Black-Owned: Why the U.S. Needs More Black Entrepreneurs

Key Takeaways:

• Due to systemic barriers and biases, Black entrepreneurs have a harder time starting and growing their businesses.
• Contrary to popular belief, African American entrepreneurship dates back to the 1600s.
• Society can support Black-owned businesses by giving them their patronage, writing online reviews and working with Black-owned banks.

Did you know that the National Negro Business League (NNBL) was established more than a decade before the United States Chamber of Commerce?

Despite racial discrimination, fewer support networks and limited access to resources, Black entrepreneurs have made significant contributions throughout U.S. history that have helped to shape modern business practices.

While several Black-owned businesses have persisted against all odds and flourished, many others have not. Studies show that while a sizable number of small businesses do not last more than a few years, businesses owned by African Americans often last for an even shorter period.

Even though many Black entrepreneurs have, and will continue to launch businesses, the pandemic, coupled with a multitude of other barriers, has led to a deficit in Black-owned businesses. According to a study by the Federal Reserve, most business owners endured financial issues throughout the pandemic, but Black business owners struggled the most, with 92% reporting financial issues.

Barriers Facing Black Entrepreneurs

Many deeply rooted barriers and biases continue to negatively impact Black Americans’ ability to start, own and grow their businesses. Venture capitalist Melissa Bradley estimates that it costs Black entrepreneurs about $250,000 more than their white counterparts to create the same type of business. If a Black business owner is able to get their business up and running, they are more likely to struggle to find financing. According to the U.S. Small Business Administration (SBA), only 1.7% of federal contracts went to Black-owned small businesses. This is a telling example of the hills these entrepreneurs must often climb.

Why It’s Important to Support Black Business Owners

Supporting Black-owned businesses can:

• Provide Black entrepreneurs with a path to establish financial independence
• Decrease the size of the racial wealth gap
• Create job opportunities in the community where the business is operated

When Black businesses do well, it helps society as a whole. According to a study conducted by the Alliance for Entrepreneurial Equity (AEE), if African American-owned businesses were proportionate to the general population, there would be 730,000 more Black-owned businesses and about seven million more jobs.

How to Support Black Businesses

We can all help create a healthy environment for Black-owned businesses by making a conscious effort to support them.

1. Intentionally shop at businesses owned by Black entrepreneurs

The next time you are thinking about shopping, opt to shop at a local Black-owned business instead of a big-name retailer. Going out of your way to shop at a local business can help them stay afloat when business is light.?

2. Encourage others to shop at Black-owned businesses

If you shop at a Black-owned business and have a positive experience, consider posting about it on your social media channels. By posting about your experience with a business on platforms such as Twitter, Instagram, Facebook and YouTube, you can spread the word about the business and encourage others to shop there. You can also support Black entrepreneurs by writing and sharing reviews about your experience with their business online. Many shoppers rely on reviews before visiting or buying from a business. By writing a thoughtful and positive review about a business on platforms like Google or Yelp, you can help boost the business’s reach and attract new customers.

3. Support Black-owned banks

If you are looking for a new bank, think about partnering with a Black-owned bank or credit union. These types of institutions are classified by the Federal Deposit Insurance Corporation (FDIC) as Minority Depository Institutions (MDIs) or Community Development Financial Institutions (CDFIs). Giving your business to a Black-owned bank or credit union helps these types of institutions better serve the businesses in their community.

Final Thoughts on Black Entrepreneurship

For many Black entrepreneurs, owning a business represents more than the American dream: it represents achieving prosperity. To help uplift Black businesses, we must do our part to support them.