To celebrate Black-owned businesses, Monday, February 1st through Monday, March 1st has been designated as National Black History Month. It’s a yearly celebration of African American achievements and a time to recognize their central role in U.S. history.
A significant way the African American population has improved America is through entrepreneurship. Black business owners are a vital part of the American economy and support of African-American entrepreneurship results in growth and community opportunities.
Here’s important information to know about the path of Black entrepreneurship in America and how to promote your minority-owned business and honor the achievements of others.
Black History Month
Since 1976, this annual celebration has recognized the contributions of Black Americans to our country. Here are five important things to know about this meaningful month:
It was only a week
In 1915, Harvard-educated historian Carter G. Woodson and minister Jesse Moorland founded what’s now known as the Association for the Study of African American Life and History. That organization established Negro History Week in 1926, which strived to inspire schools and communities to organize local celebrations and host performances and lectures.
Carter Woodson is the father of Black History
Woodson was tireless in his lobbying to establish Negro History Week as a program to encourage the study of African-American history. He dedicated his career to the subject and wrote many books on the topic. His most famous volume is The Mis-Education of the Negro (1933), which has become required reading at numerous colleges and universities.
February is meaningful
Negro History Week was the second week of February to coincide with the birthdays of Abraham Lincoln and Frederick Douglass. President Lincoln, of course, was the 16th U.S. president and paved the way for the abolition of slavery with his Emancipation Proclamation. Douglass was an escaped slave turned activist and author, and a prominent leader in the abolitionist movement to end slavery.
Extended to a month
The civil rights movement of the 1960s helped elevate Negro History Week to national prominence… and turn it into a month-long celebration. As a result, in 1976, President Gerald Ford made things official, proclaiming February to be Black History Month.
The history of Black business ownership
Black entrepreneurship can be traced back to when Africans were first forcibly brought to North America in the 16th century. Emancipation and civil rights permitted businessmen to operate inside the American legal structure starting in the Reconstruction Era (1863–77) and afterwards.
By the 1890s, thousands of small business operations owned by African Americans opened in urban areas. The most rapid growth came in the early 20th century, as the increasingly rigid Jim Crow system of segregation moved urban Blacks into a community large enough to support a business establishment. The National Negro Business League—which Booker T. Washington, college president, promoted—opened over 600 chapters. It reached every city with a significant Black population.
While minority entrepreneurs may still face significant barriers, expanding education and access to resources helps Black business owners grow their business and thrive economically.
Black business owner statistics
Each year, Guidant Financial and the Small Business Trends Alliance (SBTA) surveys business owners to learn about small business trends and life as a small business owner. Here are their statistics about Black- or African American-owned businesses as of 2021.
- There were an estimated 134,567 Black- or African American-owned businesses with $133.7 billion in annual receipts, 1.3 million employees and about $40.5 billion in annual payroll.
- About 29.5% (39,705) of these businesses were in the Health Care and Social Assistance sector.
- With women making up 46 percent of Black entrepreneurs, this group shows one of the highest percentages of female small business owners in any segment – 53 percent higher than white small business owners.
- 33 percent of surveyed Black small business owners had Bachelor’s degrees. The next most common level of education was Master’s degrees, at 26 percent.
- Black small business owners skew younger than their white peers. Twenty-seven percent of Black entrepreneurs are boomers, compared to 46 percent, 49 percent are Gen X compared to 43 percent, 21 percent are Millennials compared to 11 percent, and three percent are Gen Z, compared to less than one percent of white small business owners.
- The majority (36 percent) of Black small business owners decided to go into business for themselves because they were ready to become their own boss. Twenty-four percent wanted to pursue their passion, 17 percent were inspired with a new business idea, and 17 percent were dissatisfied with corporate America. The plurality (42 percent) of Black entrepreneurs are very happy as small business owners.
Become certified as a Minority-Owned Business
It’s a strong strategy to take advantage of opportunities available as a minority business owner. Black entrepreneur Andrew Magnus took the steps necessary to become certified as a minority owned business. He says, “I only knew one minority business owner. He asked me why I was working for someone else and told me that I could make my own paycheck. That always stuck in my mind. A big part of my push was to create a greater minority presence in a multi-billion dollar industry.” Once certified, Magnus targeted companies and institutions with a diversity spend initiative. Read the story of his business journey here: BTC Envelopes and Printing: A Customer Success Story.
To qualify for this type of certification you must meet these qualifications:
- The business owners must be U.S. citizens
- The business must be at least 51% minority-owned, operated, and controlled. (Per the National Minority Supplier Development Council (NMSDC), a minority must be at least 25% Asian, Black, Hispanic, or Native American. Also, minority eligibility is established through screenings, interviews, and site visits. For publicly owned businesses, at least 51% of the stock must be owned by one or more minority group members.)
- The business must be for-profit and physically located in the U. S. or its territories.
- The minority owners must also participate in the daily management and operations of the business.
Becoming an official Minority Business Executive (MBE) then allows your business to participate and take advantage of the many networking and educational programs provided by the NMSDC. Check with your regional office about business opportunity fairs, leadership training, and networking opportunities.
The SBA (Small Business Administration) is committed to supporting the development and growth of minority-owned small businesses and entrepreneurs from underserved communities. Learn more about this important certification on their website here: Minority-owned Businesses.
What makes a business owner successful?
Even if your services are in demand and your products are flying off the shelves, it’s important to have a handle on the health of your business.
Here are areas to keep track of:
Financing
Start-up financing to launch a business and funding for working capital and debt refinance is a challenge to every entrepreneur. The #1 reason small businesses fail is related to cash flow problems. The right loan at the right time can shore up cash flow and put your business in a much stronger position to succeed.
Minority business loans can come from a variety of sources, including the U.S. Small Business Administration, online lenders or banks, and non-profit organizations. Securing financing can be difficult for minority business owners, who may have lower credit scores and fewer assets to secure small-business loans than other business owners, according to the federal Minority Business Development Agency.
There are many ways a business can acquire funding when just starting out after being established. Here are options:
- Friends and family - One accessible option is to borrow funds from family and friends. Because of your close relationships, you won’t have to demonstrate your trustworthiness and your ability to see your promises through. Keep in mind that entering into this kind of financial partnership can put personal relationships at risk and may also adversely affect your ability to access other kinds of loans.
- Business grants - Business grants are another way to finance a business. Read 4 Insider Tips about Small Business Grants on the SmartBiz blog for how to find and apply for grants. Learn more about the SmartBiz® Boost a Small Business in Need Grant Program and ongoing grant opportunities from SmartBiz below.
- Crowdfunding - Crowdfunding through sites like Kickstarter and Indiegogo, relies on many smaller investments and it’s up to individuals to decide how much to contribute based on your pitch. If your campaign is successful, you’ll receive the funds you need and build a loyal customer base. While there are some attractive benefits of crowdfunding for your business, be wary of the disadvantages.
- Business Credit Cards - Using business credit cards can be a flexible option if used responsibly. Because they are a revolving line of credit, you can continue borrowing without depleting your available funds. With your credit card, you can also take out a cash advance, a type of short-term loan that allows you to withdraw cash which you then repay with interest. Learn how you can benefit from a business credit card here: 6 Benefits of Using a Business Credit Card.
- Bank Term Loans - Term loans are a common source of funds that entrepreneurs use to develop their small businesses. The idea’s simple enough: you borrow capital and then repay with interest on a regular basis. SmartBiz Loans offers fixed-rate term loans with stable monthly payments that are funded swiftly. Learn more here: Bank Term Loans.
- SBA Loans - An SBA loan is a type of long-term loan secured, in part, by the US Small Business Administration. The agency makes a guarantee to the bank that it will cover a percentage of your desired loan amount if you can’t make your payments. This is a win-win for small business owners and lenders: you benefit from low rates and long terms, while lenders have the advantage of additional support from the government.
Taxes
Tax laws are nondiscriminatory so small business owners do not get special incentives just because they are minorities. But owners can take advantage of numerous tax breaks for starting and running a business. Be sure to check with a tax professional for specifics and legal requirements.
Before you pay taxes, look into the structure of your small business and how that will have an effect on your tax obligations. From withholdings to quarterly estimated taxes to deductions, small business taxes can be confusing. If this isn’t your area of expertise, working with a bookkeeper or accountant familiar with small businesses can relieve stress and help you avoid penalties. For information read: Small Business Taxes: Self-File or Use a Professional?
Revenue
One way to keep track of your growth is to measure your business revenue. In accounting, revenue is the income that a business has from its normal business activities, usually from the sale of goods and services to customers. Our article, Small Business Revenue: Determine Where You Stand, has tried and true ways you can increase your business revenue if you’re falling short.
Marketing
You want your target audience to be aware of your products and services but that takes some effort. Do you have your marketing and social media strategy outlined? If not, it’s time to create a comprehensive marketing plan. Our blog article can help you get started: Example of a Marketing Plan for Small Business. Your plan acts as a roadmap and can reveal resources and funding needed to launch successful marketing programs. The SmartBiz Small Business Blog has many articles about low-cost, effective marketing strategies. Here are a few to review:
- Marketing Calendar: When to Promote Your Business – Make sure you have important shopping days like Small Business Saturday and Black Friday but don’t ignore other opportunities to promote your business.
- 8 Direct Marketing Strategies to Benefit From – Direct mail, social media, emails, and online marketing are explained along with strategies you can use to reach consumers.
- 5 Companies with Good Marketing Strategies – Get inspired and tailor your own marketing programs with ideas from successful businesses.
For more strategies, check out this article from the Black Enterprise website: 9 Marketing Tips for Black-owned Small Businesses to Accelerate Business Growth.
Hiring
African American small business owners face the same challenges that any other small businesses face. Finding the right employees and managing overhead can be difficult. If it’s time to bring on an employee or add to your team in place, know that hiring the right people can make or break your company so you want to do it right.
The co-founder of Skillbridge sums up hiring this way: "Great people versus okay people is the difference between success and mediocrity."
First, determine what kind of employee you need. Our article, Do You Need an Employee or Independent Contractor? can help you choose the right type of employee based on your unique business. 7 Things a Business Owner Needs to Know About Hiring is filled with information to help as you staff up like placing the perfect help wanted ad, running a background check, interviewing tips, and more. Before you hire, check with your bookkeeper or accountant to make sure you’ve filed the appropriate paperwork and are fulfilling employee tax obligations.
Employee management
Managing well and keeping them satisfied in the office is key to running a successful operation. Here are articles to help you build a strong company culture and a happy workforce:
- 4 Tips for Making Work More Enjoyable for Employees – Learn simple strategies like putting a rewards program in place, providing a healthy and aesthetically pleasing environment, and facilitating friendships on your staff.
- 12 Proven Employee Retention Ideas – Tuition reimbursement, asking for feedback, encouraging creativity, and running a respectable workplace are just a few ideas.
- 10 Ways to Lose Your Small Business Employees – Here are things to avoid when managing your team like playing favorites, underpaying, and stretching resources too thin.
Consider these options that can be affordable and keep your employees engaged:
- Long-term assignments and projects
- Guidance from a small business expert
- One-on-one coaching with a seasoned employee
- Local networking meetups, groups, and peer training sessions
- Cross-training (Simply giving workers the information and skills needed to handle tasks and projects across all departments. This is a great strategy, especially if an employee is out of the office for vacation, an illness, or maternity leave. Others can jump in and take on important duties.)
Business operations
All tasks within a company to keep it running and earning money are referred to collectively as business operations. Entrepreneurs are driven and creative but may not have all the skills needed to run a business effectively. The Minority Business Development Agency within the U.S. Department of Commerce has many resources to help improve business operations. The organization is staffed with experienced professionals, ready to help strengthen, develop and grow minority owned businesses.
SmartBiz support
The SmartBiz Loans team has processed nearly $4 billion in funded SBA 7(a), PPP and bank term loans through its bank network, helping more than 20,000 businesses. We’re proud that over 60% of the loans funded by our banks are for women-owned, minority or veteran businesses.
In 2021, five new recipients of the 2021 SmartBiz® Grant Program were chosen. The Program was established to support minority, women, and veteran business owners during the continuing pandemic and is an extension of the SmartBiz mission to help equip entrepreneurs with reliable access to smart capital.
“The SmartBiz team is committed to empowering entrepreneurs across the U.S.,” says Evan Singer, CEO of SmartBiz. “From supply chain problems to hiring issues, we know that brighter days are coming and are proud to contribute to small business rebuilding.”
The grant recipients include Jasmine Parker, owner of Listen to Your Art Therapy & Empowerment Services, LLC located in Spring Hill, Florida. The organization provides art therapy sessions to assist teens in solving problems, increasing self-esteem, building social skills, and behavior management. Grant funds will be used to expand their mobile services.
Eliana Stefanitsis, owner of Molos Restaurant, is using the proceeds for staff uniforms and vendor payments. Molos Restaurant is a Greek and Mediterranean inspired seafood restaurant located on the Hudson River in New Jersey.
MPower Fitness, located in Palm Coast, Florida, is owned and operated by Fatima Q. Sena. She’ll use grant funds to purchase gym equipment so she can work with an older demographic and for print advertising to reach that community.
Freedom Bremner describes himself as a singer, songwriter, and storyteller. He is the founder of Houseofreedom, LLC in New Jersey. The funds will be used for social media and online marketing to promote his live music production services.
Brandi Dobbins owns and operates B's Maple House Restaurant in Ontario, California. Founded in 2020, B's Maple House specializes in soul food, blending California flavor with traditional Southern delights. The grant funds will help support daily business operations and new equipment purchases.
SmartBiz has committed to support an ongoing grant program for minority, women, or veteran-owned businesses.
Learning from successful Black leaders
SmartBiz Loans featured quotes from leading Black business leaders including former slave William Johnson who became a successful Black businessman in Mississippi, operating a barber shop, loaning money an acquiring real estate. Also featured are Mifflin Gibbs and Peter Lester who started up their own business and went on to make a fortune selling luxury shoes. Gibbs and Lester would emerge as leading activists in the local Black community. Also featured is Elizabeth Keckley, a slave who purchased her freedom and went on to become the dressmaker for First Lady Mary Todd Lincoln. Learn about these inspiring entrepreneurs here:
10 Top Black Owned Business and What to Learn From Them. Also included are the top 15 Black-owned businesses today and quotes from the successful businessmen and businesswomen who founded them.
