Black people constitute 12.8% of the U.S. population, but just 2.4% of businesses in America are Black-owned. At the same time, 86.5% of companies in the U.S. are white-owned.
It is a shame that starting and running a business as a Black person in the U.S. is more complex than getting a camel through the eye of a needle.
But how can Black people create more businesses, and what do they need to thrive in the US? You’ll find the answers to these questions in this article.
What Do Black Businesses Need to Thrive in the U.S.?
According to a study by the Urban Institute, black-owned businesses have an average annual revenue of $1.3 million and employ just over 1 percent of African Americans. While this figure is higher than it was 20 years ago, when black people owned only about 6% of businesses, there’s a need for more work to ensure black people have success stories in the sector.
So what do they need to thrive in the United States?
- Equal Access to Funding
A Federal Reserve study from 2021 found that Black-owned businesses had less than half the chance of receiving total funding for loan applications than White-owned businesses.
What they need to mitigate the possibility of extinction is funding. If black businesses could access loans, VC investments, etc., they would have a better chance of survival in the business ecosystem.
- Investment in Black Talents
Black talent is underrepresented in the business ecosystem. This shortage costs the US economy millions of jobs and billions of dollars in unrealized revenue.
By creating opportunities to support Black business owners, such as networking and support groups, educational resources, small business training, mentorship, and DBE programs, we can recognize black talent, support the expansion of black businesses, and strengthen our economy.
- All-inclusive Economy
Businesses thrive in a healthy environment, and the economy is a significant part of that environment. Black people need an economic structure that neither discriminates nor upholds values that limit the progression of black businesses.
Additionally, in an all-inclusive economy, black people can access educational materials, investment opportunities, etc., which increases business acumen and fosters economic growth.
- Customers and Business Owners Support
They need all the help they can get to rise above the limitations and systemic barriers to grow and survive in the United States.
As a customer or a business owner, you can support their businesses by patronizing them, promoting them on social media, investing in them, e.t.c. Such actions will have a multiplier effect that encourages other black people to thrive in their businesses and create more sustainable businesses.
- Supportive Business Ecosystem
According to a McKinsey & Company report, black people have less business equity than white people. They face several barriers throughout the business-building process, such as less access to capital, valuable relationships, and business networks due to discriminatory policies and practices in the US.
Black businesses cannot survive in such an environment. They need a supportive ecosystem that welcomes them the way they are, celebrates their ideas, fuels their growth, and helps them thrive by addressing the barriers in the system.
Therefore, leaders in financial institutions, philanthropy, government, corporations, and investors need to align and collaborate toward a clear set of goals that address these systemic barriers and form a supportive policy for their businesses and other disadvantaged businesses.
Together, we can help Black businesses thrive and build an economy that reflects America’s promise.