Why Supporting Black-Owned Businesses is Essential for Economic Prosperity

When it comes to economic prosperity, Black-Owned Businesses are in high demand. Supporting these companies helps create business opportunities, promote economic growth, and bridge the gap between low-income families and the middle class. To truly boost Black Business Growth, however, it will require leaders of financial institutions, philanthropy, government, corporations and investors to align and collaborate toward a clear set of objectives that address systemic barriers. From supportive policy to representative leadership, it is critical that we work together to build an economy that reflects the promise of America. Beyond slavery, we can trace the origins of today's racial wealth gap to Jim Crow-era practices such as redlining, employment discrimination, and exclusionary legislation that segregated African Americans from higher-paying jobs and homeownership opportunities.

This ultimately impeded wealth creation. For example, while the Social Security Act of 1935 was advertised as one of the first social safety nets in the country, it largely left out black citizens as it did not cover domestic and agricultural workers or low-level jobs with low or unofficial wages without payroll information. Supporting Black Business Owners may be one of the keys to closing the racial wealth gap. Doing so maintains a positive cycle of allowing companies to grow and therefore creates the need and ability to hire new employees. This cycle supports the surrounding community by opening up new jobs and boosting the local economy.

In addition, viewing representation can encourage young children or other aspiring BIPOC business owners to start their own businesses. This will further diversify the economy and allow for greater black representation in the market. Most of us don't have the individual capacity to equalize the balance of bank lending or redistribute wealth. But we can indirectly influence the likelihood that black-owned businesses will overcome these obstacles. Among the most common reasons companies fail is lack of cash flow. Therefore, supporting black-owned businesses with our consumer spending habits will help alleviate the need for additional loans or recourse to personal savings.

Promoting the success of black-owned businesses will also help address some of the prejudices that prevent black entrepreneurs from gaining equal access to commercial loans. During the most recent and ongoing crisis, the Coronavirus Aid, Relief and Economic Security Act aimed to provide emergency relief to SMEs but did not reach many black-owned businesses. In fact, about 58 percent of black-owned businesses were at risk of financial hardship before the pandemic compared to about 27 percent of white-owned businesses. What's more, 68 percent of black women entrepreneurs with paid employees belong to three industries that account for only 13 percent of total business income. It may also be beneficial to offer services to a local black-owned business; for example, if you or someone you know can provide paint or electrical work. Black, brown, and Asian-American businesses are more likely to report that their neighborhood is the site of most of their business transactions, pointing to a willingness to serve a community as well as restricted markets. Many African American business owners finance their own businesses due to the lack of capital mentioned above.

Black owners of employing businesses who are more likely to benefit from services such as legal and financial counseling are less likely to seek them. We encourage you to consider all objective reasons why it is important to support black-owned businesses. Louis has the highest representation of the black population which is reflected in its participation in black businesses. Sociocultural barriers encompass biased and exclusionary ways in which black entrepreneurs are more likely to be blocked from obtaining social capital such as useful relationships that make up business networks. Big business has a history of oppressing small businesses and imposing a heavy burden on low-income communities including black communities and black-owned businesses. The analysis foresees possible economic benefits if black companies published figures similar to those of non-black companies. Black women's high entrepreneurship rates may reflect economic need rather than opportunity; 64 percent of black women spend less than 40 hours a week on their businesses suggesting that business may be one of several sources of income or that they cannot focus on entrepreneurship. The potential economic and social benefits that strategic investments in black businesses can have for individual business owners local communities and the broader economy warrant analysis.

Despite this encouraging growth, black business owners continue to face a disproportionate number of challenges namely lack of access to capital and these obstacles have only been exacerbated by the Covid-19 pandemic. We must recognize that supporting Black Businesses is essential for economic prosperity. We must take actionable steps towards creating an equitable economy where everyone has access to resources regardless of race or gender.

Tessa Monday
Tessa Monday

Freelance internet maven. Hardcore burrito aficionado. Professional internet trailblazer. Wannabe zombie fanatic. Professional travel expert. Friendly travel enthusiast.