Successfully Starting and Growing Black Businesses: For Entrepreneurs and Educators

Introduction

Most people are provided 8,760 hours each year of their entire lives, and most have full discretion on how they spend their hours. But for many who struggle economically, this discretion is drastically limited. The COVID-19 pandemic at the time of writing this chapter remains particularly hard on members of the black population in the United States. Consequently, black people spend disproportionately more of their time post-pandemic than others attempting to garner economic resources to increase their economic and social standings. Studies around the world repeatedly show that higher portions of black populations relative to other racial and ethnic groups actively engage in entrepreneurial activities for basic subsistence reasons. Partly owing to systemic forces such as disparate treatment of black businesses based on race, restricted access to capital, lower household assets, higher unemployment rates, lower education rates, and others, the many hours spent too often produce quantitatively and qualitatively less favorable business outcomes for these black entrepreneurs. As a result, fewer of these black entrepreneurs actually become successful and registered business owners in the United States relative to other groups.

Fortunately, some of this underrepresentation of black business ownership diminishes when the informal economy is factored into consideration. Members of all racial and ethnic groups operate in both the formal and the informal economy. Recent research suggests that once both economies are considered together, the sum of entrepreneurship rates of blacks drastically increase and likely surpass all other groups. Similarly, actual rates of black business ownership and entrepreneurship in Africa, the Caribbean, the United Kingdom, South America, and other places around the globe are likely understated.

Because the bulk of national data on entrepreneurship and business primarily reflect formal economic activity, much of black entrepreneurship remains hidden and under the radar. The hidden nature of these activities creates micro-economic and macro-economic distortions. Many otherwise successful black entrepreneurs and business owners who happen to operate in the informal economy create levels of credit worthiness, entrepreneurial experience, and business transactions that remain untraceable and unmeasurable. Yet, many of them cannot deploy or leverage these assets to generate capital and other critical resources when needed because of the hidden and undocumented state of those assets. To prospective business partners and other stakeholders, any perception that the assets do not exist is actually a distortion. When such distortions remain unchecked and uncorrected, negative consequences ensue which include prospective customers, suppliers, partners, and investors foregoing opportunities that would otherwise be provided by these types of black businesses and entrepreneurs. Additionally, policymakers, government officials, and funding institutions inadvertently divert resources elsewhere given a false premise that black populations yield comparatively lower entrepreneurial outputs and assets.

History shows that black communities are highly innovative and resourceful at solving pervasive and enduring societal problems. Members of the black population, and black women in particular, view problems and solutions from unique lenses of which society has yet to optimally capitalize. Their novel perspectives are viewed as invaluable to too few organizations. One of the major mobile phone carriers recently witnessed this firsthand when the organization sponsored a weekend long entrepreneurship hackathon competition at a major historically black college or university (HBCU). The audience and contestants were primarily black women. The market-based problems they identified, embraced, and built web- and app-based solutions for during the weekend competition were extremely novel and starkly different from typical problems embraced by young white and Asian males who more typically lead product development in tech firms.

Many black entrepreneurs in the US are extremely busy working night and day to earn income for basic survival in a post-pandemic world. A large portion work multiple jobs, attend high school or college full-time, and care for their families in the United States and often abroad. Time, as a precious commodity, is viewed and treated very differently by them. To the extent that these entrepreneurs understand how and where their time spent and actions fit within the broader scope of successful entrepreneurship is essential to increasing their business success rates.