Nancy Andrade hands out samples of her vegan and vegetarian tamales at Whole Foods on Roosevelt Road. Photo by Erik Unger via Crain's Chicago Business.

This is a package of six feature stories about minority-owned businesses in Chicago, written for the Focus section.

Breaking out of the niche

Crain’s Chicago Business. November 24, 2008.

James Cabrera had a choice to make.

“There were only two ways to go in my business,” says the president of United Building Maintenance Inc., which started as a small carpet-cleaning company in 1979. “Stay small or grow through volume.”

On the former path, Mr. Cabrera, 57, says, he would probably end up with a minority-focused storefront operation on the West Side, working from his predominantly Hispanic neighborhood. He could be hands-on. Referrals would be good. Customers would be loyal.

But he opted for the latter, and went mainstream.

“If I chose to stay small, I felt like I was operating in a box,” he says. “You’d run out of clients and the cycle of getting work starts to close. I wanted to go after larger jobs.”

Thirty years later, UBM is the largest Hispanic-owned facility-maintenance company in the Midwest, employing 900 and counting AT&T Inc., Commonwealth Edison Co. and United Airlines Inc. as clients. Revenue totaled $21.5 million last year at the private company, which Mr. Cabrera says is profitable.

Like Mr. Cabrera, most small-business owners eventually hit a plateau. But for minority entrepreneurs, the question of how, or whether, to rise higher can be tricky. How do you reach beyond your traditional niche into the mainstream market? And if you revamp your product or service to reach a broader audience, do you risk losing your base clientele?

Read the full story here.

Graduating from set-asides

Crain’s Chicago Business. November 24, 2008.

Obtaining government set-aside contracts is one way minority-owned businesses can scale up and compete in mainstream markets.

Chicago aims to award just under a third of city contracts to businesses certified through its Minority and Women-owned Business Procurement Program. State and federal agencies do the same through Disadvantaged Business Enterprise programs, which have varying eligibility requirements for qualified firms depending on the industry.

For example, to bid on minority set-asides from the U.S. Department of Transportation, a firm must have less than $20.3 million in annual gross receipts, and the business owner’s net worth cannot exceed $750,000. The idea is to help firms “graduate” out of government-assisted programs into the private sector once they achieve a certain size.

Ernest Wong, 49, started his landscape architecture firm, Site Design Group Ltd., in 2000. Though revenue totaled $1.2 million last year, his business has yet to grow as big as he needs to take on bigger, private-sector projects. About 75% of his work comes from city contracts.

“How am I ever going to graduate if I’m not able to get these larger projects as a prime (contractor)?” he says.

Read the full profile here.

Looking to create jobs close to home

Crain’s Chicago Business. November 24, 2008.

Some minority entrepreneurs aim to balance growth with commitments to their communities.

Colby Smith, 49, and William Leggett, 61, started their debt-collection agency, Collectors Training Institute LLC, in 1995 with a mission of creating jobs in an underserved neighborhood.

Almost all of their employees have been black, most from the same ZIP code as the company’s call center, in the old Sears Roebuck & Co. administration building in North Lawndale.

But the company’s growth has been limited by the size of its locally owned clients, which included Great Lakes Consumer Services and the Community Bank of Lawndale.

In their search for bigger clients, the duo highlighted their commitment to the community in order to stand out from other collection agencies.

Read the full story here.

Still room for improvement in hiring, sales

Crain’s Chicago Business. November 24, 2008.

Between 1997 and 2002, the number of minority-owned firms in the U.S. increased by 30%, three times the national average for all businesses. Gross receipts grew 12%, compared with 5% among all other firms. Minorities, who make up one-third of the U.S. population today, are expected to become the dominant demographic by 2042.

But minority-owned firms still lag behind their counterparts, especially when it comes to employment and revenue.

Read the full story here.

Making the leap into the big leagues

Crain’s Chicago Business. November 24, 2008.

Entering the mainstream market requires size, scale and capacity. But most minority-owned firms remain small. Here are some common obstacles to growth and how to overcome them.

1 Lack of access to capital

Minority businesses are denied bank loans twice as often as white-owned firms. If they do secure financing, they often are charged a higher interest rate. It’s no wonder they are more likely to use credit cards, in addition to personal savings, when starting up. But a better source of capital may be equity financing. For entrepreneurs who can’t get a loan but don’t want to swipe plastic, “the next best choice is your SBA guaranty loan,” offered through the U.S. Small Business Administration, says Timothy Bates, professor of economics at Wayne State University in Detroit.

Read about all four obstacles here.

Q&A: Why growing minority biz matters

Crain’s Chicago Business. November 24, 2008.

Read the full Q&A here.