By Dr. Lomax R. Campbell, MBA, PMP®, LSSBB, RYT®
Let’s face it, starting and growing a business is no simple feat. Nearly half of all new businesses are predicted to fail within the first five years of operations according to the Bureau of Labor Statistics’ Business Employment Dynamics. And these outcomes vary by industry-sector, geography, size, and owner demographics. There are a number of reasons why businesses struggle to survive and thrive. Some of the top ones include poor market conditions, capital and cash flow problems, management team constraints, and failure to effectively respond to market needs.
However, African, Latino, Asian, and Native American (ALANA) owned businesses experience these challenges at higher rates than their White counterparts. For Black businesses, one study found that Black and White consumers were, “equally likely to patronize the new business owned by the black entrepreneur” (Ogbolu & Singh, 2019, p. 94) while White consumers were more inclined to support White businesses than Black consumers. Thus, the article provided some support to the idea that White people are more loyal to White businesses than Black people are to Black ones. Which leads me to ponder, if we do not support businesses owned by members of our own cultural community, why should we expect others to do so?
In the wake of the COVID-19 pandemic, these disparities have worsened along the color line, manifesting in structural and systemic ways. For starters, many business categories deemed “non-essential” in the State of New York under Executive Order 202.6 included a large share of Black businesses—e.g., barber and beauty shops, caterers, event planners and other service providers. I would imagine this has been part of the reality in other states. This forced many ALANA-owned businesses to put their operations on pause like Ballet Afrikana, the dance preparatory academy my wife and I have owned and operated for the past six years. Others have even been forced to close permanently. “Essential” businesses have been required to drastically pair down operations including retail shops moving to curbside pick-up and limited hours of operation, and food-based businesses confined to take-out and delivery options. Most of the essential businesses and services on the list were not owned by ALANAs.
To offset these effects, small businesses were allow to apply for new unemployment insurance, loan repayment deferrals, and emergency funding programs. Many of these programs presented their own mix of structural and systemic challenges. One bar-restaurant owner I spoke with indicated their employees who worked “under-the-table” were unable to take advantage of unemployment insurance benefits, while the owner was now able to. Even in a thriving economy, many of these businesses are unable to provide under-the-table workers with formal employment. Many small businesses are also afflicted by the Digital Divide, resulting in an inability to successfully apply for funding and other support services online. They lack a sufficient web presence for consumers who shop online, and for those who have retooled to increase their online presence, there are yet many consumers who still prefer to do business offline.
Loan deferrals are helpful to businesses who previously benefitted from accessing capital from public and private sources. However, in order to have qualified for many of those programs during good times, some funders require businesses to be situated in a brick-and-mortar establishment within a commercial corridor. These policies are exclusionary to home- and web-based businesses, food truck and cart operators, and those who render onsite services, but lack physical locations within commercial districts. Many traditional and new funding programs require business plans, collateral-contributions, established banking relationships, and the know-how needed to navigate bureaucratic processes. These are some of the major reasons why 90% of the rural, women and ALANA-owned businesses failed to access more than $370 billion in combined small business set-asides under the federal paycheck protection program. And too many small businesses so preoccupied with working in their businesses, that they fail to pivot to working on their businesses. Albeit, with little support, few successful exemplars, and often no working knowledge of the first step of the process.
Let us keep in mind that racism is a public health crisis with economic consequences. The racial pandemic and corresponding civil unrest has reminded people of the vital importance of supporting Black businesses. Last year, members of Gamma Iota Boule Foundation’s economic development committee worked with Black businesses to form Greater Rochester Black Business Alliance, Inc. (GRBBA). Amid two pandemics, GRBBA partnered with Rochester Hispanic Business Association, Rochester Professional Consultants Network, and the Mayor’s Office of Community Wealth Building to organize successful small business forums online to educate Black and Latino businesses about the array of support services and resources available.
Our community is tired of Black suffering, especially at the hands of racist police officers, racially oppressive policies, practices, and systems. Black-Owned Business Rochester (www.bobrochester.com), a virtual economic development resource, received over 50,000 new visitors, media coverage, and new submissions bringing the directory to over 500 listings in the wake of George Floyd’s assassination. The platform is now being rebuilt to respond to a number of user recommendations. Other regional activities include the recent launch of the Rochester Financial Empowerment Center (www.rochesterfec.org), which provides free financial counseling to individuals and businesses alike thanks to the joint efforts of City of Rochester and Consumer Credit Counseling Services of Rochester.
Small businesses are the lifeblood of thriving economies. In order to realize equitable growth and social inclusion, we need ALANA-owned businesses at the table. Not only do they contribute to regional and national productivity, they create jobs that support consumer spending, generate tax revenues, support homeownership, lower crime rates, and mitigate the social determinants of health. So, let us not let these two pandemics go to waste. We must channel more of our productive energy and resources to support women and ALANA-owned businesses without asking for a discount. This requires us to be intentional, strategic, and persistent. But, not only during the hard times posed by our “new normal.” To sustain our momentum and collective impact, we have to make doing business with our own cultural communities a priority during good times too.
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Biography:
Lomax has 17 years of experience in business, higher education, and government. His expertise includes management, ethnic psychology, urban entrepreneurship, economic and workforce development. He holds a Doctor of Management from University of Maryland Global Campus and an Executive MBA from Rochester Institute of Technology.
References:
Ogbolu, M. N., & Singh, R. P. (2019). Studying consumer ethnocentrism as a factor for depressed rates of Black entrepreneurship. Journal of Business Diversity, 19(5), 88–99. doi:10.33423/jbd.v19i5.2647
