Thriving international communities and shopping districts around the country offer no apologies for being exclusively for and by their own. Chinatown, a well-known international attraction in the city of Houston, goes as far as to have street and store signage completely written in Mandarin. While businesses attract shoppers from all around the state, this bustling community could survive on the dollars of it’s own members alone and they work to keep it that way, creating a small, country-like infrastructure around the community where the specific needs of the people can be met.
The same goes for countless ethnic communities around the country that position local businesses as integral parts of the communities they serve. But while you might expect African Americans to have a model relationship with its business owners, that hasn’t been the case, leading many economists to question why the minority population with the largest buying power in the country doesn’t have a small business economy which is reflective of that. Unlike Hispanic, Asian, and even African immigrant communities whose members almost exclusively support their locally owned businesses, Black American communities are constantly debating why Black businesses want to make money off of Black people. My question is why wouldn’t they?
It’s no secret that entrepreneurship is a challenging endeavor regardless of who’s crazy enough to pursue it. In a study by Statistic Brain which explored the Startup Business Failure Rate by Industry, the failure rate of all U.S. companies after five years was over 50%, and over 70% after 10 years. It’s easy to take for granted just how many new businesses don’t survive simply because we’re bombarded by images of the few that do. The road to entrepreneurship is often riddled with rags to riches tales like that of Sam Walton, the Oklahoma veteran who took a local convenient store and created 11,000 Walmart stores in 28 countries. Rarely do we hear about the local entrepreneur who recently shut his or her doors due to declining sales and increasing overhead costs, and this can make escaping collective accountability that much easier. The reality is that small businesses don’t survive without the support of the communities around them, often operating without marketing or advertising budgets, the surrounding community can sometimes be their only reachable demographic. That fact makes it even more strange that Black businesses that target Black consumers in Black communities have a higher rate of failure than non-Black businesses in the same communities.
While we overlook the correlation between the lack of thriving small businesses and our poor performing communities, we continue to promote the idea that small businesses are the backbone of the U.S. economy. How ironic. According to a recent analysis, small businesses inject jobs and revenue back into local communities while helping to spark innovation and provide opportunities for women, minorities, and immigrants. In other words, communities are empowered when they empower local businesses and entrepreneurs. So how do we explain our decision not to?
One common argument centers around the collective inadequacies of Black businesses. A viral video of comedian Jess Hilarious discussing why she doesn’t support Black businesses sparked debates across the country. While some agreed with Jess, that dealing with Black businesses comes with higher prices, unprofessionalism, and unpredictability, others weren’t so quick to condemn Black businesses due to a few bad experiences, and rightfully so. Sure, some businesses have problems with time management, customer service, and inventory management but at the root of most, if not all, of these issues is a lack of capital. Whether we’re talking about home loans, personal loans, car loans, small business loans or any other type of major bank financing, it’s common knowledge that Black Americans have been systematically discriminated against and unjustly denied funding or given higher interest rates, coinciding with the 80% of surveyed Black entrepreneurs who said that lack of capital was their greatest challenge.
According to ProjectDiane, only 0.2% of all venture capital funding was allocated toward startups founded by Black women in 2016, while just 34 Black women business owners received more than a million dollars of funding in the last year. Capital doesn’t just solve the inventory/supply problem, it provides funding for training and professional development, it hires and screens staff, it’s marketing and advertising and covers general upkeep. Knowing this, how realistic is it to expect local Black businesses to measure up against well funded big box stores when 93% of them are self funded. We know our local mom and pop shop is cash run and could never price match a CVS or Walgreens. We know our nearby Caribbean restaurant can only afford to buy ingredients one week at a time and is more likely to run out of menu items than a chain restaurant who can not only buy wholesale, but store large quantities in state of the art equipment. We know our only Black nail salon faces supplier discrimination when purchasing from Asian suppliers and therefore must charge more for services. We know all of this and still we complain anytime a Black entrepreneur breathes a word of self promotion in our direction. So maybe the problem is bigger than pricing and business hours, maybe it’s about trust.
As a community, we’ve proven that we can keep small businesses afloat. The run down, overpriced liquor store, the Chinese hole in the wall, the neighborhood bar that’s claimed so many lives no one knows how or why it’s still open. Black people, if nothing else, are going to spend money. So why is it we reject the opportunity to spend with each other? A 2013 study conducted by The Boston Globe found that customers increasingly supported businesses they perceived to be trustworthy, which has presented an unavoidable obstacle for Black business owners. Black people have been unjustly stereotyped as conniving, sneaky, and dishonest for centuries, but stereotypes like these aren’t just accepted by those on the outside, they’re internalized by those on the inside. We talk about the Black community distrusting law enforcement, healthcare, politics, the judicial system and every other institution that’s been used to disenfranchise Black people in this country, but rarely discuss our casual distrust of one another. No matter how many times McDonald’s forgets our apple pie or puts onions on our cheeseburger, we trust that when we give them our dollars they will give us an equal good or service. No matter how many negative encounters we have with Asian nail salons, we continue to trust that when we give them our dollars that they will give us an equal good or service. But when it comes to our own, we question the value, we scrutinize the pricing, and we challenge whether or not we’re being taken advantage of as if the likelihood of it happening increases based on the complexion of the owner. We carry these negative assumptions with us as we work, as we socialize, as we spend, unknowingly hindering our own growth while screaming for improvement.
Black business owners are out to get your Black dollars, yes, and they should be. But they are not out to get you. We have to have a real conversation about what underlying issues keep Black businesses from thriving in the midst of Black communities where our dollars are constantly leaving our hands. Unprofessionalism and poor customer service haven’t kept us from supporting any of the other minority and white owned businesses that zap our communities of wealth and resources, and while we should absolutely voice our dissatisfaction, we shouldn’t withdraw our support. It may be tedious at first, but if we’re going to spend anyway, we should consider spending with ourselves first. Not because we’re doing another Black person a favor, but because we prioritize supporting our community. We should trust our local Black business owners the we trust sellers all the way in Guangzhou, China to send us 100% Brazilian hair off of AliExpress. We should support local Black business owners the way we support athletes and celebrities whose successes have no direct impact on us or our communities. Black businesses are not the predators we need to be on the lookout for, they’re the pillars on which most longstanding Black communities have built themselves on. Black businesses want and need Black dollars, and nothing should deter us from giving it to them.