Black-owned businesses and entrepreneurship have come a long way in the past few decades. This has exposed the barriers that have stifled black-owned businesses and brought new opportunities to light. The racial inequality that has plagued black-owned entrepreneurship through the years now has many in society acknowledging these disparities and creating new opportunities to help correct them.
Barriers to Black-Owned Businesses
Black owners typically face several barriers, reducing their chances of success in some cases. Some of those barriers have been economic, while others are more related to sociocultural issues. One of the first significant roadblocks for many black business owners is startup capital. Most entrepreneurs know that to eventually be profitable, proper startup capital is typically necessary. Unfortunately, black owners typically face more significant hurdles in securing the capital they need to start up their business properly.1
Some businesses rely on personal savings and contributions from family and community to get the capital they need. With a significant wealth gap in black communities, relying on family and friends may not produce enough capital. Black owners may also face unfair practices when it comes to lending, which may hinder their ability to secure the funding they need to stay in business.1
Often, as a result of bias and exclusionary practices, black entrepreneurs sometimes have less social capital, with few experienced mentors to help them get through the roughest part of the startup stage.1
Opportunities on the Horizon
The need to provide black entrepreneurs with opportunities was well-known as far back as the Nixon Era. While minor strides were made to bridge the gap, such as establishing the Minority Business Development Agency, the need is still there.2
In the effort to create economic justice among the races, many investors and even everyday consumers understand the importance of putting their money into businesses that may help create a change. Because of this, there is a growing movement to patronize and invest in black-owned businesses to lessen the divide and create a more even playing field for competition in the various industries.
Many Fortune 500 companies and government entities are also committing to diversifying their suppliers, which provides expanded opportunities for black-owned businesses that may have been previously shut out.2
While the gap that exists between black-owned and other businesses is far from closed, the growing opportunities to help more black entrepreneurs establish their businesses may hopefully turn the tide.
This material was created for educational and informational purposes only.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
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1Black Entrepreneurship: The Opportunity Gap Explained, Forbes, https://www.forbes.com/sites/forbestechcouncil/2021/02/05/black-entrepreneurship-the-opportunity-gap-explained/?sh=58c2a7b6d89c
2Removing the Barriers to Black Business Success, Black Voice News, https://blackvoicenews.com/2016/08/31/removing-the-barriers-to-black-business-success/