BUSINESS MATTERS

NW region rated 3rd in U.S. as fertile spot for minority-owned business

Seeing Northwest Arkansas pop up on "best of" lists is rarely a surprise these days.

For what seems like the better part of this decade, the Fayetteville-Springdale-Rogers Metropolitan Statistical Area (which also includes Bentonville) has been a favorite of list-makers. Name the recognition -- best-performing cities; top travel destinations; desirable retirement communities; start-up friendly locales -- and it's come.

Still, SmartAsset, a financial planning company, declaring the region as No. 3 on a list of "The Best Metro Areas for Minority-Owned Businesses" warranted a double take.

It's not that Northwest Arkansas isn't a business-friendly environment. It's just that -- right or wrong -- Northwest Arkansas is not the first place that comes to mind when thinking of diversity in the state.

According to Data USA the population in Northwest Arkansas is approximately 74.2 percent white. That's not terribly far behind 73.4 percent for all of Arkansas, though it's worth noting that only 2 percent of the population in the state's fastest-growing region is black. Hispanics make up about 15 percent of the region's population.

Fayetteville-Springdale-Rogers is at No. 3 on this "best of" list behind Seattle-Tacoma-Bellevue (Washington) and the Kingston-Bristol-Bristol (Tennessee/Virginia). Chattanooga (Tennessee/Georgia) and Bremerton-Silverdale (Washington) rounded out the Top 5.

Methodology for the study focused on what SmartAsset labeled as ownership ratio, income ratio and profitability ratio.

Ownership ratio, where Northwest Arkansas scored 0.143, was calculated based on "comparing the percentage of the metro area's population characterized as minority to the businesses owned by minorities." A metro area where the percentage of minority-owned businesses closely resembles its percentage of minority population would score highly on the survey.

Income and profitability ratios were calculated comparing financial success with nonminority-owned businesses. Profitability ratio includes labor costs versus income, and Northwest Arkansas scored a 2.124, the second-best mark among the 25 metro areas ranked.

Keep in mind the study was considering only race and ethnicity when evaluating business ownership. So Hunt Ventures, owned by billionaire Johnelle Hunt, isn't in this particular conversation. Nor is 2015 Inc. magazine's 30 under 30 honoree Kirsten Stuckey, owner of Riff Raff boutique and the Charlie Southern clothing brand. Both are white.

A business-friendly climate led Oklahoma City media mogul Russell Perry, who is black, to open urban radio station KISS 105.3-FM from a 2,800-square-foot studio on Dickson Street in Fayetteville. Northwest Arkansas, as we reported in January, could tune in to its first two urban radio stations this year. For decades country, Top 40 and sports talk dominated radio in the region.

Perry notes that only 2 percent of radio stations nationwide are black-owned. Employment at minority-owned businesses, regardless of industry, in Arkansas is about 4 percent.

Since Perry opened The Black Chronicle newspaper in 1979, the company has grown to include 22 radio stations in Oklahoma, Georgia, South Carolina, Florida and Arkansas.

Because his company is well-established, Perry found financing for the Arkansas project relatively easy, though he went with established relationships in Oklahoma. Arvest Bank in Fayetteville, he said, has shown an interest in "becoming banking partners."

For minority-owned businesses that don't have a nearly 40-year track record of success, that sort of reception can often be lacking.

The U.S. Small Business Association has found "disproportionate loan denials" to minority-owned businesses.

A 2010 study cited by the American Sustainable Business Council found that "87 percent of venture capital funds go to Caucasian-led teams with only 1 percent going to African-American led teams."

The ability to secure outside capital is generally a key factor in the success or failure of a business.

Removing those barriers and connecting minority-business owners with the right people is something the Northwest Arkansas Council and others in the region actively aim to do. It's why you see an established businessman like Perry enter the market and why Northwest Arkansas ranks so high on a list of top places for minority-business owners to operate and succeed.

"I've been extremely blessed, but I've earned my spurs," Perry said. "I've had a lot of backers believe in what I was trying to do in Oklahoma City. I have a feeling that Fayetteville and the Northwest Arkansas Council are similar. They see a need and they're doing something."

SundayMonday Business on 07/31/2016

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