Minneapolis looks to give minority-owned small businesses a boost

Can changing the way a city makes purchases increase equity and improve diversity? City leaders in Minneapolis are convinced it can.

When the city of Minneapolis wanted to diversify the companies with which it contracts, the city council created a new program to level the playing field for small businesses. The Target Market Program (TMP), which launched in January, was established to increase opportunities for historically underutilized small businesses and boost the local economy.

The idea is simple: When a procurement need arises, the city notifies participating small businesses so they can bid or respond to a request for proposals. Under TMP, qualified small businesses will bid against each other for goods or services valued at $100,000 or less instead of competing with “larger, more established companies.” This should increase the number of enterprises with whom the city conducts business and support smaller firms.

While TMP was created in response to concerns about equity, the program is race- and gender- neutral. But it was also an opportunity for the city’s Innovation Team (i-team) — a Bloomberg Philanthropies-funded in-house consulting group — to deploy new strategies aimed at increasing the participation of minority- and immigrant-owned small businesses.

The program was created in the fall of 2016 by the Minneapolis City Council. It was part of a number of recommendations stemming from the 2010 City of Minneapolis Disparity Study, which examined discrimination against women- and minority-owned enterprises competing to do business with the city. The report called for the creation of preferences for small firms on a race- and gender-neutral basis.

Beyond the Disparity Study, the city found its existing system for contracting was challenging for many enterprises. In a 2016 survey, only 31 percent of local businesses had worked with the city in the past year, yet 74 percent were interested in doing so. And more than three-quarters of the companies surveyed had fewer than 20 employees — making them prime candidates for the new program.

The Minneapolis i-team hoped it could help make TMP successful in its mission to improve diversity as well. “We knew this program was going to happen, and that unless there was intentional outreach to get diverse vendors signed up, there was a real risk of increasing disparities,” said i-team Program Director Zoe Thiel. “We were able to partner with our procurement office, who were the leads on this initiative, to create an outreach plan with this in mind.”

Drawing upon interviews and workshops conducted among minority-owned businesses, the i-team knew that accessing city services — including getting contracts — could be a confusing, time-intensive process. So it created an outreach plan to make sure that small businesses, especially minority and immigrant entrepreneurs, knew about the new program.

Through their research, Thiel noted that the i-team “learned that business owners hear about city programs from their peers and business support organizations.” The team’s primary strategy became using those networks to share information about the program. The team went to existing meetings, events, and workshops to talk about TMP and connect with small businesses owners in spaces in which they already were gathering. Eight hundred small businesses signed up for TMP the first three months after the policy went effect.

There are high hopes that the TMP can improve equity among the area’s entrepreneurs. As Minneapolis Mayor Betsy Hodges noted, the idea behind the program was to simplify the process so that businesses without a lot of resources can fairly compete for the city’s work. “These businesses are driving the growth of our Minneapolis economy, and by diversifying our vendor base, we’re providing an opportunity for women and minority-owned small businesses to grow as well,” Mayor Hodges said.