People of color can become business owners of Black-Owned Businesses and create financial independence for their families. They also provide opportunities for other members of their community to find work. Small-business owners also contribute to the economic health of their locality by contributing taxes that are paid into the state and city coffers. They make neighborhoods more vibrant by occupying retail space.
It is not easy to start a business and keep it running. Many small businesses fail to survive beyond a few years. Black business owners are more likely to be in trouble. According to the Federal Reserve 2021 Small Business Credit Survey, while most owners suffered financial hardships during the pandemic, Black business owners reported the highest rate of 92 percent.
Black business owners have had to overcome many obstacles over the years. Some of these were based on racism and some are still prevalent today. Yet, Black-owned businesses are still able to succeed and continue to grow. Here are some ways you can help.
Black-owned businesses by numbers
Many Black-owned businesses continue to grow in America despite the difficulties. A study conducted by Merchant Maverick showed that Black-owned businesses increased by 38 percent between February 2020 and August 2021, while the number of Asian-owned businesses fell slightly.
MerchantMaverick.com’s “Top States for Black-Owned Businesses in 2022” report found the pandemic had created opportunities for Black entrepreneurs, particularly in Mid-Atlantic and Southern states — Virginia, Maryland, and Delaware ranking in the top five states for Black entrepreneurs. Each state has a large Black population, and there are many private and public initiatives to support Black-owned businesses. The top 10 were also dominated by the southern states.
The study did show that payroll inequalities continue to plague Black-owned businesses. Nationally, the average annual payroll of employer businesses is $ 1.25 million. This is more than four times that of Black-owned businesses. According to the findings, a funding gap is almost certain to play a part in this situation.
It is important to support Black-owned businesses.
While Jim Crow laws were declared unconstitutional by the 1954 Civil Rights Movement, segregation finally ended in the 1960s, and there were still unfair banking practices. These practices were made illegal by the federal Community Reinvestment Act, which was passed in 1977 to combat racial discrimination when it was first implemented.
Challenges remain. Black-owned businesses face more challenges in securing capital from investors and other investors. Crunchbase reported that venture funding for Black entrepreneurs in the United States dropped to $324 million in the second quarter after showing growth in previous quarters.
The amount of funding for Black startups in America has been low compared to overall startup funding. However, last year was a remarkable year with record-breaking investments in Black-owned businesses. According to Crunchbase, the quarterly funding ranged between $850m and $ 1.2 billion in the five prior quarters.
A 2020 Bureau of Economic Research paper shows that Black entrepreneurs have an average of $35,205 in startup capital, while white entrepreneurs have $106,720. Black-owned businesses are less likely to get business loans than white-owned companies.
Groupon and the National Black Chamber of Commerce conducted a study that found that 59% of Black business owners were victims of racism or bias in starting their businesses.
During the COVID-19 epidemic, this disparity was even more severe. The New York Times reported black business owners had more difficulty finding lenders willing to work with them in the Paycheck Protection Program than white business owners.
The racial wealth disparity is another. According to a Duke research paper, the average Black family has 12 cents per dollar of wealth compared to the typical white household.
These are just a few of the reasons you might be motivated to support Black-owned businesses. You will not only be an economic force, but you can also celebrate and sustain Black culture. Increasing sales can prove to lenders that the company is worth investing in. You can also increase your company’s visibility by becoming a frequent shopper.
Six ways to support Black-owned Businesses
There are many easy ways that you can support Black-owned businesses.
Black-owned businesses are worth shopping for.
It is possible that you don’t know where to look for small Black-owned businesses. Nextdoor and other community boards, such as Craigslist, are great ways to start your search. Post a question asking for help in your area. Then wait for the responses to come in. This is a great way for people to start a dialogue about how they can help each other.
A sourcebook is another option to help you spend at Black-owned and operated businesses. The Official Black Wall Street directory provides a comprehensive listing that allows you to search for a wide range of products and services both online and in brick-and-mortar. Make a list of the places that you want to shop and the products and services you wish to buy.
It is also a good idea to set aside money for Black-owned businesses. This means determining how much you can afford and choosing at least one Black business to visit per week or month. You can help someone stay in business when they are struggling.
Share and write reviews about Black-owned businesses.
Share your positive experiences with Black-owned businesses on social media platforms that are widely used by the public. Data from ReviewTrackers.com shows that 88% of reviews will come from top review sites like Google, Yelp, and Facebook in 2021. Of course, there are many others. You might find unique items on Etsy, for example. Write a glowing review after you have purchased and loved what you received. Every compliment is appreciated.
You can help a business get found online by using search engine optimization analytics. Your praise can also inspire others to spend money at these businesses.
Recommend Black-owned Businesses in person or on social media
Social media platforms such as Twitter, Facebook, and TikTok, in addition to official review sites, are great vehicles for spreading the word about Black-owned shops in your area that you like.
Write content that explains why this business is worth your attention. Include photos or videos and the website. Post the physical address if it is available. It is important to make it easy for potential customers to find the business and to patronize it. Tag the business to let them know. Social media platforms are used by billions of people every day. This means that the reach is huge.
Are you not able to access the internet? It’s okay. You can keep the conversation going by telling your family and friends about the business. Think outside the box if you are interested in supporting a cafe, bar, restaurant, art gallery, clothing store, or cafe. You might also be a customer and inquire about how you can help them by renting the space out on slow days or off-peak hours. You may even be able to buy items at the event, party or meeting.
Support Black-owned banks
You might consider looking for a Black-owned bank or credit cooperative to manage your loan, deposit and credit card accounts. This designation is official: The Federal Deposit Insurance Corp (FDIC) classifies these financial institutions under the heading Minority Depository Institutions. The criteria require that at least 51 percent of the ownership be owned by minorities or that the majority of the board members are minority members to meet these requirements. A financial institution must also serve a majority-minority community.
MDIs are available to all races. This will help these businesses survive and continue to provide valuable services for the community. Check out their digital banking services if there is no MDI near you. You can be a customer and show solidarity with those who have suffered discriminatory experiences with lenders, both historically and current.
Invest in the Black Community
investing in Black communities can help you achieve your goals of being a part fostering equality and company growth. There are many ways to invest effectively.
- Black-owned Startups: Micro-investing Platforms such as Kiva allow you to invest in them
- Buy shares in Black-owned businesses that trade on the stock exchange
- To reach your investment goals, you should work with a Black investment professional such as a CFP, CFA or CFA.
- Focus your investment decisions on ETFs for minority empowerment, which are designed to expose U.S. companies that have exhibited racial or ethnic diversity policies.
Whatever your decision, remember that it can help to end the cycle of debt Black-owned businesses are in. According to a 2019 report by the Congressional Black Caucus Foundation, 17.6 percent of Black entrepreneurs use personal credit to finance their businesses. This compares to 10.3 percent for White non-immigrant startups.
Entrepreneurs are at a disadvantage because credit cards have higher interest rates than bank loans. You can help them become more financially stable by investing in them.
Establish relationships with Black-owned businesses
Another way to show support is to ensure exposure. Owners of small businesses may be too busy running their venture that they don’t have the time to promote it. Help the business owner to establish and maintain valuable relationships.
- Invite them to join your community groups where they can display their products and services.
- Ask for the owner of the podcast, a blog or a newsletter that is widely published to get your name in the media.
- Ask the owner if they are interested in joining relevant business networking groups and events.
- Offer workspace and facilities if you have them (either free of charge or at a discounted rate).
- Refer to your business contacts.
You can mentor and provide resources to help Black-owned businesses that are struggling to survive. There are many options, including the Black Business Association and Black Founders. The Coalition To Back Black Businesses is a joint effort of American Express, the U.S. Chamber of Commerce Foundation, and the National Black Chamber of Commerce. It also includes the U.S. Black Chambers, National Business League, and Walker’s Legacy.
Many Black business owners face real challenges and still have to deal with them. There are many things you can do to make your business a positive force. It is a great idea to find Black-owned businesses that you can support and give them some business. Spread the word.
Source: Bankrate – https://www.bankrate.com/finance/credit-cards/support-black-owned-businesses/