By: Alvin A. Reid, St. Louis American City Editor

November 14, 2002, The St. Louis American

	Professor Steve Rogers from the Kellogg School of Management at Northwestern University said creation of more black entrepreneurs and larger black-owned businesses is needed. Photo by Wiley Price

CLAYTON - Steve Rogers wove a historic tapestry of history, entrepreneurship and black achievement during his Salute To Excellence in Business keynote speech last Thursday at the Chase Park Plaza.

Rogers, the Gordon and Llura Gund Family Distinguished Professor of Entrepreneurship at the Northwestern University Kellogg School of Management, reminded the sell-out audience of almost 700 people that "entrepreneurship has meant freedom to the black community."

"Black entrepreneurship began 32 years after the first African slaves arrived in America in 1619. In 1651, Anthony Johnson, an ex-slave purchased 250 acres of land in Virginia, becoming the first black entrepreneur.

In a riveting speech, Rogers said free blacks in the north and south "had an insatiable appetite for business ownership...their collective wealth was conservatively estimated to be more than $50 million. For instance:

-- In the late 1700s, James Forten owned a manufacturing company in Philadelphia that made sails for ships and he employed more than 40 workers - both black and white.

-- In 1838, free black women created jobs for themselves and others in the dressmaking, hat-making and wig-making industries.

-- In New York, blacks owned a clothes cleaners, a hairdressing salon, a confectionery, a fruit store, two coal yards, two dry goods stores, two restaurants, three tailor shops and six boarding houses.

Even black slaves knew the importance of owning a business.

Frank McWhorter, saltpeter manufacturer, John Berry Meachum, a carpenter, and Robert Renfro, a restaurant owner, were allowed to own their own businesses - and required to share profits with owners. All used their shares of the profits to buy their freedom, and also to buy the freedom of other slaves.

"Black entrepreneurship, especially during the Jim Crow era, was not loved by everyone," he said.

One of the worst episodes of racial violence in the United States' history occurred on June 21, 1921 in Tulsa Okla., and the root of "the black holocaust" was black business success.

Whites killed more than 3,000 blacks on this day, and their attackers burned a 36-square-block area called the Black Wall Street. In this area, blacks owned and operated more than 600 businesses.

"A dollar would circulate 36 to 1,000 times, sometimes taking a year to leave the black community. Now, a dollar leaves the black community in 15 minutes," Rogers said.

Blacks in Tulsa owned 30 grocery stores, 21 restaurants, six private planes, two movie theaters, a hospital, a bank and a bus system.

Unfortunately, "the pride and admiration that those 15,000 black people had was equaled by the jealousy and disdain of a group of whites," he said.

Jumping from the past to the present, Rogers said "our country desperately needs more black entrepreneurs who can create significant wealth for themselves and others."

"Who are the most likely employers of black males and other minorities? Black entrepreneurs," Rogers said.

"Black entrepreneurs, regardless of the company's location, city or suburbs, create jobs for minorities."

Rogers, who owned and operated two manufacturing firms and one retail operation, before returning to academia, quoted a study that concludes that white-owned companies in minority communities have workforces that are 32 percent minority, while black-owned companies in minority communities have a workforce that is 85 percent minority.

In addition, the study said that white-owned companies located in white communities have work forces that are 15 percent minority. Conversely, black-owned companies in white communities have a workforce that is at least 75 percent minority.

"Obviously, these facts show that more black entrepreneurs, and larger black-owned companies, will help solve the problem of providing jobs for minorities," Rogers said.

"Simply placing companies in minority communities does not create jobs for minorities. The company's ownership is more important that the company's location."

Rogers explained the difference in the racial makeup of employees at minority and white-owned firms cannot be blamed entirely on racism.

"Instead, the reality is that a lot of this has to do with how people get jobs - especially in small companies. It's primarily based on employee referrals by friends and family.

Larger black-owned firms and increasing the number of black entrepreneurs, "would benefit the minority community, and more importantly, the country as a whole," Rogers said.

"America is stronger when all of its citizens are employed."

Rogers said the new generation of black entrepreneurs "must be ambitious and committed to owning a large company.

"Research shows that only 2 percent of the 3 million minority-owned businesses in the country have revenue of at least $1 million," he said.

"These businesses in turn generate 66 percent of revenues for all minority businesses and this 2 percent employs 54 percent of the total number of workers.

"Therefore high-growth, black entrepreneurship must be a priority."

Rogers said that lack of access to capital "has really slowed the growth of black entrepreneurship. A Dartmouth College study concluded that more than 40 percent of black entrepreneurs have a bank loan application rejected, compared to less than 20 percent for whites.

He called the performance of the private equity/venture capital industry "disappointing" in that less than .05 percent of the more than $90 billion invested in the past five years has gone to minority entrepreneurs," Rogers said.

"In fact, 99 percent of the money that black entrepreneurs have received from venture capitalists has come from firms that are members of the National Association of Investment Companies (NAIC) - a trade organization for venture capital that invests in minority entrepreneurs.

Rogers also told non-entrepreneurs what roles they can play in helping build more and larger black-owned firms.

"First, use their services and buy their products. And when it comes time to pay your bills, pay them on time," he said.

"Those of you in Fortune 1000 companies should encourage your organization to invest a portion of its pension fund in the NAIC firms that invest in minority entrepreneurs. This should not be social investing, but investing with the expectation of market-rate returns."

Read more about Prof. Rogers in the Kellogg interview on his new book The Entrepreneur's Guide to Finance & Business.