product of joint efforts by the Milken Institute and the
U.S. Department of Commerce’s Capital Access Task Force.
The report was a follow-up to “Mainstreaming Minority Business: Financing Domestic Emerging Markets”
which was highlighted in our Summer, 2000 newsletter. The new report, continues the work of last year’s study, presents new findings and makes concrete recommendations for sustaining the business growth cycle.
The report speaks to the growth rate of minority firms, which at a rate of 17% per year is six times the
growth rate of all firms. Arguably, the most important assertion was that the U.S. “economic growth
cannot be sustained without the inclusion of minority businesses and an infusion of capital into those
businesses. Absent broad-based institutional investor participation in minority and immigrant business
communities—soon to be the new majority of businesses—continued growth in the American economy
is impossible, affecting not just minority businesses but putting the nation’s macro-economy at risk.”
Inadequate access to capital, an unequal share of the current growth in technology, and the U.S. labor
supply constraints which shows that 70% of the workforce growth is occurring amongst minorities
are all evidence of the need to carve channels of capital to minority entrepreneurs. You
can view this report and a host of other news release articles online at www.mbda.gov.
PMBDC partners with First Republic Bank
The PMBDC has added another lender to its list of potential funding sources for PMBDC clients.
First Republic Bank, a member bank of the Federal Home Loan Bank of Pittsburgh, will receive a
portion of the $5 million funds allocated in its inaugural year to implement the “Banking on
Business” (BOB) program which is aimed at helping small businesses with start-up and
expansion costs.
The PMBDC will (under a reciprocal agreement) provide referrals to
First Republic Bank on minority applicants seeking funding through the BOB program to
start or expand their businesses in Philadelphia County’s underserved neighborhoods.
For additional information on the BOB program, please contact the
After selecting the business structure and the service or product to market, the next important issue for a
business owner to undertake may very well be the accounting method to use. An accounting method is a
set of procedures that help determine when income and expenses are recognized. A taxpayer chooses a
method when its initial return is filed. The selected method must clearly reflect income. Once chosen, the
method must be used until the taxpayer requests and is granted permission to change by the IRS.
The methods of accounting that may be used include:
Under the cash method, income is recognized when cash is received (actual or constructive) and
deductions are taken when payment is made. A check is considered paid when it is delivered, not
when it is cashed. An accrual method taxpayer will include an amount in income when all events
have occurred that fix its right to receive the income. Likewise, an accrual basis taxpayer can
deduct business expenses when all events have occurred that fix the liability, the liability can be
determined with reasonable accuracy and economic performance has occurred (property or
service is provided). A hybrid method, as the name suggest, provides elements of both the
accrual and cash method, i.e. a taxpayer with more than one trade or business may use the
accrual method for some activities and the cash method for others. In an environment where
an entity’s revenue and related receivables are increasing at a quicker pace than accounts
payables, a cash basis taxpayer will recognize less income than its counterpart who uses the accrual method.
Generally, C-corporations and partnerships with a C-corporation as a partner must use the accrual method
of accounting. In addition, according to Treasury Regulation 1.446-1(c)(2)(i), taxpayers that maintain
inventory are required to use the accrual method to account for inventories, even if they use the
cash method for other items. As an exception to the general rule, the Internal Revenue Code
provides that an entity may use the cash method if it is not a tax shelter and is an entity that has
averaged less than $5 million of gross receipts.
Further relief for small taxpayers has recently
been provided in Internal Revenue Service Revenue Procedure 2000-22 (Rev. Proc. 2000-22).
Rev. Proc. 2000-22 provides that qualifying taxpayers with $1 million or less in average annual gross receipts will no longer be required to account for inventories and use the accrual method for buying and selling merchandise.
These new procedures will simplify accounting for many small taxpayers and allow them to
defer recognition of income until payment is received, rather than recognizing income when services are performed.
The change in method provided by Rev. Proc. 2000-22 is effective for the first tax year ending on or after December 17,
1999. Taxpayers who qualify and wish to change their method of accounting under this procedure
have until November 13, 2000 to complete and file form 3115, “Application for change in
Accounting Method”. Form 3115 must be attached to an amended federal income tax return for the
taxpayer’s first year ending on or after December 17, 1999.
MBDA Launches its Web Portal
In the past, the MBDA has advocated on behalf of minority businesses for access to capital, human resources, and capital equipment/inventory. With the advent of technology and its impact on the
business environment, the MBDA has added another component to its advocacy list, access to
information and its uses.
With an established target date of January, 2001, the MBDA will introduce its “expanded
E-commerce tools for enhanced growth strategies” through an Internet portal (doorway)
that will provide many different types of information to minority businesses. A business
will create a personalized user profile that will be entered into an Application Service
Provider (ASP) that is a one-stop databank of resources. The ASP will provide key, timely
information about market trends, high growth industries, financing your business,
business operations and doing business with the government. The categories will
differentiate according to personalized business areas/industries as defined by the
user profile. Slated for the future is a “chat room” where entrepreneurs can share
information, experiences and ideas.
Make sure to visit the MBDA’s website which currently provides “Virtual Business Centers” with
information on Aquaculture, International trade, Franchising, Manufacturing, Technology and, as a
future addition to the site, Capital Access (where to find equity investors).
Take Your Business Around the World...And Never Leave Home
Doing business on a worldwide scale isn’t just for the Blue Chips anymore! The International Visitors Council (IVC) and the Philadelphia Trade Office now offer a FREE program to help minority and women-business owners become players in the international marketplace.
“Most small business owners aren’t aware of the enormous opportunities that exist for doing business abroad,” said
Nancy Gilboy, executive director of the IVC. “And you don’t have to be a big success. With guidance and
technical assistance, small companies can grow through exporting.”Through a series of seminars,
workshops and mentoring programs, (courtesy of an 18-month $300,000 grant to IVC from the U.S.
Economic Development Administration) women and minorities in Philadelphia can receive the
guidance and training they need to take their business international. “Even if you don’t
manufacture a product but are a wholesaler, or a manufacturer’s representative with
access to a product, the seminars and technical assistance workshops offered by the
Philadelphia Trade Office will open a new world for your business,” Gilboy said.
The seminars are FREE for companies based in Philadelphia. For additional information and to
register for the “Growing Companies” workshop series contact the IVC at (215) 683-2126.
Paucity in the number of Regional Minority Businesses
According to Dun & Bradstreet Minority Business Data, the percentage of businesses that are minority-owned in
Pennsylvania is (0.04%), Delaware (0.21%) and New Jersey (5.18%). The states with the highest
concentration of minority-owned business are California (34.04%), Florida (10.21%),
Texas (10.15%), New York (8.58%), and New Jersey (5.18%). All five of these states had
minority populations between 25.0 to 49.99% of the total population in 1995. Conversely,
the minority population was between 15% to 24.99% in Delaware and less than 15% in
Pennsylvania. The statistics show a positive correlation between those states with a high
minority population and the percentage of minority businesses.
THE MINORITY ENTREPRENEUR SPOTLIGHT:
Raymond A. Yabor, President/CEO - 503 Corporation, 5019 Mulberry Street, Philadelphia, PA 19124
The 503 Corporation, Philadelphia’s largest Latino-owned distribution company was incorporated in 1992.
From a paper and janitorial supply company in 1992 the 503 Corporation today is close to attaining its goal of
becoming a single source supplier. From a one-man operation in 1992, the 503 Corporation has grown to
an organization with eleven employees. Most have received professional training while employed at 503
and several have been certified as professional forklift drivers. All of the 503 employees have certificates
in safety and ergonomics in the work area. Today this company is an aggressive and competitive
supplier to the janitorial service industry, building management, building contractors and
developers, supplying paper, chemicals, lighting, equipment, office supplies, office furniture and
specialty building products. They attribute part of the company’s success to providing
quality products, reliable service, and a commitment to hard work. Active participation in
Philadelphia’s MBEC, the National Minority Supplier Development Council, guidance from
the PMBDC and membership in the Philadelphia Hispanic Chamber of Commerce also
contributed to the company’s achievements thus far. Mr. Yabor was recognized
as the Minority Entrepreneur of the Year by the US Department of Commerce MBDA and the
PMBDC at the 15th Annual Minority Enterprise Development Week Awards Luncheon on
Friday, October 6, 2000 at the Philadelphia Marriott Hotel. Please call Mr. Yabor at (215) 535-3100
for all your supply needs.
We wish Mr. Yabor continued success in his entrepreneurial endeavors!
PMBDC