Now is the Time for "The 5% Solution Strategy" as an Economic Development Self-Help Investment
If you are fortunate enough to have a job, particularly in a small to mid-size business, take a look around at the people you work with every day. Then look at the owner of the business. You will probably find many of your co-workers resemble the boss. Not in a familial way, but demographically speaking. According to a study by Georgia Tech Economist Dr. Danny Boston, most people employed by a business reflect the company's ownership. Boston found that 66 % of employees look like their boss.
Based on that simple yet profound premise, I, through the Atlanta Business League, launched an economic development initiative a few years ago intended to spur Black business growth while at the same time creating more jobs in the Black community. The 5% Solution Strategy program is designed around a plan to show the economic benefit of Black businesses and its impact on the overall economy. Strong Black businesses can hire other Black folks who spend money with other Black companies. Unlike social responsibility initiatives, set-asides, and other perceived entitlements, the 5% Solution is strictly an economical solution, not just for tough economic times but all the time. And it shows the contribution Black business makes to our economy.
Consider the fact that jobs are created primarily through small businesses. Even solo practitioners are employers, though only themselves. The overwhelming majority, more than 99 %, of employer firms are small businesses, employing roughly half of all private-sector employees. Entrepreneurship among minority groups represents a sizable portion of new job growth. And Black-owned firms comprise a large chunk of that segment.
In his study examining the data, Dr. Boston found that Black businesses in Metro Atlanta outgrew all other ethnic groups over a five-year period. His study showed that ten jobs were added for every $1 million spent with Black businesses, and seven of these jobs went to Black people. With Black unemployment nearly double the overall unemployment rate, the 5% Solution offers a credible solution. According to Dr. Boston, if Black people spent 12 percent more with Black businesses across this country, approximately ½ million jobs would be created for Black people. Unemployment among Blacks would decrease from 13.6% to 10.4%.
Another example is people spent 5% more with Black businesses in Atlanta. In one year, an additional 24,000 jobs would be created. If 66% of those jobs were Black, it would increase 18,000 jobs produced by Blacks for Blacks.
Responding to the evidence and community knowledge, the ABL's Public Policy Committee I headed expanded these straightforward facts into a panoramic approach to economic development called the 5% Solution Strategy. On the one hand, it encourages the community to support Black businesses with a minimum of 5% spending of the Black consumer dollars year-over-year. It also urges Black businesses to conduct 5% more interactions with other Black enterprises year over year. In turn, it asks those businesses to donate a minimum of 5% of their earnings back to the community year-over-year through the support of community-based, non-profit organizations, churches, etc. This approach fuels a continuous cycle of prosperity by circulating the dollar throughout the community. And it applies to any type of Black business.
The 5% Solution Strategy is a "Black Blueprint" that underpins redevelopment efforts in inner-city communities. The 5% Solution Strategy harnesses Black spending and provides a tool with which every Black person, along with others, can participate. It is an individual commitment, and you can self-measure whether you are engaged. Instead of looking for others, the person, business, or organization can commit to participate and help their environments improve. The spending will stimulate and support Black employment and revitalize Black communities where these businesses are located. This "Black Blueprint" to increase Black business activity can be applied in any city or community. When its guidelines are followed, the action will stimulate a resurgence of Black businesses and their location.
The 5% Solution Strategy is not built on emotion or conjecture. Instead, it is made with a business plan. It includes pre-set goals so that stakeholders can use economic indicators to expect and measure the return on their investment. This Return on Investment (ROI) model reallocates resources to create value for the entire city in the form of new businesses and jobs, philanthropy, Black business growth, civic leadership, and a whole gamut of infrastructure improvements and metrics. Corporations and governments can adopt this "Black Blueprint" as a form of minimum annual goals for their programs. This is not a cookie-cutter approach and can be adopted as a city-wide economic development program.
The 5% Solution Strategy makes both the Black community and the entire city work because it recognizes that the assets to achieve the strategic goals are already in place in the form of Black businesses and Black purchasing power. As a business model, the Black Blueprint serves as a toolkit that leverages these assets through a 5% spending formula and turns them into long-term economic activities that produce new and continuing transactions with visible results. I further expanded this concept into a book titled "CITIworks and the 5% Solution Strategy, an economic plan to use the "Black Dollar" and Black business to revitalize American cities." The basic idea is "when the Black community works, the entire city works!"
The 5% Solution Strategy is more than a mere drop in the bucket or a flash paper response. This is a self-directed "Black Blueprint" of self-help focused on Black business development. It is about time we recognize the Black business community for its economic value, which includes employing people, philanthropy, paying taxes as an asset to our city, and giving them the respect, they deserve. Additionally, this is a self-investment approach, not a social entitlement, handout, or other gifting program based upon social intent. It uses monies new and old already directed by the Black community and at the Black community by others to contribute a purposeful response. Every person, group, business, government, or community-at-large can adopt the simple premise without inflicting pain upon themselves in a straightforward beneficial manner.
We are talking about OUR BLACK COMMUNITY MONEY and A BLACK COMMUNITY BUSINESS MARKET!! These are Our BLACK BUSINESSES, CONSUMERS and INSTITUTIONS!! This is NOT A Set-Aside or Privileged Market!! This is NOT A SOCIAL PROGRAM or ENTITLEMENT!! Therefore We DO NOT NEED PERMISSION!! Why Because We are Using our BLACK COMMUNITY ASSETS to establish the Value of helping vitalize the Black community and highlighting the importance of all Atlanta as economic instruments.!!