The Financial State of Black-Owned Businesses
Throughout history, Black people and Black-owned businesses have been disadvantaged across all sectors of society. According to a recent report by the Brookings Institution, while Blacks comprise 14.2% of the U.S. population, our businesses only comprise 2.2% of the 5.7 million employer businesses. This disparate representation significantly impacts our communities, our economic security, and ability to build wealth. Today, Black workers still make much less than their white counterparts. And Black-owned businesses continue to face more challenges than white-owned businesses. Unfortunately, our nation’s history of systemic racism results in the continual unfair financial positioning of Blacks in America.
The Racial Wealth Gap
Our nation’s racial wealth gap limits access to capital for African Americans, making it harder for us to obtain capital, especially during crises such as the COVID-19 pandemic. During the height of the pandemic, Black business ownership suffered the greatest decline amongst all racial groups, widening the revenue gap even more. Because of insufficient assistance and funds, our businesses were not equipped to endure the pandemic, and many closed their doors permanently.
To combat the number of closures, Aurora James, Creative Director and Founder of the luxury accessories brand Brother Vellies, launched the Fifteen Percent Pledge in June 2020. The Pledge invited large retail companies to provide 15 percent of their shelf space to products made by Black businesses. The 15 percent reflected the percentage of Blacks in America. It’s working. Over the past two years, Black entrepreneurs generated $10 billion in revenue because of the Pledge. Additionally, the organization helped facilitate relationships with large retail industries and smaller Black-owned businesses. With help from Aurora, Black businesses were given another chance.
Merchant Maverick reported that between February 2020 and August 2021, the number of Black-owned businesses increased nearly 40 percent. These new businesses created more job opportunities, provided more diverse services, and allowed for the accumulation of wealth for Black individuals. Accordingly, with increased access to capital and customers, Black-owned businesses can serve as a source of major socio-economic advancement. We simply need support from majority-owned businesses and government agencies.
What Can You Do?
Currently, organizations like the National Minority Supplier Development Council focus on the growth and development of minority business enterprises (MBEs), including Black-owned firms. I serve as the chairperson of the New York and New Jersey MBE Input Committee and sit on the National MBE Input Committee. Collectively, we stand up for identifying and securing equitable business opportunities for MBEs. We work hard to advance and deliver economic and social impact for marginalized communities. If more organizations actively supported Black-owned businesses, we would be one step closer to reaching revenue parity and extinguishing our history’s pattern of systemic racism.
Until that happens, I encourage all Black-owned businesses to prepare for future crises. Develop a plan that includes flexibility, accounts for generational wealth, and has room for growth so that none of us ever have to close our doors again.
Your Marketing Momma,
Cheryl McCants ~ Impact Founder and CEO