Becoming an entrepreneur is no easy task. It’s a long and strenuous road filled with challenges, risks, and hardships, but these problems are worse for underrepresented minorities. When you are a black entrepreneur, there is so much more at stake. You are fighting for more than just financial stability and business success.
When you are a black entrepreneur, you are often expected to represent your community in regional, global, or local markets and fight for a dream that was delayed through discrimination and systematic racism. Although it is getting easier and less challenging with time for black startup owners to succeed in business, there are still many obstacles left to overcome.
That being said, we know that many African American men and women today are hailed as successful entrepreneurs. Black business is a growing trend, with Black female entrepreneurs making up the fastest-growing group in the economy. There are more than two million black-owned businesses in the United States, 35% of them women.
Black entrepreneurs launch thousands of businesses every year, and if the stats are anything to go by, it’s been a good few years for African-American small business owners. According to a report published by Guidant Financial in 2018, the number of black business owners in the United States is up by an impressive 400%.
To help you get on the right track, this blog covers some of the most critical factors contributing to the success of black-owned businesses today and the obstacles they usually encounter. Continue reading to learn more.
What Are the Barriers Restricting Black Entrepreneurs?
Before we get into anything, it’s worth discussing the market, sociocultural, institutional, and economic barriers affecting the success of black-owned businesses. These can relate to the challenges of raising capital, disempowerment, social influence, regional restrictions, etc. The following are a few of those obstacles covered in detail.
Starting and Sustaining
To begin with, starting a business is a demanding process. You will likely face many challenges, including securing funding, planning, hiring good help, balancing quality and growth, managing your time, and fatigue.
Raising capital for their startups is often the biggest challenge for new entrepreneurs, regardless of their race. But, according to Guidant, institutional barriers are the most significant issue facing black entrepreneurs. While fewer minorities are approved for financing, people of color, the same time, distrust financial institutions due to their history of oppression and discrimination.
When combing this with a lack of support and access to venture capital networks, black entrepreneurs struggle with securing funding, paying their operating expenses, and being taken seriously by venture capitalists—all of which are vital for business survival and success in the initial years of starting.
Due to a history of discrimination and prejudice, black business owners are often left to deal with insufficient access to knowledge, support, sources of funding, and other resources critical to launching a startup business. This leaves minorities less economically mobile, limiting their potential for succeeding in business.
African-American business owners face more economic, sociocultural, and market access barriers than other ethnic groups.
Statistics reveal that black entrepreneurs tend to have a restrictive belief in their business models. They have had it systematically drilled into them that they should stick to smaller businesses and stay in less lucrative sectors.
This could be due to systematic oppression, location, or the fear of failing instilled in them from a very young age. Either way, this results in business owners having less experience and exposure, inhibiting them from looking into more profitable business opportunities.
Factors Influencing Success
With the numerous struggles black business owners go through, it’s vital to consider the constitutive factors of a successful black-owned business. Hence, we discuss these in detail here, with ways to challenge the social norms and help you grow your business and succeed.
For starters, we understand that you may be frustrated right now. For a black entrepreneur, there would always be moments where the odds seemed to be against you. You might be losing hope, feeling you’re outnumbered as a minority. As stated earlier, this fear and anxiety prevent most black entrepreneurs from growing their companies. They tend to give up on expectations of becoming as successful as their competitors.
However, you should know that you aren’t alone in feeling these emotions or fears. Thousands of black-owned business owners feel the same way as you. Yet, those who persevered and refused to give up are now considered among the most successful entrepreneurs globally.
You need to remember that there is no such thing as an ‘overnight success. Nothing happens without perseverance, hard work, and courage. You have to take a step at a time – whether designing a prototype, marketing, integrating technology, or expanding your business. Never lose hope, and remember that life is full of highs and lows. Try to bear through the lows the best you can.
Learning from Mistakes
Since there are not a lot of resources available to help you learn how to manage a business as a minority, you may have to know much through trial and error.
Many people succeed in business throughout history by ‘accidentally’ stumbling upon a great idea. It all starts with being able to identify a gap in the market or seeking solutions to age-old problems. Part of the success of black-owned businesses is simply being comfortable looking at their own failures as the start of something new. These mistakes are never the end. Instead, they must be viewed as the cause of a vital shift in your mindset.
Today, most black entrepreneurs understand that the only way forward is by remaining optimistic. This optimism is not the product of external factors like increased visibility or readily-available funding. Instead, this confidence comes from within and helps you stay positive in the face of adversity.
Social Media Presence and Effective Marketing
In this Information Age, it is no secret that the internet and social media play a vital role in helping entrepreneurs reach new audiences, build trust and authority, and promote their business. By leveling the playing field, social media can make a big difference for small businesses at a fraction of the cost of traditional media channels.
Social media, likewise, can help black entrepreneurs grow their businesses beyond the systematic obstacles in their way. It can be a valuable tool for overcoming racial injustices and anti-racist sentiments. As an African American startup owner, you can utilize the power of social media to connect directly with potential customers, investors, venture capitalists, and supply chain partners, thus, establishing broader communities. With the help of search engines like Google, you have the opportunity to create ads and market your offerings to your target audience.
You need to understand that there are people out there who’d want to support black businesses.
Social media can help you accomplish this by creating a positive connection with customers and other stakeholders. By having a solid social media presence and being on top of the latest online trends, you can engage in meaningful dialogue with your target audience. Meanwhile, targeted ads can further benefit by specifying who you want to reach.
For example, you can choose to advertise only to people who follow your brand, or you can customize your preferences, such as search behavior, age, and location. This way, you can advertise to minorities who are more willing to support black-owned businesses.
Adaptability is the Key to Success
Last but not least, to help your black-owned business succeed, you need to learn to adapt to new changes and developments taking place all around you. As a minority, you need access to technical assistance camps, startup boot camps, and diversity programs that offer support and funding to minority founders.
You need to upskill and be more open to new opportunities that come your way. Try joining training programs or short courses if you lack a particular skill, like coding, marketing, or financial management. And, if you ever feel like failing, try to remember how much you’ve achieved so far and how far you can still go.
The Way Forward!
The right business ecosystem can mitigate the adverse effects of structural, financial, and other obstacles for black business owners. According to a research study, the black-white wealth gap in the United States costs the country millions of dollars each year, resulting in much distress in the economy, society, and people. The only way to keep this gap from widening further is to encourage and support black entrepreneurship.
As a minority business owner, you may sometimes feel discouraged and dissatisfied with the system, but remember that the path to success is filled with uncertainty and hardships. So be resilient and keep moving, and you have already laid the groundwork for success!
From businesses to workers, inflation is taking its toll on Black …. https://thegrio.com/2022/01/30/inflation-businesses-workers-black-communities/
Most of these topics are discussed in my two books:
Being A Visionary: Going After Your Vision
Being A Visionary: Going After Your Vision Workbook
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