It should not be a surprise to anyone that Black citizens in the United States have faced barriers to success for generations. As a Black business owner, who has also worked more than 20 years in the local nonprofit sector advising and helping other Black business owners, I know about having to overcome systemic racism that bars many of us from getting credit, accessing markets, and raising economic and social capital.
As a Black entrepreneur, I’ve had to endure many situations that did not seem fair. Once, I was told a rental property was unavailable, only to find out a white peer was offered the same property, later. I’ve also been denied funding opportunities without explanation. These examples, and many more, contributed to unnecessary stress and anxiety, creating doubt about starting my own business. Back then, I wish someone had given me a few words of wisdom and ways to overcome obstacles.
Years later, the playing field is still not equal, and our country continues to struggle. I not only have owned successful businesses, but as the Director of Inclusive Entrepreneurship at Bounce Innovation Hub, I interact with local small business owners every day. I also build relationships with community leaders to help break down these barriers, and I can provide the advice and wisdom I’ve learned over the years that I wish I had when I started out. I feel it is my responsibility to help clients achieve success in their businesses.
Based on my experiences, below are five things I think every Black entrepreneur should consider before starting or growing their business.
Make sure your business idea is profitable
Entrepreneurial business ideas often start with someone’s hobby that they are so passionate about, they want to make it their life’s work. This sounds like a great idea; however, hobbies do not always make enough revenue to sustain a business. You may love it, but you need to make sure it will provide a way to make money. If you don’t have someone letting you know your business isn’t profitable, such as a business advisor, you may get stuck with a loan that is costing you money versus making it.
It is okay if a hobby is just a hobby. Take the time to vet your idea; you’ll save a lot of money and headaches down the road.
A good business plan can lead to capital
It’s not just going to the bank and asking for a loan because you filed an LLC.
Being able to get business capital can be difficult for aspiring Black small business owners. There is a lack of financial service institutions run by Black executives and inequities in the funding gap. On average, Black-owned businesses are valued at less than white-owned businesses. Having a detailed, functioning business plan can help in obtaining capital. Your business plan shows banks that you have thought about everything from a mission statement to how you plan on paying the loan back. If you need help starting, you can visit your local Small Business Administration office for advice.
Regardless, this is a must-do step in the process of starting a business as most small businesses are less likely to receive funding from investors.
The real deal with bookkeeping
My first year of owning a business, I did not keep good records. I did not understand income statements, profit-and-loss statements or what a balance sheet was. It wasn’t until my second year of business that I heard of financial ratio, liquidity and trend analysis. Take the time to research and understand the financial side of owning a business. Keeping good records is essential to your business. Hire an accountant if you can, or consider not starting the business until you’ve had a chance to get this knowledge and master these skills. You should be ready for a lot of math and record-keeping. This is what real business really looks like.
The low down on grants
In my experience, it seems many Black aspiring entrepreneurs are looking for grants to start their businesses; they think it is easier to access than finding an investor or getting a loan. However, getting a grant to start a small business is even less likely. Finding grants requires lots of research to see if your business is eligible and the process is extremely competitive. Don’t expect or rely on receiving funding to start your business. You may have to bootstrap it for a while. Instead of spending time searching for grants, use that time to get your business plan together to access capital in other ways.
Being above reproach
While everything I already mentioned may be essential to starting a business, it is also important to know that as a Black entrepreneur you must be above reproach while starting and owning your business. You simply cannot be less than perfect.
I can remember my grandfather saying that “trying to get a loan or being treated fairly while obtaining a brick-and-mortar business for a Black man was like finding a needle in a haystack.” As a result, I try my best to stay above reproach. And what I mean by that is I make sure my legal paperwork, credit, and business plan are perfect before I apply for a loan or try to buy a building. It’s our reality. You will be scrutinized more than your white counterparts.
Learning from history
These are not all but just a few things to consider when owning or starting a business. As I look back on my entrepreneurial journey during Black History Month, I think about the achievements of Black business owners that came before me and the obstacles and barriers they overcame. I am reminded of the success of creating Black Wall Street in Tulsa in a time of racial tension in this country. It was one of the most prominent concentrations of Black businesses in the United States in the 20th century. In 1921, white residents attacked the area killing hundreds of Black residents; however, 10 years later, surviving residents rebuilt the district and it remained a vital Black community despite racial tensions for several decades.
I also think of Berry Gordy and how he turned Motown Records into the biggest Black business during its era, paving the way for Black-owned music labels that followed. And I think of our local hometown here, LeBron James, an underrated entrepreneur in the world. Owning several businesses, he has managed to achieve a net worth of $1 billion.
We can learn a lot from these entrepreneurial journeys, especially the need to collaborate and network with other Black mentors, entrepreneurs, and the community to get ideas off the ground. There is always advice to be given, either personally or taken from history; however, we all must be willing to receive it and work together to break down the systemic barriers that exist for us.
If you are thinking about owning your own business, Bounce offers an Aspiring Entrepreneur program where we cover what it takes to be an entrepreneur, how to think like one and understand how businesses work. The next cohort starts in the spring. Interested in learning more? Email me at email@example.com or visit www.bouncehub.org/aspiring-entrepreneur-program.