Black-Owned Businesses Must Be Persistent and Tough, Says GSB Alum
March 2007
STANFORD GRADUATE SCHOOL OF BUSINESS—When Robert J. Dale’s small-but-lean black-owned advertising agency captured the 5-year, $100 million contract with the Illinois Lottery in 2003, it suddenly found itself subjected to an unheard of five audits, capricious new invoicing rules, and six-month delays in payments. Hearing similar stories from other minority business owners as his company armed itself for a battle it ultimately won, Dale learned that his experience was not unique. Black-owned businesses that become serious competitors with their white-owned counterparts, he said, often experience deliberate attacks aimed at undermining their success.
Such obstacles can, nevertheless, be overcome, Dale, MBA ’73, founder and president of the Chicago firm R.J. Dale Advertising and Public Relations, told attendees at the Stanford Black Business Students Association conference on March 10. He urged black students to persist in considering entrepreneurial careers. “There’s no limit to what you can accomplish, and we need you out here,” he told his audience.
Dale’s own company got its lucky break when the Illinois Lottery solicited proposals for a new segment ad agency to focus on the African-American market. “The account was for $1 million, but we gave a presentation as though we were competing for the $20 million general account already held by a larger agency,” he related. Taking advantage of its opportunity, R.J. Dale blasted the selection committee with big, creative ideas to raise the lottery’s overall revenues, including a plan to develop TV ads featuring comedian Bernie Mack.
Dale’s company won the account––and piqued the interest of lottery officials about the firm’s other creative ideas. After a showdown with the larger agency that held the lottery account at that time, the larger firm resigned, leaving R.J. Dale to fill its shoes. Within a few years, the Dale agency raised the lottery’s revenues from $1.5 to $2 billion dollars, and eventually won the lottery’s $100-million contract. That’s when the onslaught of audits, invoicing rule changes, and payment delays suddenly hit. “I woke up every day wondering what someone was going to do next. I was never disappointed,” Dale said.
“When you step out of your ‘place’ as a minority, forces go into effect to attempt to put you back into your place,” he told the audience. With the help of a sophisticated accounting consultant and lawyer, however, the company was able to come out a winner––with the state owing the firm money.
While 1.2 million black-owned businesses were in existence as of 2004, Dale reported, most were sole proprietorships, and their total sales amounted to a mere $84,000 annually per company. “That’s nothing to brag about,” he said.
One major challenge blacks face in raising the number, size, and revenues of their businesses is a lack of access to capital. Dale cited research indicating that white-owned businesses secure loans twice as often as black-owned businesses. “Banks treat blacks like sellers instead of buyers of money,” he said. “They act as though they’re doing us a favor when we’re looking for funding. We must change that attitude about ourselves.”
Dale warned students, “If you don’t have a plan, then someone has a plan for you.” He encouraged them to see past the plans of “others”––couched in big salaries, promotions, and attractive assignments with larger firms––and consider starting their own companies. “As Stanford students, you’re all home run hitters, and home run hitters don’t bunt,” he concluded.
—Marguerite Rigoglioso