Challenges for African-American Business Owners

More black entrepreneurs are going into business for themselves because they’re ready to be their own boss. At 34 percent of responses, “ready to be my own boss” is the top motivation for black small business owners, with a 25 percent increase in responses year over year. “Wanted to pursue my passion” remains the second most popular reason to start a business from the previous year. Twenty one percent of more small business or franchise owners were motivated by dissatisfaction with corporate America from last year, making it the third most common response.

Lack of capital and cash flow is the biggest challenge for African-American small business owners, according to Guidant. That’s not really a surprise since those are the same problems most small business owners face. However, most black owned businesses struggle more because they don’t have a business plan in place or personal capital.

But fewer African-American small businesses are approved for financing, often at lower amounts of money with higher interest rates, according to a report in The Washington Post. Guidant reports that the “wealth gap also contributes to financing challenges…making it harder to [get] financing. Without the funds to invest in as many resources as other businesses, such as hiring talent or marketing and advertising, competing for contracts or attracting clients becomes exponentially more difficult.”

How Can This Be Fixed?

The black family unit must practice Group Economics in these 5 Facets in order to succeed.

• Businesses: The Black community must be willing to help and put black owned and run businesses back into their communities to have Black consumers purchase their goods, products and services from in the community. In addition, we must also plan to replace those businesses owned by people outside in the Black Community with equal or better-quality options. We need Black owned hair stores, grocery stores, barbers, hair salons, shoe and clothing stores and much more in our own communities in order to begin creating wealth in the Black community. Black businesses owners in turn must be willing to offer a higher quality of services to make sure they keep the loyalty of the Black consumer.

   

  There needs to be a bridge built between Black businesses and the Black community. There needs to be a trust between the provider and the customer within the Black community. Black business owners must value the dollar of Black people within their communities and create better relationships within our community as much as we do outside the community.

  Black businesses must be willing to provide phenomenal customer service at all times.

• Hiring from Group: Black business owners must hire from their own local community and develop talent. Part of the effect of Group Economics is improving your own community. These jobs will help reduce the high rate of unemployment.

   

  Black communities must be willing to pay more until black businesses can get big enough to compete with lower prices. Most Black businesses cannot compete with bigger establishments when they start because they are not able to purchase in bulk. The Black community must be patient until the business can become a fixed provider within the community which will help them lower prices as they grow.

• Business Planning:  Another area where Black businesses fail is their lack of planning. Most people in general don’t take time to plan, and Black business owners are no different and can suffer  more by  not having a plan in place. Having a plan for your business is the one thing that can provide direction to keep your business afloat when everything seems to go awry. If you’re looking to start a business and need help planning, click here.
  
• Marketing: Black businesses must market themselves actively to the Black community to make sure their services & products are known. Marketing is also important for creating successful visuals and  models for aspiring entrepreneurs.

   

• Consumer Loyalty: The community of Black consumers must be committed to patronizing great Black businesses. Black consumers must also be willing to respectfully hold Black businesses accountable to maintain high standards of products and service.

   

  Black businesses and aspiring entrepreneurs should look to provide products that Black consumers need within the community. If we can provide the needs of the Black consumer, there will be no need for them to go outside of the community.

  In the end, this will become a win-win situation for the business owner and the community.

• Using Technology In Business: Technology was supposed to even the playing field for Black businesses. However, many businesses don’t use technology to its full capacity. We must embrace the use and leverage the fullest extent of technology to extend our businesses. Besides reducing cost, it provides opportunities to hire others from the community with better paying jobs.