How to Build a Sustainable African American and African Business Community in Every City


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Building Black Institutions – A playbook for the 25 to 34-year-old Black entrepreneur starting a new business in any city in the world!

The black community has tremendous potential to do great things. We have produced some of the greatest inventions in history such as the automatic elevator doors by Alexander Miles or game-changing hair care and beauty products like Madame CJ Walker. Plus we have several successful black entrepreneurs and entertainers like Oprah Winfrey, Rihanna, Jay Z, and athletes like Lebron James and Floyd Mayweather who are a reminder that greatness is attainable. 

However, as it relates to business ownership and economic success on a broader scale the black community has taken a while to rise. There is still room for more people of African descent to embark on this journey of entrepreneurship and garner more economic power in the nation.

The racial wealth divide

The financial power of American families has grown over the last century where for example the median family wealth expanded from $83,000 in 1992 to $97,000 in 2016. 

However, this does not include all racial groups. According to Mckinsey black families and communities tend to be behind their white counterparts as seen where in 2016 the median white family had over ten times the wealth of a median black family. (Figure 1)

african american business communityFigure 1 Source  

Furthermore, in the business scene, we can see where according to Brookings in 2019 there were 5,771,292 employer firms, and out of that 134,562 were black-owned. Zippia shows that black people are among the lowest percentage of racial groups that own businesses. (Figure 2) 

The reasons for the slow economic progression and wealth attainment for black people or people of African descent are heavily credited to the systematic racism that has affected the race since the days of enslavement. This has led to black people having less access to jobs and good wages. American Progress highlights the racial disparities in wages and jobs where people of color are found in the lowest-paying positions. (Figure 3)

african american business communityFigure 2 Source  african american business communityFigure 3 Source

Black business trends

There is some growth within the black or African business community over the years. Brookings Education says black businesses experience upward growth since before the Covid-19 pandemic where from 2017 to 2020 black-owned businesses in the US grew by 13.64% a growth larger than every business in general. In 2020 black-owned firms brought an estimated $141 billion in gross revenue. (Figure 4)

african american business communityFigure 4 Source

More black people are becoming entrepreneurs these days and some successful black-owned businesses today according to Yahoo Finance include Millennium Steel Service with a revenue of $312 million and Fair Oaks Farm at $342 million.

One way we can continue to empower our people and support and create black wealth is to push for the creation of more black businesses. We will have a look at how to create a sustainable African American or African business community in every city. This discussion will also factor in the establishment of African businesses in cities in the US.

Black business success starts with the right mindset

It is said that success begins in the mind. Black people have always had an ambitious mindset and a good work ethic. There is always room to do more and continue to reach for success especially because the community is more than capable of doing so. 

Many leaders in the community continue to empower our people to rise to the occasion. One such person is Dr. Umar, a psychologist, activist, and motivational speaker, and many black celebrities believe in black excellence and echo such messages in songs as motivation for youngsters and older generations alike.

But the message of progressing as black people or Africans has been around for decades. For example, Jamaican-born activist Marcus Garvey made a great effort to empower people of African descent. The National Humanities Center says Garvey taught people black is beautiful and are members of a mighty race.

We want a similar message to resound today. While more and more black people are getting businesses and “making moves” online as influencers, trading digital currency, etc., we also want the community to make more revolutionary changes by owning businesses of every nature and every scale in every city- the possibilities are endless.

Rashawn and Andre Perry in their article explain that in addition to direct reparation payments to slave descendants, entrepreneurship among other growth opportunities should be considered. This will help to close the racial wealth divide between blacks and whites and put the community on the right path to economic success.

Make the right investment 

A critical step for business owners when launching a business is thinking of the right sector- that is choosing one that is on demand and lucrative. However, the business enterprises that black people commonly get involved in are normally low lucrative sectors. McKinsey explains that the majority of black businesses fall within fields like healthcare and assistance, construction, and transportation. (Figure 5)

african american business communityFigure 5 Source 

These sectors, while they will generate profit, their popularity among African and African Americans reflects the fear of or the lack of knowledge of the different areas which can be explored to provide more profit and experience. Black people or Africans can consider exploring the road less traveled in the black business world and work to grow and expand their businesses. 

This will help to give black entrepreneurs a chance to venture into different sectors and watch their wealth increase across cities. Some of these highly lucrative areas include banking, tech, and electronics. According to Fortune some of the highest-earning businesses in 2022 include Apple, Berkshire Hathaway, and JP Morgan Chase. (Figure 6)

american companiesFigure 6 Source

Be strategic with your business location

Many black-owned business operators when choosing the location for their businesses often consider setting up in predominantly black areas. This is often because people want to choose the locations that they are more familiar with and that they are sure the people residing there will be able to relate to and appreciate their goods and services. 

According to Mckinsey sixty-five percent of Black Americans reside in 16 states (See figures 7 and 8 for areas with a majority of Black population). These areas do not meet the US average on indicators of economic opportunity. This is an important point to note as if black people or those of African descent are looking to establish businesses focused on these areas only they will miss the opportunity to reap the many benefits that exist in cities that are more conducive to economic success. 

Moreover, if they ignore the option of expanding to multiple states out of fear of not being loyal to the roots or the community they will not be able to enjoy the benefits of launching into new markets. According to Brookings the places with a higher amount of black-owned businesses are the largest Black and Latino-majority cities in the country. (Figure 9) The cities where Black Americans are mostly located are normally economically disadvantaged areas putting them in a more vulnerable position than their white peers to have successful businesses.

How to Build a Sustainable African American and African Business Community in Every CityFigure 7 Source How to Build a Sustainable African American and African Business Community in Every CityFigure 9 Source

Figure 8


How to Build a Sustainable African American and African Business Community in Every City

What are the benefits of expanding into different areas?

BDC Bank online says some benefits of expanding to new locations include more customers, improved inventory turnover, and better economies of scale.

For persons looking to extend their black-owned business into multiple cities across the country or who are inspiring entrepreneurs with a vision of expanding to different cities, they must carefully analyze the location or market and see how they can strategically launch and convert customers.

Also, many cities have the potential that business owners will never experience as they are hesitant to set up a location there. However, many cities offer tremendous opportunities for their business regardless of the sector. For example, cities like Scottsdale in Arizona which according to 1-800 Accountant has tax friendliness and a large workforce making it one of the country’s best cities to start a new business.

Maintaining a sustainable business

Business owners or entrepreneurs require start-up capital as they make the effort to launch their businesses. However, not all business operators of every racial group have the same experience. Mckinsey reports that black entrepreneurs start with $35,000 of capital while white business owners start with $107,000. 

This has a big role in whether the business operations will be successful or if they’ll acquire debt issues which would pose a strain on the business and its overall longevity. For example, black people who are normally very hesitant in the first place to seek assistance outside their race when seeking loans are faced with stricter requirements than their white counterparts.

More opportunities for black business owners 

Since 2020 there has been more and more support for black businesses from businesses and individuals. This includes people being encouraged to buy from black-owned businesses and tell their peers about the stores. While such support is good, there should be some critical steps taken by black entrepreneurs: have a proper business plan, borrow as needed to help sustain the operations, introduce technology, continue to learn more to improve your business, and also continue to try new cities and break down barriers to success.

Final thoughts 

While the Black or African population is a minority group in the US, more and more members of this group are rising to the occasion and moving past different obstacles to create their own businesses. The resilience and determination of the people is a major contributing factor as well as the developments in racial equity are making it easier for black people to attain more business success such as access to higher education and access to loans, financial education etc.

Spotcovery offers unique and fresh daily content on Black culture, lifestyle, and experiences. We talk about everything black, black people, black-owned and black-owned businesses. We also deliver authentic and relevant content that will inform, inspire and empower you! The future of black media is a critical piece of the black experience of today! Our primary audience includes African American, African, Afro-Caribbean and people of African heritage. Black culture is for the culture!

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