As a Black woman and the CEO of Tote + Pears, which my husband and I founded more than 10 years ago, I’ve overcome numerous obstacles to keep my business thriving. One of the most challenging is bad advice from an accountant that almost cost us our business and livelihood.
Like most Black Americans, we didn’t grow up wealthy. According to the Federal Reserve, the median net worth of Black families in 2019 (the latest year data is available) was $24,100, compared with $188,200 for white families. Access to family wealth can make the difference in the ability to purchase a home, go to college, and start and sustain a business.
Our accountant’s bad advice on how to set up a corporate structure when we moved to a new state was costly – and could have been devastating if we’d been in a different position. We were fortunate because we had savings and could shift with the market. Not every business owner – especially every Black business owner – is in this position.
Ultimately, Black business owners have the same struggles as other business owners, as well as additional challenges due to our lived experiences. Being aware of these trends impacting Black business owners can help you spot an issue before it becomes a major problem.
1. Fewer Opportunities for Funding
Having cash available to establish and grow a business is a challenge all business owners face, but Black business owners experience it more than our peers. According to Crunchbase data collected collected in Q2 of 2022, startups with at least one Black founder have received only 1.2% of overall venture dollars invested in the U.S., making it difficult to scale and navigate rough patches.
If you need funding and are having a hard time finding it, don’t give up. There are more funding sources than ever to help Black-owned businesses survive challenges and excel during high-growth times. Government grants, small-business loans, and crowdfunding are just a few avenues you can explore.
But it can be exhausting going after funding with such low odds in our favor. Sometimes, we need to turn inward. That can mean looking for ways within your business to find more revenue sources or conserving cash.
2. Technology
Keeping up with technology is essential to business success, but there’s a digital divide that disproportionately affects Black Americans, according to research by McKinsey, leaving us slow to adopt new technologies that could help improve our businesses, like artificial intelligence (AI) that can help you create content and respond to customer requests.
If you need funding and are having a hard time finding it, don’t give up. There are more funding sources than ever to help Black-owned businesses survive challenges and excel during high-growth times.
Business owners have to keep pace with the latest technology, so consider doing what you can to learn more. Read, attend conferences and talk to peers in your field. If you’re in the position to do so, hire someone to consult on digital initiatives that could help your business thrive.
And remember: technology changes constantly, so it’s not just about knowing what’s happening right now, but also what's coming in the next wave of tech that could have an impact.
3. A Challenging Economy
During economic downturns, cash is king. So, you want to practice good financial habits to build a strong cash reserve. Having cash on hand during challenging times provides you with opportunities to adjust to the market.
When times are slow, you can turn to your reserve to keep your business afloat or use your extra cash to take advantage of new business opportunities, pivot, or grow by acquiring another company or through a merger. Being financially prepared to adapt to market changes is essential for longevity and growth.
4. Excessive Inflation
Price increases are making it harder for Black-owned businesses, already struggling with cash flow, to have the cash on hand needed to buy supplies and recruit and retain the workers we need to run our businesses.
To help combat the impacts of inflation, you may want to consider taking a closer look at your spending and reevaluating your vendors and suppliers for more affordable options. Another possibility, depending on your business model, might be to invest in hiring older workers or veterans who have the experience and drive but are frequently overlooked by companies.
5. Talent Shortages
Those of us looking for workers are seeing a shrinking candidate pool, and workers’ changing expectations and demands are making it harder for business owners to recruit and retain top talent. Often, Black business owners have even smaller talent pools to hire from given our limited resources and small networks.
One way you can work to overcome the talent shortage is by investing in your current employees with training, mentorship, and a values-based culture. Survey employees on ways to make your company a great workplace, communicate clearly and often, and invest in your team.
You also can step up your recruitment game by going after talent from outside your network. Consider building relationships with career programs at colleges and universities, especially Historically Black Colleges and Universities, or industry organizations, to broaden your pool.
As a Black business owner, I know the challenges well. But I also believe that by being mindful of the trends impacting Black-owned businesses, we can develop strategies that help us overcome these hurdles and build a path to success.
Photo: Getty Images
