At the top of their game.

These companies emerged as B.E.'s 1998 Small Business Entrepreneurs of the Year -- Emerging Company, Business Innovator, Rising Star and Kidpreneur

Despite a host of challenges, including lack of adequate start-up capital, competition from larger majority firms and an anti-affirmative action environment, African American business owners are forging ahead and succeeding as we stand on the threshold of the new millennium.

We are expanding our business ranks at nearly twice the rate of the overall business community, according to Aida Alvarez, administrator of the Small Business Administration. From 1987 to 1992, the Census Bureau estimates that black-owned businesses grew by 46%, from 424,000 to nearly 621,000. And, those black-owned businesses with revenues of over $1 million annually are growing the fastest.

But the real story isn't in the numbers. You have to look at the businesses themselves to understand what success is truly made of. At the Black Enterprise/NationsBank Entrepreneurs Conference last May in Orlando, Florida, five individuals who had embarked on the journey of entrepreneurship were honored as recipients of the Third Annual Black Enterprise Small Business Entrepreneurs Awards. Some of these businesses are on the cusp of becoming BE 100s firms; others are just out of the starting blocks. But all were recognized for their potential, innovation, perseverance and commitment to African American entrepreneurship.

EMERGING COMPANY OF THE YEAR

The Emerging Company Award recognizes businesses that are poised for future growth. They have adopted creative marketing techniques and carved out a niche for themselves.

Robert Luster President & CEO Luster Group Inc.

Robert A. Luster has built his company on three pillars -- integrity, client focus and social responsibility. As president and CEO of Luster Group Inc., this former Army officer believes that it's not what his company does that matters, but what it stands for.

Luster, 40, founded Luster Construction Management (CM) in 1990 in San Francisco to provide project and construction management services to the private and nonfederal public sector. In 1996, he established Luster Group Inc., comprising Luster CM Inc.; Luster National Inc., providing program and project management services to federal clients; and Schoenberg Design Associates Inc., providing landscape architecture, environmental and planning services. Luster also founded the Luster Fund, a nonprofit entity that provides education and training in various fields.

Prior to starting his own firm, he spent 10 years with the Army at the Department of Defense and co-founded another construction management firm. Luster says he found the transition from the Army to the private sector eye-opening. His first business, Athena Management Engineers, failed after only two years.

"I got a Ph.D. in the school of hard knocks," says Luster. "I learned how differently things are done. People have different objectives -- you have to interpret between the lines. In the Army, what you say is what you mean -- there's a high sense of integrity. It's not profit-oriented. In the private market there are more variables that go into the equation."

Determined to "own a piece of the rock" and work with family members, Luster started his second company with $50,000 from credit cards, despite being $35,000 in debt from his first company. "After working for the largest bureaucracy in the world," he says, "I thought there was a better way to run a business."

Taking no salary for 19 months, Luster worked days, nights and weekends for the first three years. He got his first client, O'Brien-Kreitzberg, a San Francisco-based construction management firm, before he had even hired a staff.

"I stuck my neck out and said I could have someone there the next day," recalls Luster. "Two weeks later, I got a call saying they needed someone the next morning. I had already screened about 25 people I'd like to have hired if I secured a job."

By 1992, Luster CM had $2 million in revenues and a staff of 17. In 1997, revenues were $8 million. This year, revenues for the 104-employee firm are expected to top $10 million. Clients include Dyncorp, the Department of Defense and the Department of justice.

The Luster Group has been recognized for its tremendous growth, which Luster credits to his use of technology and his innovative staff. "Technology has become an extension of ourselves, which has increased efficiency," he says. "You can't afford not to invest in technology today or you'll be left behind."

Luster says he was one of the first in his industry to have a Web page and an intranet system so all employees at the company's various offices could communicate with one another. But because he competes with companies that are up to 10 times as large as his, some prospective clients are skeptical about whether Luster has enough resources to get the job done.

"I will have clients say that my company is not a big house, and therefore doesn't have all the skills needed in-house," says Luster. "To counter that, I spend more time up front cultivating the relationship so the client is familiar with me and my company." Luster also teams up with other companies to jointly market to prospective clients, which ensures that all resources are available. To guarantee that his company continues to emerge as a professional service organization, Luster plans to acquire companies to grow his operation.

Luster also gives back to his hometown -- the City By the Bay. His sister, Laura, heads the company's training and community development division, which provides student engineering internships and adult training, funded by federal and local governments. "Many companies take money out of the community and don't give anything back," says Luster. "I was trying to find a way to differentiate the Luster Group while breaking down barriers." Two California counties have hired the Luster Group to help them develop the framework for their welfare-to-work initiative programs.

BUSINESS INNOVATOR OF THE YEAR

The Business Innovator of the Year Award recognizes individuals who have successfully set trends and broken new ground in their respective industries.

Dr. Levy Thompson, CEO Maria Thompson, President T/J Technologies Inc.

In an industry where you create your own path, innovation comes with the territory. Levi T. Thompson, Ph.D., 38, and wife, Maria, 36, founded T/J Technologies Inc., a company that develops cutting-edge materials for lithium-ion batteries, gas sensors, fuel cells and ultracapacitors, in 1991. The business concept was based on ideas Levi felt had commercial potential. Levi, a tenured professor of chemical engineering at the University of Michigan, and Maria, a former IBM marketing representative, combined their respective expertise to form the Ann Arbor, Michigan-based research firm using $35,000 in savings. They also bought used equipment for $1 from a manufacturing company that was closing one of its divisions.

For several years, the husband-and-wife team continued to work full time, while devoting evenings and weekends to launching their company. During this time, they took no salary, but continued to pay their technicians. "Sometimes the government was late in paying invoices, but we managed by using our personal finances to cover payroll," recalls Maria.

Their first contract, with the Small Business Innovative Research of the Department of Defense, involved researching armor materials for the Army for $60,000. Today the 18-employee firm generates over $1 million in revenues, having won more than $5 million in contracts from commercial (nongovernment) and government agencies. It counts the departments of Defense and Energy and NASA among its clients. The government primarily funds their research and development, but the Thompsons' ultimate goal is to expand to a commercial base.

T/J Technologies is noted for its leading-edge research and development of materials controlled to the nanometer ([10.sup.-9] m) scale for use in ultracapacitors, lithium batteries, fuel cells and gas sensors. Ultracapacitors and lithium-ion batteries can be used to power cellular phones and computer equipment. Currently, fuel cells provide power to large facilities, buses, military transport and test vehicles. They may also make an impact in such markets as portable power sources for consumer electronics, emergency generators, yard maintenance equipment and the motion picture industry. New gas sensors will be a key component of automated control systems to reduce emissions and improve energy efficiency, says Levi.

"Our objective is to develop and commercialize advanced materials that will be superior to available materials in terms of performance, at a reasonable cost, and which don't pollute the environment," adds Maria.

The company has an extensive patent portfolio, with patents filed internationally in the fields of advanced materials and manufacturing processes. These proprietary materials have significantly improved the efficiency of ultracapacitors, batteries and fuel cells in terms of power, weight and cost. T/J Technologies also has been chosen to participate in the Mentor Protege Program with the U.S. Air Force and Lockheed Martin Corp.; this is their first major commercial contract. As part of this program, the Thompsons are developing ultracapacitors as energy and power sources for defense applications.

"We expect to see our electrode materials used in ultracapacitors and high-power, long-life rechargeable batteries," says Levi. "We would like to see our electrocatalysts used in fuel cells for automobiles and our transducer films used in nitric oxide gas sensors. Our company has the capability to provide the components for someone else to build or build it ourselves, or we can license the technology to another company."

While managing the $1 million business, the couple also raises two small children, ages two and four. They also find time to help nurture and develop young people through educational and civic organizations, such as his fraternity (Alpha Phi Alpha) and her sorority (Delta Sigma Theta), plus the National Science Foundation, the National Organization of Black Chemists and Chemical Engineers, and the National Society of Black Engineers.

RISING STAR AWARD

The Rising Star Award acknowledges exceptional achievement by an individual who is under 35 and in the early stages of his or her business or professional career. With outstanding skills, professionalism and perseverance, this entrepreneur has established him- or herself as a future leader.

Alonzo Washington President Omega 7 Inc.

As a kid, Alonzo Washington read and collected comic books and drew his own animated pictures. He'd take a superhero action figure and press on an Afro he had sculpted from clay. "I had kids buying comic books from me," recalls Washington. "I was never pushed or encouraged by teachers. They said I should have a real job."

In 1992, Washington, now 31, turned his childhood passion into a fledgling comic-book business when he founded Omega 7 Inc. in Kansas City, Kansas, with the help of his wife, Dana, and mother, Millie. Washington sought to promote self-esteem by providing positive images for black youth through comic books.

"I saw a lack of positive [black] role models in any fictional area in comic books and fantasy characters," he says. "They were either sidekicks, ex-cons or something negative. With my product, I knew I was going to break stereotypes and address social issues. I wanted to educate and enlighten African American youth."

Washington's first comic book, which he financed with personal savings and funds from his wife and mother, cost $5,000 to publish; he made $12,000 in profits. But he didn't wait for stores or distribution companies to pick it up. As a community activist, he was able to "spread the word" through churches, bookstores and community organizations before he had even finished the book. Through these preorders, Washington gained media attention and distributors called him for orders.

Due to the overwhelming success of the comic book, he was able to market other products, including T-shirts, watches, baseball caps, posters and action figures. In June 1997, Washington made history when he introduced Omega Man, the first black action figure produced by an African American-owned comic book company. Washington designed the doll, contacted a Hong Kong manufacturer and financed production of the doll himself. As with his first comic book, he initially sold the doll through preorders. Omega Man sold out in about two hours at a Toys "R" Us store in Kansas City, Kansas, prompting the toy company to increase its orders nationally.

Thanks to a thriving mail-order service, a Web site (www.omega7.com), distribution of his comic books through comic book specialty stores and cultural shops, and distribution of his action figure at Toys "R" Us, the company's revenues reached $600,000 last year. Washington also makes personal appearances at schools, churches and book signings to further promote sales.

For the future, he hopes Omega Man will find his way to the shelves of other major retail outlets and enjoy wider distribution in all Toys "R" Us stores, instead of select outlets in minority communities. Getting the doll distributed in major chains such as Kmart, Wal-Mart and Target, has been Washington's biggest challenge, despite the fact that these retailers have minority supplier programs. He's currently developing a marketing plan for Wal-Mart. He would like to see the same for his comic books, but because of their political content, Washington believes, major retailers have declined to distribute them. Two new action figures will be added in time for the holiday rush as part of the Omega Force.

KIDPRENEUR AWARD

The Kidpreneur Award honors a young entrepreneur or group of entrepreneurs, 18 years and under, who embody the entrepreneurial spirit and are committed to advancing the rich tradition of black business achievement.

Jasmine Jordan CEO & Editor-in-Chief Tools for Living Magazine

A writer since age five, Jasmine Jordan, now 15, set out to inspire young people like herself when she founded Tools for Living magazine in 1996.

"Some material [that's out there for teens] contains sex and violence and is inappropriate for young people," Jordan says. "I thought it would be empowering to write a magazine by young people for young people."

The lifestyle publication promotes personal and professional development, positive self-images and pride in one's accomplishments. Jordan also has developed writing and publishing sessions for teens and Tools for Living workshops that focus on such areas as money management, personal enhancement and building working relationships.

Tools For Living has 16,000 readers, ages 12-19, in six states (the circulation tripled after Jordan won the B.E. award), a staff of 12 teen writers and artists and revenues of $11,000 in 1997. Her brother, Jason, 22, is the graphic designer and publisher, and her mother, Winifred, assists with marketing and finance.

Jordan, a Bronx, New York, native, attended New York's School of Writing and Publishing, which helped nurture her interest in writing. This fall, she'll be a sophomore at the High School of Economics and Finance, a division of the Academy of Finance, in Manhattan.

Jordan's brother and mother financed the venture with about $300. A Sarasota, Florida, company printed the magazine and Jordan sent copies to friends around the country to help distribute it. Today the magazine is published in alliance with the Hot Diggity Dog Youth Foundation Inc., a Miami-based volunteer organization dedicated to community service and youth entrepreneurial development.

"Being an entrepreneur takes constant planning," says Jordan. "It takes all I have and what my family has to keep it going to where it needs to be. There are a lot of good and bad times, but all I can do is persevere." She hopes to expand her readership and inspiring message to the Caribbean, where she has family ties. "America's youth in partnership," says Jordan, "that's what the magazine is about."