Faced with an unemployment rate of 9.2 percent and a deep desire to forge their own pathway to career success, many African Americans are opting to create their own businesses. The creation of African American-owned businesses is an essential component in improving the economic condition of our communities.
“Black businesses are the greatest private employer of Black people,” said social activist Margarita Alexander, who embarked on a quest to exclusively purchase Black-made products and services for an entire year. She chronicled her journey in her book entitled, “Our Black Year: One Family’s Quest to Buy Black in America’s Racially Divided Economy.”
Alexander found a direct correlation between Black unemployment and other economic inequities in African American communities and the number of successful Black-owned businesses.
“African Americans have the power to greatly reduce our own unemployment problem,” said Alexander.
For more than 150 years African American businesses have exhibited an indomitable entrepreneurial spirit and continued to survive and thrive which has translated into substantive progress in the Black community.
Entrepreneurship is becoming an undeniable front-runner as an avenue towards socioeconomic empowerment amongst Black people.
If Black business creation leads to the employment that keeps Black communities healthy and thriving, what does the future hold for their continued success? What are the challenges Black businesses face and how can these obstacles be turned into stepping stones to higher success?
Generational outlook differs
Mature African American business owners of the baby boom generation and younger Generation X and Millennials view the path to future business growth from two unique vantage points.
“There are some great opportunities for the future,” said Gene Hale, baby boomer and Chairman of the Greater Los Angeles Chamber of Commerce (GLAAACC). “I think Blacks really need to concentrate a little more on where the real money is—I know we like to follow our passion—but we need to follow the money too.”
Hale is the owner of G and C Corporation, a Gardena, Calif.-based company that sells construction materials and supplies. “Billions and trillions of dollars are being spent on infrastructure building. If you look at the construction business now, it’s very dismal. We don’t have many Blacks in that industry,” noted Hale.
Randle Pinkett, a Gen X-er and chairman of New Jersey-based BCT Partners, a program management consulting firm, agrees that there should be a focus “on where jobs are and where they are going.” However, he contends that construction should not be the industry focus for future entrepreneurs.
“We have to challenge ourselves to really raise the bar and raise expectation of what we think Blacks can do,” said Pinkett. “We launched a program in Newark, N.J., looking at using young men of color to build mobile applications. That is where I think you really find the opportunity.”
Terran Moore is confident that he is on the leading edge of a new trend in the Black business arena, and in one way, the 25-year-old Los Angeles-based, Loyola Marymount University graduate found himself in that space somewhat accidentally.
“I was studying abroad in 2013 in Hong Kong and China, and my hair was starting grow kind of long. So, I started looking for an app where I could find a barber that could cut my hair,” said the Carson resident.
At the same time, the concept of computer applications was gaining traction and Moore said it was a natural progression for him to develop an app to solve his problem. But rather than putting together a list of salons, he took the next step by developing an application called Barbr that features actual barbers rather than shops.
Moore spent four months creating an app that is now being beta tested in the Apple store on the IOS platform.
Moore’s business model was also a little different. Rather than charging the standard 99 cents (and up) purchase price for the app, he decided to offer Barbr for free and sell advertising to the barbers directly, as well as to other companies selling men’s grooming products like Bebel, which manufactures a shaver that targets African American males and others with razor bump issues.
Moore’s app currently focuses on barbers in the Los Angeles area, but his intent is to eventually expand nationwide and to include a subscription service.
Currently, the app allows barbers to advertise their services and for users to rate barbers services. Moore said Barbr also allows him to tap into the new way contemporary customers are using their phones 24/7. For more information visit Barbrco.com.
Educational institutions such as Historically Black Colleges and Universities (HBCUs) are preparing students to be independent of the traditional career track.
“When I was here at Howard as an undergrad, we were programmed to assimilate into corporate America. That was in the ‘80s,” said Carl Brown, executive director of the Small Business Development Center at Howard University.
“That whole dynamic in the classroom has become ‘you need to become an entrepreneur. Get work experience, fresh out [of college], but become an entrepreneur and determine your own fate.’ I’m hearing that a lot,” Brown noted.
Adding to the endless stream of mobile apps flooding the media market, sister-duo Alexis and Kenady Hundley have created Mohiyo.com, an easy-to-use platform that provides users with access to all the tools they’ll need to host a successful party.
“Our app allows users to bring their party ideas to life without the headache of coordinating deliveries, tracking down the best products, or negotiating prices,” explained Alexis.
“We stopped and asked ourselves what we were truly great at. I’m great at throwing together parties—I’ve got it down to a science. When I told Kenady that, she looked at me and said, well what if we turn that into an app? As we sat and brainstormed and did our market research we realized that we had stumbled upon an untapped market as well as an unrecognized need.”
Young aspiring business owners have been using social media to market and brand their products. This platform has spawned the existence of numerous entrepreneurs, causing the market to explode with an overflow of self-made inventions and services.
“The most important factor that has pushed us thus far is executing,” says Alexis. “Having the idea was one thing, but deciding to meet, plan, and design in our spare time outside of our full-time jobs was the real mental challenge. We are just highly motivated to succeed and hopefully that spirit continues as we progress.”
Black businesses growth by the numbers
According to the latest U.S. Census Survey of Business Owners released in December, the number of Black-owned businesses has increased by 34.5 percent. The number of Black-owned firms with paid employees has increased 13.39 percent and payrolls have increased 36.3 percent.
The survey showed that two and a half million Black-owned businesses earned $150 billion in revenue. But, less than 10 percent of those businesses operate with paid employees, the remaining 90 percent are single-employee operations. If more of these entrepreneurs move toward hiring talent from within their communities, the outlook for Black economic growth would likely be even more positive.
Facing challenges ahead
Looking ahead, what will it take to maintain a trajectory of growth for Black-owned business? According to many Black business associations, access to capital is the number one barrier to growth for Black business.
Another major barrier to business growth according to Aubry Stone, president of the California Black Chamber of Commerce is African American firms inability to partner with each other. “We don’t joint venture enough. That’s because we’re not used to working together,” observed Stone. “Other people do it all the time. Black businesses should work harder to partner with each other and get the kind of deal that one firm could not have gotten on their own.”
The younger generation seems to have gotten a better handle on the importance of networking and self-promotion.
Tyler Nelson is a good example of that. The Southern California resident recently launched his company movefirstbrand.com, which is designed to help entrepreneurs promote their businesses on various platforms including YouTube, the Internet, Twitter, Facebook and Instagram. The 25 year old said he started his company because he is intrigued by the idea of owning a business and thinks more young Blacks need to move in that direction.
Brandon Bibbins, Tyler’s friend who grew up surrounded by computers because of his dad’s work in computer programming, has learned how to combine the creativity of photography with technology. It is a skill set that has enabled him to steadily grow his business from wedding photography to supplying landscape portraits taken from a drone.
Scott Lilly, president of Opportunity Funding Corporation (OFC) which conducts entrepreneurial competitions for students, views the inability to identify and develop entrepreneurial talent as a hurdle to the growth of Black businesses.
“By us not even identifying talented individuals, we have no real way to point them to performance, point them to creating jobs,” said Lilly. “I think recognizing and developing an entrepreneurial mindset is one of the big challenges that many people don’t think about.”
Preparing future business owners
Similar to HBCUs Xavier and Howard Universities, Morehouse College takes a holistic approach to preparing its students to become job creators.
Morehouse College Dean Cheryl Allen said the school focuses on developing business skills that will work in both in corporate world and as a business owner.
Allen has seen a trend and a change in students wanting more entrepreneurial activities and focus. “I’ve seen a lot of students developing apps—everybody wants to have their own business, she said. “And it’s not just business majors that are interested in entrepreneurship,” said Allen. “[Students from] All the schools want to know how to run a business.”
Lilly sees a bright future ahead. “Every time OFC convenes HBCU students to compete, Fortune 500 executives who attend say, “Wow. This talent is amazing.”
“That’s why I have belief in the future of Black businesses. It’s just a matter of can we get more exposure, can we get our students in the next 5-10 years shifting into an entrepreneurial mindset, thinking about creating goods and services. When we lean into what they naturally do well and help guide them around that, that’s when I believe anything is possible.”
