Succeeding Without Affirmative Action.

Los Angeles city officials beamed broadly when the state Supreme Court cited its loosely structured outreach program as the best, and maybe the only, way to deal with the fast fading issue of affirmative action.

The court had just struck down San Jose's affirmative action program, which openly solicited women and minority business owners to bid on city contracts. The judges ruled that San Jose violated the intent of Proposition 209, the 1996 initiative that banned race and gender preference by government agencies.

L.A.'s program is indeed a good model for how govemment agencies must proceed in the post-affirmative action era. Since Proposition 209 was passed, women-and minority-owned businesses have bagged 13.5 percent of city contracts, amounting to $1.1 billion.

City officials, mindful of the peril of running afoul of Proposition 209, carefully avoid any hint that they set aside a certain percent of contracts for women or minorities. They also don't exclusively solicit minorities and women to bid on projects, or limit the amount of business that white-male contractors can do with the city.

They do conduct outreach by publicizing upcoming contracts in minority-owned publications, maintaining a database of women and minority business owners, and holding informational seminars on contract requirements.

Yet even with the city's efforts to keep everyone in the business loop, many minority and women business owners are still at a huge disadvantage in head-to-head combat with white contractors, who are more experienced, better financed and connected to land the goods at City Hall.

Explosive growth

But there are good signs that this is changing.

In the past few years, the growth of women and minority business has surged in Los Angeles County. Nearly one-third of all businesses are owned by minorities or women. And it's estimated that they generate nearly $50 billion in annual revenue and employ thousands of skilled and professional people.

More importantly, a recent study by the Merrill Lynch Foundation on minority business in L.A. and Orange counties found that many of these businesses have moved beyond the traditional, lower-end, mom-and-pop retail stores and service industries. A significant number of these firms are in music and movie production, transportation, finance, real estate, construction, equipment leasing, computers and data processing services.

Such expansion is absolutely essential if minority-and women-owned businesses in L.A. County are to provide capital and increased training and employment for more women and minorities.

Also, like other businesses, their fortunes rise and fall on the strength of the economy. If consumers, wary of inflation and fearful of layoffs, purchase fewer cars, appliances and new clothes; auto dealers, retail stores and clothing manufacturers are hurt no matter what color or gender the owners are. This means that minority and women business owners must adopt new strategies to sustain and increase growth. They include:

* More self-help programs. They can pool money into a development fund to provide loans, credit, training and a contact network for new businesses.

* Rapidly diversify. Minority- and women owned firms must concentrate more capital in research and development to upgrade products and services. Mergers, joint ventures, stock trading and expansion to international markets are essential for stronger growth.

* Aggressively promote their businesses among minority and women consumers. Those consumers spend billions on products and services. But they should not spend those dollars with women-and minority-owned firms solely because of their color or gender. These firms must provide efficient service and sell quality merchandise at competitive prices. They can also boost their cause by contributing to scholarship funds, and to job-and skills-training programs for women and minorities.

* Develop more efficient and extensive networking and support groups to encourage business growth. This can include sponsoring seminars, workshops and establishing Internet information links, Web sites and e-commerce. The Merrill Lynch study found that 40 percent of the businesses surveyed use the Internet to advertise and market their products.

Changing challenges

Minority and women's trade associations and business groups also must lobby Congress, the next administration and major corporations to provide more direct assistance to minority-and women owned businesses in California.

It's not charity but good business for federal and state agencies to in vest a greater share of the burgeoning budget surplus in urban growth programs.

Most affirmative action proponents have resigned themselves to the fact that state and local government agencies can't and won't do business in the old way.

Those minority and women-owned firms that can adapt to the changing political and economic challenges in Los Angeles will grow and prosper. Those that don't will fail.

And that would be true with or without Proposition 209.