Recognizing Black-Owned Businesses Everyday, Not Just Once a Year
August is #NationalBlackBusinessMonth, created in 2004 by historian John William Templeton and engineer Frederick E. Jordan Sr. to highlight and bring attention to the needs of more than two million Black-owned businesses operating across America. Those issues still exist. Black-owned businesses still face greater challenges due not only to race and bias but also due to the wealth gap and chronic underfunding. Our role is to understand their needs and to show support for these businesses within our community.
The road of any entrepreneur is not for the faint of heart but Black-owned businesses have an even harder struggle in entrepreneurship. There are approximately 30.2 small businesses in the United States; Black-owned businesses account for nearly 2 million of these and 35% of Black-owned businesses are owned by women. Women and minorities start businesses more than five times more than any other business owners and are the most underfunded businesses. As a result, nearly 8 out of 10 fail and close at a rate of two times more often than other businesses.
The impact of the pandemic also had a disproportionately devastating effect on Black-owned businesses as nearly 41% of Black-owned businesses were shut down as a result of the pandemic. This statistic highlights the number of Black-owned businesses within the service industry which are forced to operate with low margins and were more adversely affected by the pandemic. However, they have also proved more resilient as they have rebounded at a faster rate than seen in over twenty-five years. The majority of these businesses are eCommerce businesses that don’t rely on a large amount of collateral or capital to start and/or operate. However, the need to reach a large target audience and potential customers all over the world are all of the reasons why Black-owned businesses should market online more. They can customize their marketing efforts for specific audiences and target niche markets.
There are several factors at play that impact the success of Black-owned businesses. First and foremost is access to capital and funding. According to the U.S. Small Business Administration, most entrepreneurial businesses are started with personal wealth or family wealth. Most Black entrepreneurs rely on their personal credit cards to finance their business. These statistics underline the systemic lack of equal access to funding and networks highlighting the racial wealth gap. It is imperative that flexible funding streams for the creation and expansion of Black-owned businesses are created. Equal access to capital and financing of Black-owned businesses must be established. In addition, there needs to be an education process among Black entrepreneurs that debt is not necessarily a bad thing and can be used as an effective tool to start and grow a business in order to reach a formidable size and scale.
The future looks brighter for the advancement of Black-owned businesses. In order to help Black-owned businesses succeed, the U.S. Department of Commerce Minority Business Development Agency connects with minority owned businesses to provide them with access to capital, contracts, and markets that they need to grow. According to the Minority Business Development Agency, “initiating an economic equity grant program that would fund municipal projects that foster wealth creation, opportunity, and minority business development within the Black community.”
Goldman Sachs has supported small business growth with its 10,000 Small Businesses program and recently launched its Inaugural One Million Black women: Black in Business Program to support Black women business owners and provide them with the tools necessary to turn their potential business idea into a successful business. Of further significance, this program is offered at no cost to the business owner.
In addition, there has been an increase in the number of accelerators and incubators around the country that target Black-owned businesses to provide them with mentoring, coaching, sales and marketing training, networks, legal access, and more importantly access to capital and funding. Business centers have been established at HBCUs and provide start-up capital and technical support for students and community members interested in starting or expanding their businesses.
Here recently, Cincinnati hosted #BlackTechWeek, the inclusion focused tech ecosystem-building festival that partners with founders, corporations and the community to create a valuable experience for investors, entrepreneurs, and techies of all kinds. It comprised over sixty sessions and presented over fifty tech influencers and minority innovation ecosystem builders as featured speakers.
As we celebrate Black Business Month, you can do your part by being intentional in partnering with Black-owned businesses and networks as well as actively supporting their business by shopping or visiting their storefronts.