Founder and CEO Morgan Phelps did not intend to start her own business.

The woman at the helm of Colorful Connections, a Milwaukee-based company focused on diversity recruiting, talent development and Diversity Equity and Inclusion (DEI) training, has a career built around connecting people through the art of communication. Morgan began her professional career as a journalist. She then parlayed that experience into a successful career in public relations. Morgan was heavily involved in DEI volunteer work to increase diversity within the communications industry when she decided she had to do something more.  

Ironically, it was a fundamental communication problem, as Morgan saw it, that served as the impetus for Colorful Connections, which launched in 2019.

Initially, business was brisk, but then the pandemic hit. The emerging company found little work as the places of business closed their doors.

“Clients were literally telling me- HR managers, recruiters, DEI leaders – we’re not doing anything. DEI is not a priority, and I don’t know when we will ever revisit this conversation,” Phelps said.

Just months into the pandemic, another tragedy struck that, once again, changed the trajectory of the company.

The murder of George Floyd while in the custody of the Minneapolis police department on May 25, 2020, rocked the nation. In the aftermath of that terrible event, the focus on racial inequities and workplace diversity was revived.

Phelps sat for an interview on her growing business that is focused on social change.

Q. How do you describe the work that Colorful Connections does?

Phelps: Colorful Connections is a diversity recruiting and retention firm. I liken our approach to a three-legged stool because if you’re missing a leg from the stool, the whole thing tumbles over, it’s not stable. I look at DEI within the workplace similarly. To have long standing results you need to focus on the ability to attract, retain and grow an inclusive and diverse team. They’re interdependent.

 For that reason, attract, retain, and grow are our three pillars.

Clients come to us for help, let’s say with diversity hiring challenges. But oftentimes the problem is bigger or deeper than simply not being able to find candidates from diverse backgrounds. It may be because of poor reputation or inability to retain employees from diverse backgrounds. Or maybe the recruiter is just showing up in all the wrong ways.

And from a hiring perspective, it’s important to be cognizant of what diversity means for you and how diversity fits into this hiring process. When people think of diversity, especially today, minds automatically go to Black and Brown professionals, which is absolutely critical but incomplete. And could backfire with a one dimensional mindset.

Our take, to avoid tokenism, show up authentically, and be legally compliant, involves exploring deeper dimensions of diversity.

Phelps wants companies to use Colorful Connections’ inclusive hiring practices to not only answer the question, “What does diversity look like for your team and for this role?,” but “Why is this important?”

Funding is a challenge for all entrepreneurs, but statistically, Black women struggle the most to find capital for their startups. 2021 data released by Crunchbase shows that Black women only receive 0.34% of all of the available venture capital, despite the growing number of investor groups formed to reach underrepresented founders.

Colorful Connections is a self-funded company. While the business managed to stay afloat during the pandemic, cashflow became a problem. During this time, Phelps looked for new ways for fund her company.

Q: Have you considered fundraising?

Phelps: I have and still open to it, but I pressed pause (on fundraising) for a while because I realized just how much the odds were against me. Especially in the investor space. In fact, I was on stage at a pitch competition and talking about how less than 1% of Black female founders receive VC funding. The words were coming out of my mouth as a way to say, ‘hey, investor, it’s a viable idea. Realize I’m a great candidate to back in your portfolio.’

As I was saying, the words I just had this epiphany. ‘Why am I doing this?’  I’m putting myself out there at pitch competitions, pitch meetings, and investor meetings- they’re very time consuming. And it was distracting me from the day-to-day operations of my business.

When your resources and time are beyond finite, you have to be overly mindful and protect them, and spend them wisely.

I just decided at that moment to reinvest my time into the company because it didn’t make sense to continue pitching, meeting with investors or hoping for the best with involved application processes that have little ROI. 

Q. What roadblocks have you met while fundraising for Colorful Connections?

Phelps: What’s most consistent is speaking with people who I believe genuinely have good intentions but seem to get in their own way.

I was entertaining a conversation with one investor group at the end of last year whose mission was to support entrepreneurs from historically marginalized communities. And they specifically wanted people that banks and lenders would not lend to, and causes that would have a social impact.

An important point to note here, is that when I first began discussions with the group, I had been unsuccessful securing a loan or line of credit. By the time we had our first face-to-face meeting, I had received both my first loan and line of credit from Legacy Redevelopment Corporation – a lending institution.

That did not disqualify so me, so I proceeded with the application process. But by the end, I was disappointed to say the least, but not surprised. I discovered their evaluation criteria was more stringent than traditional lenders, they had an inflexible process that requested documentation that other lenders don’t, and their demeanor was more cold than the most corporate, traditional lender whom I have met with.

Quite the opposite from what you’d expect from a social impact oriented investor group that says it wants to support entrepreneurs who are typically rejected from lenders.

Ultimately, we had a mutual agreement that we aren’t a good match for each other. Reflecting on our first conversation, as we parted ways, I felt obligated to point out the disservice they are doing to themselves and potential harm to unsuspecting entrepreneurs.

During my first conversation with that investor group, they said they were frustrated because they’ve been having so much trouble finding entrepreneurs to invest in. They spoke passionately about their mission and said for years have had that problem. I discovered why, and figured it was only right to inform them that they are a part of the problem. And it’s of course not my style to identify a problem without a solution, so I gave some suggestions. In a tactful but direct way, of course.

It was a brave conversation, but one that I felt I needed to have. And in a way similar to conversations that we have with some hiring managers who are trying to transform the workforce, but have high turnover rates or trouble finding people. Self-reflection is important.

Q. Founding a startup is full of challenges. What keeps you going?

Phelps: My team and the feedback we receive from clients and candidates whom we place. Truly, it’s rewarding to know we’re doing good and meaningful work, and for people who deserve it. And I really do appreciate my team, their passion and their commitment and their smarts.

With our line of work, you can’t do this without the right type of minds and expertise. And we’re also a support network for each other for difficult conversations that come with the nature of job.

It’s a challenge, but also a privilege and a blessing. Sometimes I do have to stop and reflect, recognizing how much we, and I, have accomplished. Despite the odds. It took a while to get here. While we still have room to grow, I’m remain excited because I know what we can accomplish.

Q. What is on the horizon for Colorful Connections?

Phelps: Looking at the rest of the year, there are a few upcoming announcements, most already underway.

We’ve just launched new learning tracks for our services. Depending on where clients are in their DEI journey, we can better guide them with a series of recommended learning tracks to meet specific goals. For instance, one is Find Your Baseline, for those who are simply trying to understand where and how to start the DEI journey. Or, there’s a recommended stack of learning experiences for teams building awareness and ally-ship for DEI versus actionizing commitments, which builds on certain fundamental skills.  

All of our services will remain available as needed, and we still customize to adapt to clients’ individual needs. This will just make it easier to map out a path for success based on immediate problems areas, keeping a bigger picture in mind.

I’m also excited about IP rollout plans. About 60% of our business comes from recruiting, and we receive two common questions – ‘how do you do this (hiring) in a legally compliant way’ and ‘can you teach me how to fish.’ So beyond Boolean searches, how to be a more inclusive recruiter, better leverage existing resources and network, and establish better processes and practices. That work starts with a strong, naturally inclusive search strategy, which we designed with legal consult from Godfrey & Kahn. We’re creating a user-friendly version of this and rolling out that Intellectual Property later this year as a tool to help others create inclusive hiring strategies.

And from a staffing perspective, we’re hiring our first salesperson, a critical addition to our growing team.

Colorful Connections has also been accepted into the US Small Business Association’s THRIVE program.

To learn more about Colorful Connections, connect with them here.