Disposable income in the black community is still on the rise. Black buying power today is $913 billion strong and is predicted to reach an all-time high of $1.2 trillion by 2013. Yet, studies show that African Americans spend only five cents out of every dollar with black-owned businesses.
â€śThere is a tremendous need for African Americans as a community to reevaluate their spending strategy to direct more dollars toward black-owned businesses,â€ť says Thomas Boston, a BE Board of Economists member, CEO of Atlanta-based consulting firm
EuQuant, and professor of economics at Georgia Tech. He explains that concentrating annual black spending on black businesses would strengthen those enterprises, which in turn would aid the development of black communities.
â€śOn average about 70% of the workforce of a black-owned business in black,â€ť for example, he says. â€śAnd for every $100,000 of revenue that a black-owned business generates, that accounts for one additional job in that city.â€ť So, â€śwhen you are supporting those businesses, you are also helping to provide employment within the black community.â€ť
Boston points out that a significant number of black-owned businesses are located in urban areas. Of the companies owned by African Americans that he surveyed which had contracts with the federal government, a little over one-third where located in low-income areas where the poverty rate was 40% or higher. In cities such as Philadelphia and Baltimore, black businesses based in urban markets were even greater at 76% and 60%, respectively.
But thereâ€™s more to â€śbuying blackâ€ť than heading to a black-owned store in a local neighborhood. Seek out enterprises through such resources as the B.E. 100s lists. BLACK ENTERPRISE magazineâ€™s annual ranking of the nationâ€™s top black-owned industrial services companies, auto dealers, commercial banks, advertising agencies, asset managers, insurance carriers, investment banks, and private equity firms. The National Black Chamber of Commerce reaches 100,000 black-owned businesses and is dedicated to the economic empowerment of African American communities. Some 190 affiliated chapters are based in the U.S. and international affiliate chapters are based in Bahamas, Brazil, Colombia, Ghana, and Jamaica.
You can also champion black businesses by encouraging your employer to buy products and services from African American-owned firms. Find out about your companyâ€™s procurement policies, especially as it relates to programs designed to increase the number of minority vendors. Does your organization have formal programs for goal-setting, measuring, reporting and achieving supplier diversity goals?
Try to identify contracting opportunities for black firms and make recommendations to senior management. If you control a budget within your company, you can make an active effort to request bids from black firms.
Boston adds that it is equally important for African American businesses to do business with each other. So, if you are an entrepreneur then look to enhance your business to business relationships with other black-owned enterprises, which could include your banker, lawyer, accountant and supplier.
Launching your own enterprise to fill a niche in the marketplace is another way to support black business. â€śYou want to be careful to start up a business that is going to require a lot of capital up front,â€ť says Boston, especially in this environment where credit and lending is harder to come by. â€śYou donâ€™t want to drain your resources that you set aside for a rainy day.â€ť
The biggest obstacle you face may be lack of knowledge and experience in running a small business. To help overcome that hurdle, you can turn to SCORE Counselors to America’s Small Business, a national nonprofit organization that specializes in helping people start and maintain their small businesses by offering counseling and resources free of charge. A SCORE mentor can help you weather the recession and come through it a strong company.
Many small business owners have gone through SCORE for help with cutting costs, getting capital, streamlining operations and finding new customers. SCORE offices across the country are staffed with volunteer experts who have experience in finance, accounting, management, marketing and strategic planning. SCOREâ€™s Website also has feature specific content for such groups as women, minorities and young entrepreneurs.
â€śOpportunities are out there. Even if you are employed, you should look at starting a sideline business as a safety gap,â€ť suggest Boston. â€śAnd if you recently lost your job, while you are in the labor market searching, investigate the type of self-employment activities that you can do to make extra money.â€ť
Further Reading: Wealth For Life Principles
1. I Will Live Within My Means
2. I Will Maximize My Income Potential Through Education and Training
3. I Will Effectively Manage My Budget, Credit, Debt, and Tax Obligations
4. I Will Save At Least 10% of My Income
5. I Will Use Homeownership as a Foundation For Building Wealth
6. I Will Devise An Investment Plan For My Retirement Needs And Childrensâ€™ Education
7. I Will Ensure That My Entire Family Adheres To Sensible Money Management Principles
8. I Will Support the Creation and Growth of Minority-Owned Businesses
9. I Will Guarantee My Wealth Is Passed On To Future Generations Through Proper Insurance And Estate Planning
10. I Will Strengthen My Community Through Philanthropy