Black-Owned Businesses Look for Ways to Rise to the Top
Supporting Black-owned businesses helps to close the racial wealth gap as consumers and other companies use the power of the dollar in their communities.
James L Katzaman
Numbers tell the sobering story. A 2020 Brookings Institute study found that “Black people represent 12.7 percent of the U.S. population but only 4.3 percent of the nation’s 22.2 million business owners.”
Known as Ms. Madam Money, Jackson is a personal finance expert and founder of DUALpreneur, which helps people create multiple streams of income.
They, along with financial experts at consumer credit reporting company Experian, reviewed a host of ways to support Black-owned businesses.
“Supporting Black-owned businesses helps to close the racial wealth gap,” Jackson said. “Per GreenAmerica.org, ‘the median wealth for white families is about 12 times that for Black families.’
“Supporting Black-owned businesses helps strengthen local economies,” she said. “Fifty percent of small-business purchases are recirculated within its community.”
The Ask Experian blog states that supporting Black-owned businesses is important because you are helping to bridge the wealth gap and combat systemic inequities facing the Black community.
“Supporting Black businesses is a revolutionary act,” Matthews said.
“If Black Americans alone moved our $130 billion in deposits to Black banks, those banks would have to hire 31,000 employees,” he said. “Those banks could then lend $120 billion to foster homeownership and enterprise in the Black community.”
Matthews cited statistics from author Shawn Rochester in his book, “The Black Tax: The Cost of Being Black in America.”
In Search of Money
Black-owned businesses face many hurdles when trying to succeed.
“Funding is one of the most common challenges,” Matthews said. “Only 1 percent of venture capital-backed founders are Black. Eighty-one percent of VC funds have no Black investors at all.
“This makes it difficult for many Black businesses to scale in the way that a lot of these newer-tech companies do,” he said
According to an ABC News report, “Black-owned businesses have often faced greater challenges in establishing and growing their businesses, beginning with securing bank loans, capital and finding investors.”
Gray Group International states that eight out of 10 Black businesses fail due to lack of resources and funding.
“Challenges Black-owned businesses face include lack of support within their own communities,” Jackson said. “Many will patronize large brands or stores rather than their local Black-owned businesses that provide the same products and services.”
For those in search of Black-owned businesses, Jackson suggested Googling.
“Simply ask around or support a Black entrepreneur,” she said. “Every purchase counts. I owned three businesses. Someone you know is or knows of a Black-owned business.
“Apps and search sites are great for finding companies,” Jackson said. “Start in your own community. There are probably dozens of Black-owned businesses.”
Online communities are also a wealth of business information.
“There are a few websites like We Buy Black,” Matthews said. “But I’m a historically Black colleges and universities graduate. I always turn to my alumni Facebook group to ask for Black-owned businesses to support.”
Join the Chamber
Just like other companies, Black-owned small businesses need funds through loans and grants.
“Local credit unions are a great option,” Jackson said. “Also check with your U.S. Small Business Administration office. Connect with and join the local Black Chamber of Commerce for funding resources as well.
“Crowdfunding has been challenging for Black-owned businesses, but it is possible to raise capital if targeted the right way,” she said. “For example, many Black-owned business owners are not aware of the Community Reinvestment Act.”
The U.S. Chamber of Commerce lists nine potential funding options for Black-owned businesses.
Funds are more readily available when businesses can establish a credit report.
“When building business credit, start small and grow,” she said. “Before obtaining business credit, determine why you really want or need it, as well as if you can pay it back.”
Business credit can be as important as personal credit. The Ask Experian blog shows ways owners can establish business credit.
“Black-owned small businesses that want to market themselves should first understand their customer’s biggest questions and problems,” Matthews said. “This is the biggest marketing key.
“From there you can begin addressing those questions and problems with your product on your website and on the social media platform where your audience is most active,” he said.
Deliver Proof Online
“Social media has leveled the playing field for business promotion for small businesses,” Jackson said. “Black-owned businesses can also leverage social proof through testimonials and word of mouth from existing customers.
“Let the world know through social media that you are a Black-owned business,” she said. “Working with influencers also can definitely help with building brand awareness. I love working with my clients as an influencer.”
Both Matthews and Jackson support Black-owned businesses.
“First is my wife’s new company, Backbone,” Matthews said. “There is also M&F Bank and authors Shawn Rochester, Tiff the Budgetnista, Lynnette KhalfaniCox and Tonya Rapley. I also support Hampton Alumni via donations.”
“I support local Black-owned businesses, including family members who have started their businesses,” Jackson said. “I have a whole community of Black-owned businesses within the DUALpreneur tribe. We support each other.
Besides purchases, there are other ways to support Black-owned small businesses.
“Tell a friend and share their content,” Matthews said. “Also give quality constructive feedback.”
Aim for Mutual Referrals
Ask Experian suggests leaving positive reviews on Google and Yelp, giving referrals to friends and family members, and posting about businesses on social media channels.
“Provide social proof such as testimonials,” Jackson said. “The best supporters of my businesses refer business to me. That is way more profitable. Gift Black-owned businesses a talent or expertise. I do free flash coaching sessions for DUALpreneurs.”
These are just some of the ways to raise awareness of Black-owned small businesses in communities.
“I post and share about Black-owned businesses via my social platforms as well as refer business to them,” Jackson said. “I will also share information to family and friends via text and email if they aren’t on social media.”
Using companies’ services results in strategic product placements.
“I frequently try to promote or feature other businesses,” Matthews said. “All my headshots are from Black-owned photography companies like JCI Creatives in Dallas. My logo and website are from Sandy Smith. I am vocal and visual about the businesses I support.
“I also point others in their direction,” he said. “That’s just another way to show support even more.”
As Jackson added, “Supporting Black-owned businesses is not hard. Share, refer and buy from them.”
About the Author
This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.
James L Katzaman
Jim Katzaman is a charter member of the Tealfeed Creators' program, focusing on marketing and its benefits for companies and consumers. Connect with him on Twitter, Facebook and LinkedIn as well as subscribing here on Tealfeed.