Last years Executive Order 13985 “To Promote Racial Equity and Support for Underserved Communities Through the Federal Government” and the more recent message that the Biden administration will direct 12 percent of federal award dollars to disadvantaged small businesses are major steps toward the meaningful change needed to expand opportunities for women and people of color in the federal government.

A 2016 Commerce Department report found that women own more than a third of all businesses in the United States, but are 21 percent less likely to be awarded federal contracts than their male counterparts. In addition, the federal government has met its strategic goal of awarding 5% of its major contracts to women-owned businesses just once since 2007.

According to the Minority Business Development Agency, there are more than 11 million minority-owned businesses in the United States, but very few of them have more than a handful of employees.

These disparities are not due to a lack of ability on the part of disadvantaged groups, which is why President Biden’s executive order will be a tool to facilitate lasting change. The federal government has expanded its ability to significantly reduce the racial intergenerational wealth and poverty gap through various programs and initiatives at the local, state, and federal levels of government, such as the Small Business Administration’s 8a program.

This spring, the SBA announced that its 2023 budget request would strengthen “efforts to promote disadvantaged small businesses and other businesses in need of support to address a 40 percent decline in small businesses operating with federal government”.

Federal agencies are also partnering with historically black colleges and universities (HBCUs) to improve equity in the contract and technology workforce. Earmarking and other mandates help small, young businesses get started, but we need capacity-building programs and resources that focus on scaling and growing minority-owned businesses.

It is believed that approx 90% of all small businesses fail and that only 1% of venture capital-funded startup founders are African American.

Although the founders of these small businesses have the technical expertise needed to meet the demand for government projects, they may lack the business acumen and knowledge needed to navigate the federal procurement process. These are not skills that are easily acquired on one’s own, increasing the demand for incubator-style programs that provide entrepreneurs with guidance, mentorship and a path to success.

It is important for any minority business, large or small, to develop a sound strategy based on short-term and long-term goals. These goals will provide guidance and direction for new founders who must manage competing priorities such as partnerships with other contractors or suppliers, administrative tasks, and federal compliance requirements. Also, hiring, retaining and upskilling the right people is just as important as getting the contract done. Founders must apply talent appropriately to meet contract needs while conscientiously monitoring revenue.

Incubator programs designed for the unique needs of companies seeking to do business with the government are needed to empower minority entrepreneurs with the tools, mentorship and peer support needed to navigate the complex world of federal procurement. Programs like these are critical to helping entrepreneurs address these challenges and reframe them into opportunities for continued growth and sustainable success.

New mandates and initiatives to expand opportunities are important, but the only way we can make a real impact on the number of minority entrepreneurs participating and benefiting—growing, scaling, and building wealth—is by helping them develop a roadmap of an early stage that will guide them to succeed.

Stephanie Chin is Program Manager at Hutch, a digital services incubator founded by Fearless, a full-service digital services firm. Chin is a member of the Board of Directors of the Digital Services Coalition.

Celestine Presley is the Chief Information Officer of the Office of the United States Trade Representative. Presley is a former member of the Hutch Advisory Board.

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