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Monday, November 26, 2012

Race And Business

If you've read this blog for any amount of time, you know I'm not especially Politically Correct.  I calls 'em like I sees 'em.  What follows is partially based on my 30+ years of banking experience - specifically in my capacity ranging from being a loan underwriter up to being the Chief Credit Officer - in total, about 8 of those 30 years.  Does this make it Gospel?  No, but considering all of this experience occurred in the SF Bay Area - one of the most racially diverse areas of this country - it will give you a hell of an insight into race and business.

The individual who can do something that the world wants done will, in the end, make his way regardless of his race.
--Booker T. Washington
When I was writing the post, The Alluring Call of Socialism, there was a big racial component to what's happening.  In my opinion, the socialist are using race as their tool to divide our country.  They have successfully convinced blacks and Hispanics that they are victims.  Vote for us, we'll give you stuff from the evil white overlords who robbed you of your chance for greatness.

Never mind that the nearly 50 year experiment with Affirmative Action has proven to be a colossal failure.  Blacks, in particular, have grown accustom to being given stuff - and the need to provide for ones self has evaporated.  The only requirement for continued payouts is loyalty at the ballot box.

Their community has been decimated.  Approximately 3/4 of their babies are born out of wedlock.  A disjointed home life - no sense of family - draws them towards gangs or "the hive" to fill that gap in their lives.

They make up approximately 13% of the population, yet are rapidly approaching 40% of welfare recipients.  The numbers are virtually identical for incarceration rates.

The great socialist experiment with blacks is a failure in its entirety.  Hispanics are trending in the same direction.  If their "leaders" continue to covet cultural victimhood as is so warmly embraced by the black community, they too can expect similar outcomes.

A whining, crying race may be pitied but is seldom respected.
--Booker T. Washington

I was thinking about the racial profiles of the folks that own businesses in the center where we've got our precious metals store.  With only one exception, all of the business owners are either white or Asian.

If you look up the federal statistics [private study in PDF], 11% of white workers are business owners.  Only 5% of blacks own businesses.  Average white business have sales of over $400,000.  The average black business has sales of around $74,000.  Huge differences.

And then there are Asians.  One of the smallest ethnic groups in the nation (less than 5% of the US population) is also one of the most successful.  So successful, in fact, that the race-baiters have had to come up with a new social tag for blacks and Hispanics.  Instead of being called simple 'minorities', they're now called 'disadvantaged minorities'.

Disadvantaged!?  Are you serious?  Blacks are the most advantaged minority group in the history of the nation.  Never has so much been given to so few who personally endured no injustice.  But I digress.

Asians business statistics are on par or superior to white business statistics in virtually every category.  How could this teeny tiny minority group absolutely crush these larger minority groups?

It's as simple and as complicated as one single word:  Culture.  Their families, friends and community,  regardless of social strata, expect - no, demand - success.

Instead of a culture that celebrates, 'Keeping It Real', they embrace Tiger Moms.  Where Asians heap scorn on their youth for educational failure, blacks deride and ridicule their contemporaries for 'Acting White' when a black kid chooses the un-cool path of academics.

A concept drilled into the brains of successful groups is that of sacrifice.  If you want success, you're going to have to give up a lot of things.  Sacrifice now for something better in the future.

You can stay home and study for the algebra test, or you can go to a party.

You can spend every dime you own on boats, cars and clothing, or you can save it for investments or to start a business.

You can spend hours playing video games, or you can spend hours reading about business success stories.

Everyone in this country has the exact same number of hours available to them.  How you choose to use those hours is up to you.  You can choose to emulate the strategies and actions of successful people, or you can emulate the strategies and actions of The In Crowd.

A bit of insight into my experience with the psyche of different Asian groups:  I've had the most experience with three groups - Indians, Chinese and Filipinos.

Indians were almost exclusively in the services field, primarily in lodging and food service.  I can't tell you how many Indians came to my banks for refinancing that started their businesses with credit cards.  They'll do cash advances on 10 credit cards, and buy a business.  I have seen dozens of dumpy motels bought with credit cards.

This is a low risk/high cost strategy.  If you default on making your credit card payments, nothing is taken from you, as credit cards are unsecured funds.  But they're very costly, so your income margins are very thin.

So, the entire family moves into the motel, thus eliminating their housing expense.  They then use sweat equity to clean up the motel and increase revenue.  Once it's "cash flowing", they'd come to us for refinancing.

They'd run it for a few more years, continually upgrading the facilities with one goal in mind:  To qualify to become a "flag ship" motel - becoming part of a national chain.  If they got the nod, we'd happily refinance them again for additional improvements.

Typically, they'd then sell the motel, and upgrade to a better flag ship company - i.e., going from Motel 6 to Holiday Inn Express.

Chinese, well, they're just crazy!  They are fearless.  They will put everything they own on the line.  They're willing to make a big bet to get a big payout, even if that means crashing and burning and losing everything.

When they'd come to us for a loan, we'd see a number of business failures in their past.  As a result, many times, their credit scores were horrible.  When you crash and burn, everything tends to get trashed, including their personal credit scores.

As a result, with these loans, we'd have to ensure we were FULLY secured, and we'd have loan covenants requiring regular monthly or quarterly financial statements and regular site visits to the business (this was obviously done for any borrower with similar business financials - Chinese just happened to be a large portion of this type).

Very often, they would sell these businesses as soon as they were gushing money to "cash out" and move on to something else.  I think they like the thrill of the hunt more than actually getting the brass ring in their grasp!

Filipinos are the lowest risk-takers of the bunch.  They've mastered the concept of sweat equity.  They very rarely would go "all in" on a project - always keeping cash and assets in reserve.  But they will spend 20 hours a day, 7 days a week to build a business.  Mom, dad, grandma, grandpa, kids, cousins, aunt, uncles - the ENTIRE extended family pitched in.

By having this large pool of mostly free labor to draw upon, most everyone could hold a "normal" job or two, and devoted their off-hours to the new business.  For instance, mom and cousin work the business during the day, and work swing shift hours at a salaried job.  Dad and uncle work regular day jobs, and prep/build/manufacture/maintain the business during the evening hours.  Grandma, grandpa were used as needed, and the kids were pressed into service whenever they weren't in school.

All three Asian groups employ very different strategies, but all are successful.  The common thread is a culture that recognizes that sacrifice will lead to success.

Much (most?) of the black and a growing portion of white culture are unwilling to sacrifice.  Poor blacks largely because of the indoctrination of economic dependency, and upper-middle class whites largely because of Helicopter Mom-ism.  Both of these groups have grown used to being cared for, and are unfamiliar with the concept of sacrifice.

Hispanics used to be as business driven as whites and Asians.  Many still are, but sadly, as a group, they're rapidly drifting towards the much easier path of economic dependency.   I pray that Hispanic leaders will help to steer their followers away from the path chosen by black leaders such as Sharpton and Jackson.  There is still a chance to keep them from this disastrous path.

There is a class of colored people who make a business of keeping the troubles, the wrongs, and the hardships of the Negro race before the public. Having learned that they are able to make a living out of their troubles, they have grown into the settled habit of advertising their wrongs-partly because they want sympathy and partly because it pays. Some of these people do not want the Negro to lose his grievances, because they do not want to lose their jobs.
--Booker T. Washington

Accept The Challenge

So how do we preppers - regardless of our race or ethnicity - use this information to benefit our lives?

The quickest way to build wealth is to own your own business.  You may have current commitments that don't allow you to quit your job and go out on your own.  But, you CAN start the process part-time and eventually take it full-time.

Get educated and get the right mindset.  Start by reading, Think And Grow Rich by Napoleon Hill.  The book is actually more about setting goals and teaching you how to reach them.  I can tell you from personal experience that it works.

If you know nothing about running a business, get thee to the Small Business Administration (SBA).  They have TONS of free resources to help you start and run a business.  If you're near a large city, they have offices with folks to help you.  Also look for SCORE centers.  These are staffed by retired businesspeople that can act as mentors for your business.

Two key areas where people fail are in marketing and accounting.  You may have the greatest product or service ever invented, but if you can't get people to buy it, you're sunk.  Know how to reach your target markets.

Similarly, once the money starts flowing, you must know how to account for it, which products are most profitable, and how to project for future growth needs.

Don't scrimp on your education on either of these points.

And of course, expect to make sacrifices.  Time, money, energy will all be sucked from you at an alarming rate.  But, with proper planning and knowledge, you can limit the impact and timeframe of these sacrifices.

Lastly, be prepared to be flexible.  As opportunities appear and disappear, you want your business to be nimble enough to move away from sink holes and steered towards profitable lines.

What's the saying?  Luck equals preparation plus opportunity.

Go get lucky!

Copyright 2012 Bison Risk Management Associates. All rights reserved. Please note that in addition to owning Bison Risk Management, Chief Instructor is also a partner in a precious metals business. You are encouraged to repost this information so long as it is credited to Bison Risk Management Associates.


Anonymous said...

It's interesting that they all utilize extended family in their businesses, including kids. I can't imagine any other ethnic group, except maybe hispanic, forcing their precious babies into doing labor! Ever hear the term "Chinese moms?" They're ruthless! LOL!

Anonymous said...

We are a family of 'business' . We have a motto that reads. The harder/Smarter you work, the luckier you get.

GunRights4US said...

I will share this post with my Chinese wife - and get back to you on her reaction.

dee said...

I just found your site. As an African-American 60 yo business woman, there is SOME truth to what you say about my race. Some are unwilling to sacrifice, but not necessarilly out lack of desire, but fear of failure, just as many in all races. I would say that the majority of my race is NOT dependent on handouts, but in the frustrations of getting good direction in getting to the point of owning businesses. I will tell you there are many in the black community who preach "get out there and try" "put your dollars back into the black community, etc". I am tired of those who presume there are not leaders who encourage self-reliance, there is a majority who try . Sure there are the lazy, and thuggish and that saddens me. My husband and I own a pharmacy(20years), gross over 3mil/year, and help other entrepreneurs where we can, with our dollars as well as our mouths and actions.I am a RN, he a RPH and he went back to school on the GI bill to get said degree, will I worked as we care for our growing family. We got our downpayment from my great brother, who was financially able to help us, just as our parents tried to live their lives as did their parents. Our kids have each helped out in the pharmacy as they grew old enough to help. Mr Sharpton in his own way, is trying to help, but he like us have seen the racial profiling and obstruction, and try to shine a light on it. "Barry" has also had work to get himself to where he is today, a good role model for all, whether you disagree with him, politically. The culmination of the American dream, if would be objective and see that. We have 4 great grown kids, married and two of the husbands are entrepreneurs. We are proud of our heritage, and our racial makeup is expanding with our grandkids. I tire of the alienation, and as a family that has tried to prepare for life's contingencies since the eighties, I am a little insulted and saddened that you believe that we, or most , are "cared for' and not familiar with sacrifice.Live in our skin, and you may see where some of the sacrifice occurs.