MAKING AN INVESTMENT IN BLACK BUSINESS.

Here's how to increase your wealth by supporting and investing in African American-owned enterprises.

IN 1995, ARMED WITH 20 YEARS OF EXPERIENCE IN THE Pharmaceutical industry and with the support of family, friends and Members of the medical community (to the tune of $220,000 in seed money), Parran Foster started his own business. His dream: to become a major force in the industry and return part of the dollars spent to the community.

To improve his chances of success, Foster formed a coalition with minority physicians with whom he had done business. He also aligned himself with Parke-Davis, a major pharmaceutical manufacturer with products to serve the medical needs of urban communities.

Today, Foster is the president and CEO of Phoenix Pharmaceuticals Inc. in Waldorf; Maryland, which has some 15 employees and sales revenues of around $2.5 million. Phoenix, whose customers include doctors and hospitals, has offices in 11 major cities, including Detroit. New Orleans, Atlanta, Miami, Chicago, Cleveland, and Baltimore.

Making sure that the dollars spent on prescriptions is into the minority com Foster's firm contributes between 30% and 50% of its revenues in the form of college scholarships.

The company has committed $1 million to aspiring students. Some 250 students nationwide Will receive $4,000 over the course of four years of under-graduate study. The scholarships are granted on a rolling basis. That is, once a student graduates, his or her share of the pot is given to an incoming student. Members of the Class of 2001 are the first 40 graduates of the Phoenix program.

Like many of his colleagues, Foster realizes that one cornerstone of wealth building is entrepreneurship. By boosting the value of a business, an entrepreneur creates a powerful asset in the community.

However, becoming a business Owner is just one role you Can play in developing viable black enterprises. Another way to support black-owned businesses is as a consumer. In other words, "buy black," Still another method is to become an investor in a thriving entity. The following are the steps you can take to adhere to Principle No. 8 of the Declaration of Financial Empowerment (DOFE): to support the creation and growth of profitable, competitive black-owned enterprises.

* Seek out black-owned businesses. One way that you can contribute more dollars to your community is through the patronage of black-owned businesses. We're talking about more than just buying black art and black books twice a year from black vendors during street fairs and black expos.

There are a number of black restitutions that provide quality products and services as welt as have a positive impact on their communities. For one, many black-owned businesses employ African Americans in addition to providing donations and in-kind services to black nonprofit organizations and charities.

Also, African American entrepreneurs serve as valuable models for our youth. "Seeds of Success: Entrepreneurship and Youth," a recent report published by the Kauffman Center for Entrepreneurial Leadership, found that 75% of black youth said they were interested in starting a business, compared with 63% of white youth and 64% of Hispanics. Their primary reasons were to build something for their families and to be able to give back to their neighborhoods.

However, many of these same black youth said they were not confident enough to pursue a dream of entrepreneurship because there was not enough available information or familiar role models. That said, what message are we sending the next generation of business owners if we are averse to "buying black"? We must show our youth that they can truly excel in business.

When you aren't buying from black-owned companies, it is important that you flex your consumer muscle by buying from companies or stores that have a history of supporting the African American community. You should buy from companies that respect us as consumers by advertising with black media and featuring African Americans in ads using their products or services.

* Become an advocate in your own company. Obviously, the first place to begin is to find out about your company's diversity policies and programs, if it has any. You might consider proposing a diversity council comprised of minority suppliers and community leaders. Try to get on the diversity team.

Within your company, try to identify contracting opportunities for African American-owned firms and make recommendations. What is your company's procurement policies, especially as they relate to using (and increasing) the number of minority vendors?

Your company's hiring and spending practices should be in line with or reflective of the demographics of the customers it serves. Also, your employer should have outlets or offices in black neighborhoods. One way to check on whether your company is socially responsible is to contact your local branch of the NAACP to see if it has been graded. Under the NAACP's Economic Reciprocity Initiative, companies are rated in various categories.

Your company will make the grade if it makes dollar as well as in-kind contributions of services and products to your community. Also, does your company recruit on the campuses of HBCUs? Of course, this may require you to step out of your comfort zone and press human resources on these issues.

* Invest in black-owned companies and mutual funds. A more direct means of contributing to such companies is through investment. For one, you can buy shares in a company like Radio One Inc., one of the 12 publicly held black businesses listed on the BLACK ENTERPRISE BLACK STOCK INDEX (see "Encore! Encore!" Moneywise, May 2000). Second, diversify your mutual fund portfolio by using one of the 14 companies listed on the BLACK ENTERPRISE MUTUAL FUND LIST (see "Fantastic Voyage," Moneywise, April 2000) to seek out funds that invest in minority companies.

"There is that emotional element of pride in putting money into a black-managed mutual fund or a publicly traded company that is black owned," says Alvin D. Hall, author of Getting Started in Stocks (John Wiley & Sons, $19.95). "It can be very satisfying knowing that you are participating in the growth of the culture." At the same time, says Hall, you have to approach these companies as you would any other investment, which means fully dissecting the company's corporate performance over time.

The bottom line is you want to see a return that provides growth to your net worth and assets. "I make my investment decisions based on the targeted growth that I would like from that company given its market share," says Hall. "It may not do as well as the Standard & Poor's, but as long as I know the top return that I am expecting, I will be happy if it hits my target."

Another possibility is to make a direct investment through a private offering, shares sold to a small group of investors. In 1999, the Enterprising Minority Investors, an investment club in Hartford, Connecticut, invested 15% of its $104,000 portfolio in Ball Girl Inc., a minority-owned women's sports apparel company in New York One of the club's founders, Andre Jett, had a working relationship with the firm's management, so the group felt comfortable taking a financial position in Ball Girl, one of its nine holdings.

While private offerings have the potential to offer the greatest return on your investment, they also present the greatest risk You could lose big. In such a scenario, you can maximize and safeguard your investment by gaining a position on the company's board of directors. Your eligibility, of course, depends on how much you plow into the business.

* Be an active shareholder. You can wield clout in America's corporate boardroom as a shareholder. Publicly held companies are required by the SEC to hold annual meetings attended by their shareholders, company executives, boards of directors, and other interested parties.

Aside from hearing the CEO's message, shareholders get to vote on issues and voice their concerns. A small number of large shareholders can possess enough voting power to decide the outcome of an issue. Individuals or groups owning at least $1,000 worth of company stock, can submit a formal proposal or resolution for consideration.

A community organizer and Pan-Africanist, Kamau Odinga cofounded the PULA ProjectInvestment Club in Luling, Louisiana. Members of the club believe in exercising their rights as shareholders. They have written letters to the boards and management of Home Depot and Winn Dixie with respect to their policies and practices relating to race and sex discrimination.

"Our position is that when you own shares of a company, you are part owner of the company itself," says Odinga. "You can now go to the CEO and say, "I don't like the way you are managing my company."' The five-year-old club owns shares in 15 companies, with a portfolio valued above $200,000.

Odinga adds that he wants to see African Americans take 10% of their billions in purchasing power and bring it to the market each year by purchasing major ownership in companies. He thinks investors should set a goal, over the next 10 years, of buying shares in at least 12% of America's Fortune 500 corporations.

To learn more about attending shareholder's meetings, you can contact the company's investor relations department. It's important that you exercise your voice in the businesses in which you have a significant stake as an investor and consumer.

* Start your own business. One of the best ways you can contribute to the development of black-owned businesses is through entrepreneurship. The Small Business Administration (www.sba.gov) estimates that 25 million small businesses in America employ more than half of the country's private workforce, create two out of every three jobs, and generate a majority of American innovations.

If you have a particular hobby or passion, don't be afraid to explore it. Eight out of 10 startups are the outgrowth of hobbies or long-term interests, according to Max Fallek, director of the American Institute of Small Business in Minneapolis (www.aisbofmn.com).

Of course, you will need to learn the nuts and bolts of your business and industry before you pursue your passion and hang out your entrepreneurial shingle. Passion alone won't cut it. Your success or failure will depend on your ability to provide a quality product or service and satisfy customer demand.

As an entrepreneur, you will need to identify key sources of seed capital, keep track of your company's cash flow, and develop strategic alliances to grow your business. There are plenty of resources out there to give you a head start, including such books as The Black Enterprise Guide to Starting Your Own Business by Wendy Beech (John Wiley & Sons, $19.95) and Where to Go When the Bank Says No: Alternatives for Financing Your Business by David R. Evanson (Bloomberg Press, $24.95).

By investing in black business not only are you building personal wealth, you are providing a greater sense of financial empowerment for your family and your community. Show your commitment to supporting those companies who respect African American buying clout. Now's the time to stand up and be counted.

IT'S A BLACK THING

This isn't meant to be a guilt trip but more of a "black awareness" test. The following survey is designed to help you take an honest look at how often you support black enterprises. Choose the answer that best describes you.

1 When it comes to getting a check-up on
your health do you use a black primary-care
doctor, gynecologist, pediatrician,
dentist and/or alternative-care provider?

[] Always
[] Sometimes
[] Never

2 In seeking legal advice do you use a
black-owned law firm or African
American lawyer?

[] Always
[] Sometimes
[] Never

3 Come tax season or in preparing your
estate plan do you use a black-owned
accounting firm or CPA who is African
American?

[] Always
[] Sometimes
[] Never

4 When seeking repairs or renovations
on the home (e.g., plumbing, painting,
roofing, wiring, lawn care, etc.), do you
hire African American professionals?

[] Always
[] Sometimes
[] Never

5 How often do you eat out at
black-owned restaurants?

[] Always
[] Sometimes
[] Never

6 When catering a major shindig, such
as a birthday party, wedding or 50th
anniversary celebration, do use an African
American events planner or service
providers (e.g., baker, florist,
entertainment, etc.)?

[] Always
[] Sometimes
[] Never

7 Your yearly vacation excursions are
handled by an African American travel
agent or black-owned agency?

[] Always
[] Sometimes
[] Never

8 Do you faithfully subscribe to one or
more black-owned magazines?

[] Always
[] Sometimes
[] Never

9 You attend social or networking events
sponsored by black organizations, such
as the Black Enterprise Golf and Tennis
Challenge or The Black Film Festival?

[] Always
[] Sometimes
[] Never

10 How often do you purchase
black newspapers?

[] Always
[] Sometimes
[] Never

11 When purchasing the hottest
paperback or self-help book do you
buy from black-owned book stores?

[] Always
[] Sometimes
[] Never

12 When building your library of reading
materials how often do you support
titles from African-American authors or
publishers?

[] Always
[] Sometimes
[] Never

13 How often do you make financial
contributions to social, educational,
or civil rights organizations, such as the
NAACP or United Negro College Fund?

[] Always
[] Sometimes
[] Never

14 Do you have a checking account,
savings account, money market fund.
CD or any other financial vehicle with a
black-owned bank or financial institution?

[] Yes
[] No

15 Do you use African American
financial services providers (e.g.,
stock broker, financial planner, or
insurance agent)?

[] Yes
[] No

QUIZ SCORING

Give yourself 10 points every question you answered always, five points for every Sometimes, and 1 point for every answer that is never. For the last questions, give Yourself 10 points for each yes answer and one point for each no answer.

* If your total is more than 130, then you deserve a gold modal for your contribution to helping viable black enterprises compete.

* If your score is between 100 and 129, then you get a silver medal for your black-on-black support.

* If your score is between 55 and 99, then you deserve a bronze medal for your social consciousness.

* If your score is around 50, you are in the running, but you need to do a better job at keeping pace.

* If your total is less than 35, then you aren't even in the race.

BRENDA WILKINSON IN UNILIKE MOST PEOPLE IN THEIR early 30s who are indebted from their college days and early working years because they accumulated thousands of dollars on their credit cards and spent more than they brought home in their paychecks. Indeed, the 34-year-old Wilkinson has no credit card debt, no student loans to pay off, and more than $95,000 saved up in a 401(k) plan. "I have been participating in my 401(k) since I graduated [from Cornell University about 13 years ago] and started working at my first job," says the human resources manager for FINOVA Capital Corp. in Chicago. She contributes a percentage of her $98,000 salary and bonus to max out her 401(k), which her company matches dollar-for-dollar.

In addition, she has a total of $30,000 invested in a Roth IRA, mutual funds, bonds, and annuities. She recently started investing in individual stocks via dividend reinvestment plans (DRIPs), She holds shares in four stocks spanning four different core industries: Merck, Home Depot, AT&T, and FINOVA.

Wilkinson's only liabilities are the $166,000 mortgage on her two-year-old town house and a $39,000 mortgage on a New York co-op she purchased in 1988. Over the next four years, she plans to upgrade to a larger domicile--a single-family home with enough space to accommodate a library and exercise room.

The savvy young investor is a testament to the proverb: "Train up a child in the way you would have him to go. and when he is old, he will not depart from it." Wilkinson recalls, "There are three things that my parents ingrained in me when I was growing up, which l have tried to maintain in my adult: life: one, aggressively save a percentage out of every paycheck; two, not carry debt on credit cards; and three, to own my own home."

Indeed, Wilkinson started saving her allowances, cash gifts from relatives, and her first paycheck at age 15. She hasn't strayed from the path, although she did have $5,000 in credit card debt a year ago, but she paid the balance off with this year's bonus money and tax retired.

Wilkinson says that she sees the people in her circle struggling more than she does financially, "I am probably a little more aggressive in terms of saving and investing since I am in a higher income." She says her primary goal is "to make sure I maintain the proper asset allocation throughout my working years."

THE ADVICE

Wilkinson has done a great job of eliminating debt and saving to reach her goals. The biggest improvement she needs to make is to increase her equity investments, which includes adding a technology stock to her portfolio, says financial advisor Pierre Dunagan, managing partner with Dunagan Robinson & Isbell Financial Services in Chicago, "The overweighting in stocks is appropriate for someone her age." BLACK ENTERPRISE had Dunagan meet with Wilkinson to help her readjust her portfolio mix. The following are his recommendations:

* Transfer assets from her fixed annuity, She needs to take the $8,500 that's in her Amex Fixed Annuity and put it into her Amex Variable Annuity, which has $550 in it. Why? To take advantage of the growth mutual funds on a tax-deferred basis.

* Increase contributions to her stock portfolio. She currently contributes $50 a month to FINOVA, $50 to Merck, $100 to AT&T, and $100 to Home Depot, She should contribute at least $100 a month to each stock (preferably $200), and add Cisco to the mix.

* Save up $10,000 in her money market account. Once Wilkinson reaches that goal, she should redirect the money she currently puts into the account, about $300 a month, as follows: $200 toward her IRA account and $100 toward bonds.

* Hold on to her real estate properties. She should keep her town house until it increases in value to at least $225,000. In about three to four years, she should be able to net a $50,000 profit from the sale of the property, That money could then be used toward the down payment on a new home,

* Consolidate her mutual funds. She should consolidate her mutual funds and contribute $750 a month to her Fidelity Freedom Mutual Fund account. This is where the proceeds for the down payment on the house will come from.

* Beef up her retirement savings. Since she plans to retire at age 60. this gives her 26 years in which to invest. She already has about $118,000 saved up for retirement, She needs to systematically put aside $1,930 a month in her retirement funds. Given a 12% return on her investments (the average for the Standard & Poor's 500-stock index), she should amass $5.9 million by the beginning of her first year in retirement (2026). Since she really only needs to have a retirement income of $7,500 a month ($20,794 in 2026), she will actually have a $1.3 million surplus.

DECLARATION OF FINANCIAL EMPOWERMENT

From this day forward, I declare my vigilant and lifelong commitment to financial empowerment.

I pledge the following:

1 To save and invest 10% to 15% of my after-tax income

2 To be a proactive and informed investor

3 To be a disciplined and knowledgeable consumer

4 To measure my personal wealth by net worth, not income

5 To engage in sound budget, credit and tax management practices

6 To teach business and financial principles to my children

7 To use a portion of my personal wealth to strengthen my community

8 To support the creation and growth of profitable competitive black-owned enterprises.

9 To maximize my earning power through a commitment to career development, technological literacy and professional excellence

10 To ensure that my wealth is passed on to future generations

For more information on DOFE, go to www.blackenterprise.com to get a complete list of all 10 principles or call 877-WEALTHY to get your free Wealth Building Kit.