There are some real challenges facing Black Underserved Entrepreneurs who are starting businesses at a rapid rate but aren’t seeing the growth or success as quickly as their white or male counterparts. This lack of success is not because they don’t have viable businesses. The stunt of success for people of color is mainly because people of color are still, in 2020, trying to combat more than 75 years of racism and redlining that have kept them out of rooms where financial decisions are happening, strategies are being discussed and where information on how to get their loans approved is otherwise shared.

For these Black Entrepreneurs, they generally face 4 major challenges when starting and trying to grow a business. These Challenges include Access to Capital, Access to Resources, Access to Networking and Access to Exposure.

Access to Capital--There are four major ways to generate capital for a business: Raise It, Earn It, Borrow It, or Re-Invest It. Now Let’s put this in perspective for Black Entrepreneurs. Raising Capital is a viable option and for most black entrepreneurs in their infancy is one of the only options. Crowd Funding & Seed Money are two of the most known ways to raise capital for black business owners but do Black Entrepreneurs have the skills and strategies to fully take advantage of these opportunities? Well, let’s discuss it. Raising Capital requires serious planning and strategies for success. You need revenue, a business plan, projections, and a really good, well-spoken and concise pitch person oh and the right venture investor. Now you can google how to write a business plan or create projections but if you’ve never run a business before or dealt with a bank, how in the world do you really know the critical elements of a business plan and what should really be included in projections from a strategic level? In short, you don’t. The only way to get this information is to network with other business owners who are doing it in your space and doing it well those who have pitched for capital before and who have gotten the money. But the problem for the Black Community is sometimes they don’t even know how to find each other or even worse if they can find each other, they know that success is so marginalized, they won’t even bother to help one another but that’s another issue. The real question is how can this change? Change starts with a mindset, so collectively we have to address that first. Black business owners have to re-think how they look at themselves and more importantly each other. Black Businesses as a whole are only getting a small percentage of venture capital funds and for black women its less than 1%. With those numbers, black entrepreneurs have to take full advantage of the funds they do get and leverage the opportunity, the capital but more importantly the information.

For dope companies like The Fearless Fund who are investing specifically in black women-owned businesses, they should take their pitch sessions to live on Facebook Watch or Instagram and allow anyone who might be looking to start a company to watch. Think Shark Tank but for newbies. The Fearless Fund’s barrier to entry for investment is a hefty $100,000 in revenue which in fairness doesn’t seem like much but for the black community, we are not benefitting from succession plans or inheriting our parents’ homes. For most black entrepreneurs they don’t have the capital to generate that kind of revenue in the first place. They don’t have a family member’s footstep to follow in or an uncle to lay the foundation. For most black entrepreneurs they are flying by the seat of their pants and figuring it out day by day so a live watch session would make all the difference.

For those entrepreneurs still trying to figure it out, they are sometimes left with no choice but to rob their future to fund their present. That’s right to read that again, black entrepreneurs are robbing their futures to fund their present. Black Entrepreneurs are liquidating their retirements to fund their dreams or what I call modern-day “Re-Investing It”. Have you heard of the term ROBS (Rollover for Business Start-Ups)? Yes, there is a type of financing where you can leverage your current 401k to fund your business dreams-tax penalty-free, seems like a sweet deal right? Well according to Bloomberg, 8 out of 10 Businesses fail in the first year and by year five those surviving businesses fail at a rate of 50% with numbers like that black entrepreneurs cannot afford to take the risk of allowing each other to fail because the consequences of failure will create a generational wealth gap so wide that their children’s children might not ever recover.

Failure happens because owning a business is hard and requires a series of tools and strategies for ongoing success. Not only do you need funding, you need a community of business owners or funders who look like you and who are going to help you get your start. If you heard the famous Jay Z song “Story of OJ” he asks the question “Ever wonder, why Jewish people own all the property in America?” and says they did it by using credit. Now, Jay-Z’s famous lyric was to provide a very exaggerated example of a situation because we all know Jewish people don’t own all the property in America. The more important aspect of the lyric is the term credit and Jay-Z’s goal was to raise black awareness around borrowing and community self-financing. Borrowing for the black community has been tough and continues to be. Wonder why? Because they may not have the liquid assets to be bankable, their former conviction records might disqualify them from SBA loans, or they just don’t know where to start. Moreover, FINTECH companies like SOFI or Upstart have someone how figured out how to lend to HENRYs (High Earners Not Yet Rich) while traditional banks are still figuring it out.

The other day, I had a conversation with a black woman who owned a hair salon and she didn’t even know what she needed to do to open a business account. I sat there and explained to her step by step what she needed to do, how to apply for an SS4 and what she needed to say to the bank about the products and services she would need from them.

But I digress, Back to Jay-Z, what the Jewish community has done well is invest heavily in each other and provide access to resources within their community. For black entrepreneurs, we could take that same mentality and invest in ourselves by sharing information about topics like Set-Asides. A set aside is a portion of corporate or government contracts that are set aside within a corporation and given specifically to minority and women-owned businesses. For the black community, there are grassroots organizations like The Procurement Queen ran by Denise Williams who has dedicated her time and knowledge to helping black entrepreneurs take advantage of those opportunities. But the work doesn’t stop there, in fact, its where the work begins. Providing access to resources and networking are critical elements that will be the difference-maker for black entrepreneurs.

More global organizations need to invest in and create incubators for the black community so they can network with each other but first, they have to understand that these incubators or panels or speeches shouldn’t be led by famous black entrepreneurs. Don’t get me wrong, the black community loves our Serenas, our Kevins and of course our Beyoncé but when it comes entrepreneurship from a grassroots level it’s more impactful to hear about Lisa Price of Carol’s Daughter who shared her story on the podcast “How I Built This” with Guy Raz. Lisa started her company in her Brooklyn apartment, saw it rise to major success and also saw it nearly fail before her eyes. I mean Lisa really gives it to us on the Podcast and though her story has a successful ending, for most entrepreneur’s they don’t get to see that level of success nor do they get a chance to understand the level of humility, networking, and the community it takes to persevere through it all.

Further, these organizations can highlight black entrepreneurs who are getting these set-asides or financing. They can highlight them by marketing that they won the contract on their social media. By simply reposting the awarded contract and the amount on their social media (LinkedIn, Instagram, Facebook, Twitter, etc.) it could make a huge difference in three ways. One, for other entrepreneurs who are looking for similar work or might not even know your company has a set-aside program. Second, by reposting the contact, it provides confidence to other companies that the business is capable of doing the work and is competent enough to secure a corporate contact and thirdly, it’s a small relatively inexpensive act that for a businesses in the black community will go a long way in making a difference but for your corporation, it will signal that you are “woke” and might allow you to tap further into the $1.2 trillion dollars of black consumer spending, just saying.

Ultimately, there is a lot of work to be done but it starts with awareness. Our global organizations have to be where these entrepreneurs are and speak to them in a language they can understand and with people with whom they can resonate with. For many black entrepreneurs they are still becoming in the words of our former First Lady yet, we have to acknowledge them, their stories and trust that the community needs to hear them and might not survive without them.

--Amirah