MEMPHIS, TN (WMC) - A new effort to pump up minority-owned businesses in Memphis has earned the backing of the city, FedEx, and Christian Brothers University.
As city officials point to a continued large disparity in productivity between black and white businesses in Memphis, a new initiative is working to close that gap.
"It is imperative that we lead by example at city hall and we get even further involved at building minority businesses," Mayor Jim Strickland said.
Tuesday, the city rolled out a new business development program called The 800 Initiative.
The goal is to help 800 minority-owned businesses grow revenue--collectively $50 million by 2023.
They're already responsible for $500 million in revenue.
"These are the companies that have sort of hit a ceiling," Strickland said. "They are not growing. So a 10 percent growth would be huge for them. We wanted to make realistic goals."
A recent city disparity study surveyed 69,000 private firms in Memphis and found they produce $36.5 billion in revenue.
Thirty-eight percent of those firms are white-owned but are responsible for more than 90 percent of the revenue.
"We truly believe that entrepreneurship can be a form of economic justice for our community," StartCo President Andrew Fowlkes said. "We want to help accelerate those firms and move them forward."
Strickland said the city will pay $500,000 from his proposed budget this year and in the next two years for the 800 Initiative.
FedEx is also making an investment of $1 million to spread out over the next four years.
"FedEx's contribution is specifically targeted and designated to support capital financing for minority businesses," FedEx Express President and CEO David Cunningham said.
Christian Brothers University will also step in to increase accessibility to training.
"We are going to provide professional training for these individuals so they can succeed in business," CBU President Dr. John Smarrelli said.
Charles Barnes is president, CEO and majority owner of Action Janitorial Paper Safety, a distributor with a 15,000-foot warehouse off of Sam Cooper.
He bought into the business in 2011 and had 7 employees, one of whom is African American. Now, he has 18 with 10 who are African American.
Along with growing diversity, he wants to grow the bottom line.
"We are scaled to do many more millions of dollars if we have the opportunities. We just haven't had the opportunities," Barnes said.
Barnes is one of 800 minority business owners the city said will qualify for the 800 Initiative.
Dr. Elena Delavega is a professor of social work at the University of Memphis and studies poverty in the city.
She said small businesses, especially minority-owned small businesses, need increased tax breaks to compete against their corporate giants.
And for the effort to be successful, they must be able to pay wages that can lift others in the community out of poverty.
"How is the wealth created, shared with the community is what's going to be important down the road," Delavega said.
The efforts are expected to ramp up in the coming weeks. The mayor said they also want to target minority businesses with no employees and help them grow to where they can hire.