August is nationally recognized as Black Business Month, making it the perfect time to acknowledge that these entrepreneurs are the backbone of the African American community. They provide jobs, goods, and services to those who may not otherwise have access.
There’s no question that starting and running a business is hard work, regardless of race or ethnicity. But when it comes to black-owned companies in America, there are unique challenges and obstacles that these entrepreneurs face daily. Despite the challenges, black-owned businesses continue to thrive and play an essential role in our economy.
Let’s take a closer look at the state of black-owned businesses in America today and the trends we expect to see in the coming year.
Specialty products and services are still in demand.
One of the first things people think of when they hear “black-owned business” is a specialty product or service. These businesses exclusively cater to the African American community. They offer products and services that fit their specific needs.
We can’t use the same shampoos, skin care products, and cosmetics that our white counterparts do. Our hair and skin are different, and we have additional concerns about beauty and grooming.
African Americans spend billions of dollars annually on beauty products, so it only makes sense to cater to this market. From barber shops to beauty salons, black-owned companies need to hone in on their specialty to stand out in a competitive market.
Financing difficulties are still a hurdle.
America is built on small businesses, but unfortunately, not all of them have access to the financing they need to grow and prosper. This is especially true for black-owned institutions.
According to a recent study, 34% of African American business owners see access to capital as their number one challenge. Note that there are many reasons for this (i.e., the wealth gap, lack of collateral, and straight-up discrimination). Whatever the situation, it’s clear that black-owned businesses have a harder time getting the financing they need.
One way to overcome this challenge is by building relationships with financial institutions and lenders that are friendly to black-owned businesses. There are also many grant programs and business competitions specifically for black entrepreneurs. With these tools in hand, black-owned businesses can get the financing they need to succeed. (Check out our list of 10 Grants for Black-owned and minority businesses)
The lack of visibility is getting better.
In the past, black-owned businesses faced a severe lack of visibility. Many of these businesses are located in underserved communities. Understandably, they don’t have the same marketing budget as their bigger, mainstream counterparts. However, social media has leveled the playing field recently, allowing them to reach a wider audience with little to no money.
By utilizing platforms like Instagram, Tik Tok, and Twitter, black-owned businesses can connect with potential customers worldwide. This is in contrast to word-of-mouth, which is often limited to the immediate neighborhood. To be successful, these companies need to remain active on social media and use the right strategy to reach their target audience.
The bright side
Despite the challenges black-owned businesses face, there is reason to be optimistic about the future. First and foremost, revenue for black-owned businesses has been on the rise in recent years. According to stats from the NAACP, Hello Alice, and Phillip Ashley Chocolate, 84% of black-owned businesses expect revenue growth this year.
The COVID-19 pandemic has also led to a surge in black entrepreneurship. As people lost their jobs, they began looking for alternative sources of income. Many shifted to catering, home-based services, and e-commerce. And black-owned businesses are now in a prime position to capitalize on this trend.
There is also an increasing amount of support for black-owned businesses. Large corporations are starting to invest in these businesses, and there is a growing number of incubators and accelerators specifically for black entrepreneurs. In addition, black-owned companies are being featured more in the media, helping to increase visibility and awareness.
Join the movement
If you’re in favor of black entrepreneurship, now is the time to get involved in the movement to support the community. There are many ways to do this, whether it’s patronizing these businesses, investing in them, or spreading the word about them. You can even start your own venture! By working together, we can help each other reach new heights and succeed in America.
The “I’m Loving me” project empowers Black women to reach their full potential by providing them with the resources they need to be successful entrepreneurs. We offer business coaching and an online community of like-minded women. If you’re ready to take your business to the next level, we can help you make it happen.
