Firms Owned by Blacks in County Growing Steadily : Entrepreneurship: Along with the the usual start-up problems, African-Americans must also work harder to overcome negative racial stereotypes.

By CRISTINA LEE

Oct. 12, 1990 12 AM PT

TIMES STAFF WRITER

COSTA MESA —

When Charles Mosley started his custom balloon business in Costa Mesa four years ago, he says the toughest obstacle he faced was getting people to take him seriously.

Despite a 20-year career in marketing, Mosley says he faced an uphill battle trying to persuade other business people that his idea was a good one. Though other new businesses encounter similar problems, Mosley’s task was all the more difficult because he is something of a rarity in Orange County: a black business owner.

Mosley, whose now-thriving company supplies balloons for corporate occasions, is one of a small but growing number of African-American entrepreneurs in a county where blacks make up less than 2% of the population.

The number of black-owned small businesses in the county rose 52% to 1,318 from 872 between 1982 and 1987, according to a recent Census Bureau survey. The 1987 figures are the latest available.

Sales among the county’s black-owned businesses rose to $81.2 million in 1987 from $27.9 million in 1982.

Although the 52% increase in black-owned firms sounds impressive, consider that those 1,318 companies represent only a small fraction of the county’s approximately 80,000 small businesses. Less than 2% of the county’s small businesses are owned by black business people--a percentage roughly equal to the county’s black population.

Nationally, the number of black-owned firms rose 38% to 424,165 in 1987 from 308,260 in 1982. Sales jumped 105% to $19.8 billion in 1987 from $9.6 billion in 1982, according to the Census Bureau.

“The increase in sales has a lot to do with inflation and the state of the economy,” said Donna McCutcheon, a Census Bureau statistician who headed the study. “We were just coming out of a recession in 1982.”

Santa Ana has the highest concentration of black-owned businesses in the county, with 215 firms and total sales of $8.9 million, followed by Anaheim, with 162 firms and sales of $6.9 million, the survey found.

While Orange County’s black business community is small in comparison to neighboring Los Angeles County, which counted 23,932 black-owned firms in 1987, local black business owners say Orange County’s reputation for innovation and entrepreneurship has influenced them to start businesses here.

“I’ve always been an entrepreneur by nature and the opportunities . . . for developing products and markets in (Orange County) are much greater,” said Aaron L. Lovejoy, owner of a computer-consulting and training business in Santa Ana, Ultratech Resources Inc., and president of the Black Business Alliance of Orange County.

Charles Hicks Jr., president of Costa Mesa-based Airways Rent A Car, said that while opportunities are abundant in the county, competition is tough and the “environment basically grooms (entrepreneurs) to survive a tough marketplace and to be the best in the business.”

Hicks, who worked as a flight manager for the Federal Aviation Administration for 20 years before he struck out on his own, now owns two car-rental franchises in the county. He is also running for a seat on the Cypress City Council.

While starting a company is difficult for any small-business person, black entrepreneurs say it can be particularly difficult when negative racial stereotypes carry over into the business world.

“You’ve got a lot of black people qualified to run their own business, but there’s a stigma among lenders that blacks can’t make it in business,” said Fred Lee Burrell, who operates Burrell’s barbecue restaurant at two locations in Santa Ana.

Some black business owners say they often encounter a perception in the mainstream business community that a black-owned firm is not up to performing the job. As a result, black entrepreneurs say, they have to work harder to gain acceptance.

James Johnson, president of J&B; Investments & Associates of Tustin, said the attitude toward black business owners is that “they can’t make good, sound business decisions.”

“The most difficult thing to starting a business was getting community support,” Johnson said. Prospective customers or lenders are often encouraging over the telephone, “but when they see you’re black, their attitude changes somewhat towards the negative.” Johnson’s business had $11 million in sales last year.

Ron Harding, chief executive of Ron Harding Moving Services Inc. of Anaheim, said the general attitude toward the county’s black-owned businesses is that their services may not be up to par. He said he constantly has to reassure customers that he is “trustworthy enough to store and distribute large amounts of goods.” His company had sales of $3 million last year.

Because they are comparatively small in number, black business people say that they lack the social and business networks that the county’s other minority-business communities have. The Black Business Alliance of Orange County, for example, has only 80 members.

Like many small-business owners, black entrepreneurs say that credit is difficult to obtain. In fact, four out of five black-owned businesses in the United States are not able to obtain capital during their first two years of operation, according to Joshua Smith, chairman of the U.S. Commission on Minority Business Development, a Washington-based organization that evaluates federal programs for minority-owned businesses.

A spokeswoman for the Small Business Administration in Orange County said that about half of the nation’s small businesses fail in the first two years.

Harding, owner of one of the largest black-owned firms in the county, said he started his business through an SBA loan for disabled business people. Harding, who lost both his legs in a trucking accident in 1978, received a $150,000 loan from the SBA.

“The loan was just enough to get me into trouble, such as business failure,” he said. “Had I not been persistent, working day and night, my business would probably have failed.”

Fritz Richard, who recently founded a newsletter for Macintosh computer users in Anaheim, had to use his own savings and borrow money from relatives. “When I was looking for the start-up money to begin my business,” he said, “the bankers wouldn’t even talk to me.”

But Lovejoy said the county’s attitude toward black entrepreneurs and the lack of access to capital are just part of a larger problem. He said there’s no black entrepreneur that stands out in the county to serve as a role model for other black business people.

BLACK-OWNED BUSINESS IN ORANGE COUNTY

U.S. Census Bureau figures sketch a portrait of black entrepreneurship in the Southland. Of the 1,318 businesses owned by blacks in Orange County, most are individual proprietorships. Only 203 are large enough to have paid employees. The data, gathered in 1987, was released in September.

Los Angeles

23,932 All firms

3,623 Firms with paid employees

Ventura

404 All firms

68 Firms with paid employees

Orange

1,318 All firms

203 Firms with paid employees

San Diego

2,481 All firms

447 Firms with paid employees