Diverse Companies Tap Into the Public Sector to Grow

• Government contracts are often a key way for small businesses to grow.
• Federal, state and municipal entities can influence and enable companies to diversify.
• Atlanta’s reputation as a mecca for diversity in business started with municipal contracting.

In the late 1970s, Maynard Jackson—Atlanta’s first Black mayor—instituted what was then a revolutionary policy: minority-owned firms were to receive 25% of the contracts for a massive airport expansion project. Millions of dollars flowed to these contractors, and joint ventures between white and Black entrepreneurs became a hallmark of doing business in Atlanta, establishing the region as a center for diverse entrepreneurship. 

Much has changed since then—most notably, hard racial quotas in government contracting were challenged in court and fell out of favor. But the city Jackson once ran remains a beacon for diverse entrepreneurs and a model for innovative approaches for using local government resources to help small businesses, particularly women and minority-owned ones, get off the ground and reach scale.

“Governments have immense power to reinforce or encourage behavior,” says Burunda Prince, COO of Atlanta’s Russell Innovation Center for Entrepreneurs, a nonprofit named for Herman J. Russell, a Black entrepreneur who leveraged construction and concessions contracts under Jackson’s airport program to create a real estate development empire. “Companies want government contracts. Companies want government dollars. That’s a huge carrot for people.”

Entrepreneurs can find a number of ways to nibble at that carrot. Officials in many cities have set up publicly-funded incubators to target specific industries—like tech—or underrepresented groups, like Black, Latinx or women entrepreneurs.

Atlanta launched its first city-run incubator, the Women’s Entrepreneurship Initiative, in 2015. The 15-month program provides mentorship from seasoned executives, co-working space, financial literacy and technical assistance to its participants. To emphasize its commitment to the program and its goals, the city hosts a week of events highlighting resources available to entrepreneurial women. 

“When a woman is empowered, a community is empowered,” says Monica Hooks, executive director of the program. “WEI works intentionally and relentlessly to leverage Atlanta’s burgeoning entrepreneurial ecosystem to amplify women’s contribution to the economic growth of the city – as innovators, problem solvers and ultimately, job creators.”

Jackson’s diversity example lives on in other ways around Fulton County, in which most of Atlanta lies. Since 2003 Fulton officials have encouraged the use of minority and female business enterprise (MFBE) certifications in order to secure tax breaks for development projects.

The program echoes a key piece of the model that Jackson and Russell helped pioneer: joint ventures between minority or women-owned small businesses and larger white-owned companies. The idea is that instead of relegating the smaller companies to tiny subcontracts on big projects, larger businesses are nudged toward working with them as partners--or at least negotiating with them for larger contracts--using needed tax breaks as an incentive

Fulton County is currently embarking on the redevelopment of Fulton Industrial Boulevard, a seven-mile stretch of warehouses and logistics facilities—a project that could see millions of dollars in contracts going to large and small companies.

“It’s not a requirement, but it’s a policy where each developer documents subcontractors that are MFBEs,” says Samir Abdullahi, Fulton County’s Deputy Director of Economic Development. “We have data and numbers that speak to what that impact looks like. It signals to developers that this is an important element and focus for the authority.”

Other Atlanta companies, meanwhile, have found that doing business with the federal government is a key driver of both growth and diversity.

In 2017 Michael Astwood founded ASRT Inc., a technology firm that specializes in software development and bioinformatics. The Georgia Tech alumnus says that while contracts are important, they’re not the only thing that makes building a relationship with the government important to companies like his.

Since ASRT works with very specialized technology, the company thrives on partnering with institutions like research universities and government agencies that provide not only revenue, but resources, data and expertise that might not be found elsewhere.

“The work we do with the government is critical to what I want to achieve as a minority business owner,” Astwood says. “Having the opportunity to secure government contracts has helped grow our business and afford us the opportunity to ensure that we have a company that is very diverse and offers unique qualifications and skill sets.”

While the ways that diverse businesses access government resources have changed, there are still companies for which the old model of landing a government contract is still crucial.

Although he runs three radio stations in Atlanta, Greg Davis Jr. got few orders for political ads while Georgia was the epicenter of last year’s battle for the White House and U.S. Senate. Then, as run-off races approached, Davis got a call from Miguel Lloyd, a media buyer from neighboring DeKalb County government, with a contract to reach ethnic audiences with a nonpartisan voter awareness campaign.

The ads Lloyd bought on Davis Broadcasting’s La Raza 102.3 FM and Smooth Jazz 100 stations that target the area’s Hispanic and Black listeners, were an unexpected boon to the Black-owned broadcasting company—and a window into an ecosystem in which government contracts and public policy can be growth levers for small businesses, specifically those owned by minorities and women.

Lloyd, who is Black and runs a boutique communications firm, was subcontracted by a larger firm to help with the DeKalb County media buy. In turn, he reached out to Davis and the owners of several other stations he knew had carved a niche targeting Black, Hispanic and Korean listeners.

The deals helped expand both companies’ capacity in ways that likely wouldn’t have happened in the private sector, the executives say. “It opened up opportunities for us to do more work with that ad agency and with the government,” Lloyd says. “There’s a new vertical for us because of that opportunity.”

Learn More:
• Resources for Small Businesses (SBA)
• Resources for Women-Owned Businesses (SBA)
• Resources for Veteran-Owned Businesses (SBA)

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