When it comes to starting and growing a business, minorities face more hurdles than most. In order to jump them, minority-owned businesses must plan for setbacks and respond with smart start-up solutions.

By: MATT ALDERTON

When bankers Tola Talabi and Deen Solebo decided to start a business, they knew the odds were stacked against them. Not only were they African Americans—originally from Nigeria, in fact—but they were also opening a high-end wine store, a business that neither of them had experience in, in an industry that's notorious for its lack of diversity.

"We're in a business where there is not really a lot of strong minority presence," Talabi says. "We're a rarity."

Unfortunately, neither banks nor suppliers like rarities. They prefer sure things in the form of the status quo. When Talabi and Solebo pulled the trigger on their business, therefore, they had to sell not only their idea, but also themselves.

"You have to be aware of people's preconceptions about you," says Talabi, who had to convince lenders, vendors, landlords and customers that two African-American men could, in fact, sell fine wine. "We realized that because we were going into a business that doesn't really allow minorities, we had to really do our homework and excel at what we were doing."

Their persistence paid off. Five years ago, Talabi and Solebo opened their first wine store in New Jersey. They opened their second, Bacchus Wine Made Simple, three years later on Manhattan's Upper West Side, where it's been a resounding success.

Minority Business By the Numbers

When it comes to minority-owned businesses, there is good news and bad, experts insist. The good is that minorities own 15.1 percent of all U.S. businesses, according to the U.S. Small Business Administration (SBA). That amounts to more than 3 million firms, 99 percent of which are small businesses.

"Minority-owned businesses are starting in record numbers," says Amini Kajunju, executive director for the Workshop in Business Opportunities (WIBO), a New York-based nonprofit that helps men and women in disadvantaged communities start their own businesses.

While the growing number of minority-owned start-ups is encouraging, it still falls short, according to Elizabeth Wilson, senior program officer for special initiatives at the Association for Enterprise Opportunity, an Arlington, Va.-based association that supports the development of disadvantaged entrepreneurs in communities nationwide.

"The start-up rates and business ownership rates for minorities are less than half of what they are for the general population," Wilson says. "On average, about 11 percent of Caucasians have their own businesses; just 4.8 percent of minorities have their own businesses."

Of course, minority-owned businesses aren't just short in supply. They're also short in cash flow. "Eighty percent of African American-owned businesses are doing less than $80,000 in sales a year," Kajunju says. "That's an issue."

Challenges: Explained

The reasons for minority missteps in business are many, according to Kajunju. Among the most common, she says, are a lack of management expertise and a low tolerance for risk among minority entrepreneurs, not to mention mismanaged priorities that have many minority business owners chasing social change over profits.

"Many minority business owners want to change the world and make money," Kajunju says. "The problem is that typically you can only do one at a time, and usually it's the profit-making part of your goals that gets left behind."

In other words, too many minority entrepreneurs want to be activists; in order to be successful, they must focus instead on being business owners. "You're doing a lot more for the community by building a business that is profitable," Kajunju says, "because that usually means you're employing people, you're being a role model and you're building up the community by moving money around within it."

For her part, Wilson—who gives minority business an F on its report card—offers the following four "Fs" as fundamental causes for minority business' failings: