At BizLink, where he labors alongside executives from corporations like Sears and Marriott, Stokes considers how best to deliver training to former welfare recipients and other low-income workers. "A lot of small-business owners don't have time to help a program like ours, because they're too busy turning their small business into a large business," says Rodney Carroll, president and CEO of the partnership. "Herb Stokes is unusual."
In another sense, though, Stokes is very usual. Like any other CEO, he wants to make money. "Economics drive this," Stokes says. For his next venture, the CEO plans to start a for-profit consulting company for corporations grappling with diversity issues. He has already talked to AFC Enterprises Inc., the parent company of Popeyes, about setting up a training program at one of its inner-city franchises and has advised Kmart on its urban staffing needs. "Everything I'm doing now is gratis because I'm developing the knowledge I need to be confident I know how this works," Stokes explains. "At some point I'll charge a fee."
But before Stokes can thrive as a diversity consultant, there's one detail he'd like to nail down.
Stokes's support for the welfare-to-work programs promoted by the Clinton administration has boosted his profile in Washington.
In the supplier-diversity movement, minority entrepreneurs who want to sell to big companies are first advised to seek certification, which is awarded by minority-business-development councils across the United States. Certification assures corporate customers that the entrepreneur is not merely a figurehead at a company owned by somebody else. So far, the Chicago Minority Business Development Council (CMBDC) has refused to certify Alliance. "Political bullshit!" Stokes rails.
According to Stokes, at issue is how he financed Alliance. The CEO's former employer, Allied Van Lines, lent him $500,000 to start the company, and Allied agents, including Berger Transfer & Storage Inc., agreed to cover Alliance's accounts receivable until the fledgling business generated positive cash flow. Neither company took equity. Stokes says Allied supported him because he was a quality expert, and because Allied CEO Mike Fergus wanted to foster diversity in the industry. An Allied spokesperson confirms that statement.
Altruism aside, Allied and Berger had a financial reason to back Alliance. Stokes's company doesn't own a single truck: it supervises customer service and pays other companies to do the physical moving. Under that arrangement, Alliance retains less than $1 million of its gross revenues, while more than $5 million flows directly to haulers like Allied and Berger. "It is accurate to say that Alliance is an independent sales rep for Berger," says David DeWitt, a Berger executive vice-president.
Maye Foster-Thompson, the executive director of the CMBDC, declines to comment on Alliance, except to confirm that the company has not been certified by her organization. A letter from Foster-Thompson to Stokes cites Alliance's "dependent relationship" on Allied as one of the reasons certification has not been granted. "The reason I can't get certified in Chicago is that people do not like that I got a loan from Allied," Stokes says.
For minority suppliers, lack of certification has financial consequences. By withholding its blessing, the CMBDC automatically bars Stokes from full membership in the National Minority Supplier Development Council (NMSDC), a nonprofit at the forefront of the supplier-diversity movement. The NMSDC acts as a formal liaison between minority-owned small businesses and large potential customers. Without certification, Stokes can't partake of NMSDC's services as fully as he would like to.
Alliance has, in the past, won certification from less demanding authorities in Cook County and is applying for certification from the Small Business Administration. The company has also formed partnerships with African American entrepreneurs to set up independently owned and locally certified sales offices in California and New Jersey. (Stokes is negotiating to open a third affiliate, in Atlanta.) But even those deals have complicating elements. For example, Stokes says he persuaded a local Allied agent to pay the salary of one of his "independent" partners for the first year that the partner was supposedly out on his own.
Although Stokes argues that his "30 years in the business" is his certification, he still wants the CMBDC's stamp of approval. To help win it, he's paid back $350,000 of his Allied loan, and he hopes to knock off the remainder this year. "In a couple of months I'm going to reapply," he says. "I think this time I'll get it."
Although stokes's critics may challenge his methods, nobody seems to question his unswerving support for struggling minority business owners. For every meeting in which he drums up business for Alliance, Stokes attends a gathering like the one at Bob Chinn's, where helping minorities is the priority. In addition, Stokes personally mentors about 10 African American entrepreneurs, including the owners of a technology consulting company, an art gallery, an Italian restaurant, and a start-up designer of men's loungewear. He pushes his own customers to buy from those young companies and has even goaded corporate contacts, such as Brian Lacey, vice-president of franchise services at Popeyes, into reviewing business plans for start-ups that Stokes would like to fund through a minority-business incubator he has in the works.
Such start-ups, if they are successful, will demonstrate the business reasons for promoting minority representation. And that is critical. If companies don't see diversity through the prism of profit, experts argue, they are likely to abandon it when times get tough. "As the years have gone by, people are grappling to come up with a business case to justify a diversity agenda," says Tammy Borman, cofounder of the Workplace Diversity Network. "The social-justice argument has just not swayed a lot of people."
Stokes's philosophy, of course, happily embraces both social justice and the bottom line. His mission now is to convince the rest of the business world that diversity isn't just the right course to pursue -- it's also the wise one.
Mike Hofman is a senior staff writer at Inc.
Please e-mail your comments to editors@inc.com.
