City of Portland Prime Contractor Development Program (PCDP)
Interise 2016 Graduation Dinner
Portland, OR | June 9, 2016
Good Afternoon Ladies and Gentlemen – It is a pleasure being here with you this afternoon. I commit to you I will not take too long to bore you with a long winded speech. However, I would like to share several thoughts with you.
First, I’d like to mention a few things about the Prime Contractor Development Program (PCDP) Program. Second, I’d like to share my thoughts about your businesses and your value. Then I commit to shut down so we can get on with the Graduation Ceremony.
Ladies and Gentlemen – I would like to Thank Stacey Edwards and the City of Portland along with Rhonnda Edmiston from Howard S. Wright and all the other partners that donated their time, experience, and knowledge to you. I am presently on a Committee with the Mayor of SEA and we are working on a project tasked to define 5 key activities we can implement to improve Inclusion of Diverse Firms within the City of Seattle Supply Chain.
The reason the Mayor of SEA is driving this initiative is because it is clear that the majority of business is going to non-women/minority firms and self-identified firms – by the way Primes have said they like Self-Identified firms because it makes it easy to hit their targets. Only 5.8% of city of Seattle business is going to certified MWBEs. The City understands 5.8% MWBE spend will impact the local economy in a positive way. In fact, by not doing something about this problem, the City is perpetuating the growth of income/wealth gap. A position the City does not want to be in.
I am one that will shamelessly steal and will be introducing this program as a benchmark for Seattle to consider.
The other thing I would like to make note of is that you, MWBEs, have invested your resources, whether it is time, money, class and workgroup preparation, and loss of sleep because you have a real job to take care of during the day. This is an investment I saw pay off during your presentations several weeks ago.
Allow me to try to put your commitment and discipline into perspective. You spent approx. 100 hours in class. You spent almost the equal amount of time working on projects and working with each other in work groups. You can put a $ value to this and estimate what your investment was into this learning process. It is important that you put your learning to good use. It is equally as important for you to Measure your Return on Investment.
The other side of the equation is the City’s investment. It took the City about 150 hours to put this program together. Class time was about 100 hours over the last 9 months. Sponsors donated about 20 to 30 hours of support. That is, the supporting professionals in this room spent about 140 – 200 hours working with you as well. All in All – The city and its supporting cast spent between 400 and 450 hours developing and delivering this program. As a consultant, my bill rate is $185 per hour. – No I am not getting paid to be here. I am here because I really believe in what you are doing – getting back to my bill rate, accordingly @ $185 per hour, the city and its support team provided you between $75 to $80K in consulting services. Thank you for supporting the MWBEs in the room. Given how tight budgets are across the business environment this is quite a commitment.
Ladies and Gentlemen - Our economy is in a state of flux.
1. We are in the middle of a national election cycle – who knows where this is going. We know where we want it to go but it is really out of our control.
2. Employment is stagnant and not growing.
3. The Feds are ready to increase the interest rate again. Cost of Capital is going up.
4. Financial Service institutions are under tremendous scrutiny with the Dodd Frank Act – they are hiring thousands and thousands of people just to meet the compliance requirements. Banks are in a high risk position – lending will continue to be a concern.
These are some of the many things affecting our businesses which is really out of our control. So we must focus on what we can control. There are over 332k businesses in the state of OR. There are 44k minority businesses and 110k women owned businesses. We are only 7 of those 154k WMBEs. As daunting as that may sound – we have more control over this than the overall economic climate.
So What can we control?
The business plans you developed are designed to help you succeed.
1. We can control the culture we build within our organization – from what I heard a couple of weeks ago it seems you are doing this.
2. We can control who we align ourselves with – who we strategically partner with – whose values align themselves to ours – there is tremendous alignment in this room.
3. We can map our success. Success does not happen on its own. We must map it out and put milestones in place to insure we are tracking appropriately – I am certain becoming a prime contractor is part of your business growth plan.
4. We can control the type of business we pursue – Not all business is good business.
5. We can control our range of profit margins in the business we pursue – Not all margins are good for growth – in fact some margins are detrimental to your growth.
6. We can control our level of customer service so we can expand – Expand not only horizontally but vertically thereby anchoring ourselves into a better position within a customer’s environment. Build yourself a 3 x 5 strategy – go 3 services deep with 5 customers or go 5 services deep with 3 customers – if one of your services falls out – you have an anchor of 14 services you are providing to carry you and buy you time to replace the lost service.
7. Hire a marketing person to manage your internal and external communications, social media. Prospective customers want to visit you online before they meet you live. If you don’t have an active and updated website, you are taking yourself out of the game. You cannot NOT have a Marketing person. It took me 6 months to find the right person.
8. One of the recurring themes I heard throughout the presentations was the need to work on the front end with the developers, as difficult as this may be, this has to be a goal for everyone in this room. Not completely in our control but in our plan!
9. Build relationships with the buying team. The people in this room will help you develop capabilities to present your case in front of the right people.
10. Lastly - Shed the actions and activities that do not drive growth – do not stay busy for busy sake.
These are some of the many things that are within our control and properly done will improve our probabilities of success.
Ladies and Gentlemen – A minute ago I mentioned that we have no control over the overall economy. I stand by that statement. However, we do have control over our local economy. I love Henry David Thoreau’s quote On Walden’s Pond – “To change Society We must change it One Person at a Time.” I am confident we can change our Regional Economies by helping 1 business at a time. We create and manufacture products, we deliver services, we create value for our customers, we help our customers deliver better products, services, and value to their customers.
What does helping 1 business at a time mean?
It means that we can create revenues, jobs, and impact our economies.
Let me elaborate. Again, there are over 332k businesses in the state of OR. Approx. 44k of them are Minority Owned Businesses/100k are Women Owned Businesses. Minority and Women Owned Businesses are growing at almost 4 times the rate of the marketplace and are responsible for generating 9 times more employment than the marketplace. National economy is slumbering and stagnant at best. Understanding this puts into perspective the value and impact your businesses have on your local economy.
There are 3 measurements we review when we look at economic contributions to our communities:
1st, Direct Purchases from the Members with MWBEs,
2nd, Indirect Activities within MBE Supply Chains.
3rd, Induced effect, where your employees and your supply chains spend their wages among the wider community.
A chain reaction of indirect and induced spend is created within our communities. You have these concentric cycles taking place simultaneously creating jobs, creating wealth, empowering communities, all while creating innovation – the most valuable asset anyone can deliver at this time.
We measure impact by looking at:
OUTPUT– The cumulative output generated by spend
EMPLOYMENT – the number of people employed by the firms and their supply chain;
PERSONAL INCOME – the incomes earned by the employees of the firms and their supply chains; and, TAXES – tax receipts generated by the supported activity.
Here in the state of OR our Council supports 40 MBE Firms – those firms generate approx. $456M supporting over 1,600 jobs. By adding our supply chain activities and induced effect, our 40 MBEs generate over $619M in annual revenues and support over 4,600 jobs. $78 M of the $619M is generated by our Architects, Engineers, and Construction firms.
By applying the same principles to the WMBEs here in the room tonight allow me to demonstrate your impact. I understand your collective annual revenues approximate $10M. You employ 30 - 40 employees. By adding supply chain spend and induced spend, your $10M generates approx. $17.3M in economic impact and supports about 130 jobs. So the answer to the question “what does helping 1 business at a time mean?” The answer is - We impact our local economies in a very positive and meaningful manner.
What you do is extremely important to the communities within which you do business. Your presentations tell me you are all “High Value Entrepreneurs.” You’re not afraid to fail – as a matter of fact, Herb – you mentioned that you had 8 other businesses before you launched BIM. You are all focused on your success as well as the success of others. You bring the “Do It” approach to making your business better and more competitive. You provide fair wages and salaries for a fair day’s work. You are presently or are thinking of providing retirement benefits, healthcare benefits. You are thinking about sharing ownership and profit. This type of entrepreneurship will lead to loyalty, growth, and wealth of yourselves and your communities.
So the next question is: How important are you?
I would dare say - you are very important – Again, I would dare to say - you are very important:
1. You are important to your families.
2. You are important to your employees and their families,
3. You are important to employees and their families you do not even know – but whom you impact.
4. You are important to our various cities, counties, and the State of Oregon. Think about your $550k - $950k in contributions to the tax coffers.
So again Ladies and gentlemen – what you do and live is very important. Continue to build your business because your growth is our communities growth.
Ladies and Gentlemen – I am going to close out this afternoon by saying thank you for allowing me to be part or your celebration. All of you have invested many resources for the purpose of building relationships and the businesses in this room. All of you have invested Thousands and Thousands of dollars in making this a successful program. Do not let this investment go to waste – let’s work at putting these activities and learning to good use.
To everyone in the room as well – you are very important to our community. You facilitate knowledge, innovation, competition, you support driving wealth to our communities and economies. You drive wealth for communities at large. You play a critical role in insuring our local economy remains vibrant in spite of the national economy. Don’t forget this.
Thank you for your time and attention.