The economic opportunity for diverse businesses continues to grow as more corporate investment is directed toward suppliers that are owned, managed and operated by historically underrepresented groups.
But what happens after a diverse startup has gotten a foot in the door with markets, customers and partners? Scaling a business brings unique challenges—everything from access to capital to executive team building—for Black, Hispanic and Latino, women, LGBT+ and veteran owners.
Here are five best practices diverse-owned businesses should keep in mind when scaling.
Financing growth is far different from raising seed capital. As startups begin to scale, they need to ensure they have the right partners and capital structure in place to fuel that growth.
For example: A large buyer wants to enter into a $150 million contract with a diverse vendor. Before that business can capitalize on the opportunity, it needs to be able to finance increased material costs and labor to deliver those receivables.
Typically, scaling requires access to more sophisticated instruments, such as common or preferred stock, asset-based lending or other forms of debt financing.
It’s important diverse suppliers address these issues head-on. Capital constraints can work against them by forcing them to settle for lower-tier opportunities that stymie growth.
As diverse-owned businesses establish themselves and grow, they can transform customers into strategic partners. This network will be a crucial asset in driving growth.
It starts by moving beyond a transactional relationship and toward having strategic conversations with partners. Many large companies with supplier diversity programs can support vendors through capacity building and planning—but it’s up to the business to leverage those resources.
Getting in the room with the right executives from the nation’s largest, most profitable companies is challenging enough. Attracting and developing the right partner network can make all the difference. Having a strategic five- and 10-year plan can help you lay the groundwork for efficient scaling down the road.
Company culture needs to be deeply embedded within the framework of a business and its strategic vision, and it cannot be delegated. CEOs and other leaders of diverse businesses must ensure decision-making relates back to the core mission and values.
Among other things, this means amplifying diversity, equity and inclusion (DEI) across the organization. Building culture through a DEI lens can help diverse suppliers better realize their strategic goals and transform them into leaders in the space.
For example, businesses should consider how they hire, onboard and retain diverse talent. Opening pathways for career advancement can lead to new ideas that allow businesses to innovate, strike new partnerships, serve new markets or make a difference in society.
At a fundamental level, compassion leads to action. Understanding this and emphasizing empathy can help businesses unlock the potential of their workforce to drive scale and success.
Typically, founders and startup leaders have to wear multiple hats during the early days of the business. When the time comes to scale, it’s necessary to build out the rest of the executive team.
The first place to start is identifying current gaps in the leadership team—not just operationally, but also in terms of background and lived experiences (which ties back to DEI). With more diverse voices in the mix, businesses can more efficiently bring their strategic and cultural goals to bear.
A surgical and precise hand in team building can help unlock significant scaling opportunities while also checking necessary hiring boxes.
Having a strategic plan to drive sales is critical to a company’s growth. Once the plan is designed, diverse businesses must be thoughtful in their execution to drive sales and reach. And it’s not simply achieved by pounding the proverbial pavement.
Analytical sales planning means being deliberate in searching for relevant, high-ROI opportunities. Spending more time up front developing quality leads and sales content often leads to growth down the road.
Yet sales planning is both art and science. Cultivating a business-owner mindset in middle management and on-the-ground employees can lead to results. Empowering them with decision-making and other responsibilities can make employees feel like they’re working toward something real in which they have a stake.
While organizational specifics will range from company to company, cascading this mindset can energize ambitious employees to go make things happen, which may not occur under a stricter command structure.
As a member of the Billion Dollar Roundtable, JPMorgan Chase is deeply invested in the success of diverse suppliers. Beyond corporate spend, the firm also seeks to actively support vendors in its network—no matter what stage of growth they’re in. This is exemplified by our Racial Equity Commitment, a $30 billion investment that touches entrepreneurship, access to capital and many more areas meant to drive an inclusive economy.
“Having the right networks and the right access to capital and resources are key to helping diverse-owned businesses scale and grow,” said Frederick Royall III, Managing Director and National Head of Diverse Businesses for JPMorgan Chase. “Our Commercial Banking business has 21 bankers throughout the country who are focused on how we do more to support diverse-owned businesses and help them grow.”
Diverse business owners looking to accelerate growth may find the following resources helpful:
JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/cb-disclaimer for disclosures and disclaimers related to this content.