Unlocking the potential of minority-owned business
African American-owned businesses are the backbone of their communities, major contributors to our growing economy, and sources of innovation and thought leadership — not just in their industries but throughout our society. They also provide economic opportunity and stability to struggling minority communities. The problem is there are simply not enough of them.
The number of minority-owned businesses has increased by 50 percent in the past decade but is still discouragingly low compared to white-owned businesses. While minorities now make up 38 percent of the U.S. population, they are a mere 15 percent of business owners. African Americans make up about 13 percent of the U.S. population but an abysmal seven percent of business owners.
As one of those African American business owners, I know minority-owned companies have great potential to contribute more to our economy. But I also know first-hand the challenges we face. As much progress as our country has made on equal rights, it’s still as our parents told us growing up: To be successful, you have to work twice — or three times — as hard as a white person.
Many of us are willing to do just that, but we still need access to the tried-and-true business resources, that typical white families can take for granted. These include wealth, an established support network and even key contacts at agencies that provide capital. To bring us closer and increase our numbers, here are a few common-sense recommendations:
- Realize that for many African Americans, especially women, starting a business may currently be their best, or only economic opportunity, given the stubbornly high unemployment rate. Women already make up the fastest-growing segment of the African American business sector. As a business consultant, I see many people of color succeed as entrepreneurs through networking, securing investment and other proven strategies — even though they face obstacles that white-owned businesses do not.
- Work to convince your elected officials to evaluate entrepreneurs’ needs accurately. For example, every growing business needs access to capital, but Small Business Administration data indicates that minority businesses owners were nearly three times as likely to be denied a loan, and twice as likely to be discouraged from applying for one, as non-minority business owners.
Organizations like the American Sustainable Business Council can help get the word to policy makers. For example, they arranged for me to testify in Washington at a congressional hearing looking at how overregulation might harm minority entrepreneurs.” My message was emphatic: Regulations are not the problem. On the contrary, regulations help.
As I told the subcommittee, “Regulations play an important role in meeting the needs of our businesses and in protecting our community. Business owners understand that with investments in their business come responsibilities, contracts and regulations to ensure protections. Responsibilities aren’t the problem. Getting a fair shot at investments is.”
When every willing-and-able entrepreneur has a real chance to succeed, all taxpayers benefit.
- Understand that the big challenge facing minority business owners isn’t the heavy hand of government – it is the continuing, compounding inequities in access to capital, business development resources, education, family wealth and fair business practices.
- Encourage your elected officials to adopt procurement policies that let minority-owned firms harness the purchasing power of businesses, governments and other large institutions. Better goals and criteria beyond the current minimal set-asides for minority- and women-owned businesses would begin to address the full range of compounded challenges.
- Seek out professional business guidance wherever you can — and offer it if you have know-how to share. Because it’s my area of expertise, I know that all businesses benefit from professional consulting. That’s why I also told the committee in Washington, “If you want to really help them, provide more resources for professional business consultation to minority-owned businesses.”
Paths to success have increased for African Americans with big ideas in recent decades, but we’re just getting started. Reality-based government regulations, investments, opportunities and responsible business practices are not just good for African American-owned businesses. They are good for all businesses — and the economy we all share.
While we work to improve fair access to capital and other business resources, let’s capitalize on our own strengths, experiences and stamina: A legacy that built so much of America can surely build us a future.
William Scott is CEO of Tristatz, LLC, a community and economic development consulting company in Selma, AL.