Mitchell, president and CEO of Washington, D.C.-based Industrial Bank (No. 8 on the BE Banks list with $382 million in assets), knew that while the bank hadn’t been involved in the subprime market, there was no way it could remain unscathed. A lot was at stake. Industrial is a third-generation family business that was founded in 1934 by Mitchell’s grandfather, in the midst of the Great Depression. The 49-year-old Mitchell wasn’t about to let it fail now.

But the economic climate at the time of the Great Recession meant nothing was safe. More than 35% of Industrial’s outstanding loans are tied to residential mortgages and home equity lines, 32% are linked to commercial real estate, 20% are with local churches, and 10% with small business loans. As the U.S. continued to hemorrhage jobs, tithing declined in churches, affecting their ability to make loan payments. “We’ve had quite a few problem loans—mostly in commercial real estate—that we’re still working through,” says Patricia Mitchell, executive vice president of sales/operations and sister to the CEO.

Despite these challenges, the bank managed to keep costs low in order to consistently remain profitable—even when the economy was the worst it’s been in a generation. And now, Industrial faces the challenge of increased regulation while eyeing the possible need to consolidate to grow assets and resources.

From Great Depression to Great Recession
In the 1930s, Jesse H. Mitchell was a vice president at Industrial Savings Bank, a black-owned bank that closed during the Great Depression. “So, my grandfather and a few of the people who had been associated with Industrial Savings got together and formed Industrial Bank because there wasn’t any other black-owned bank in D.C. at the time,” says Patricia, a graduate of Drexel University. In the middle of the Great Depression, Industrial Bank opened with $250,000 in assets and 470 shareholders on the corner of 11th Street NW and U, an area in the Shaw neighborhood known as Black Broadway since it was one of the few places where African Americans could go to enjoy nightlife. Over the years, the bank expanded and now has eight locations and 28 ATMs in the Washington, D.C., metro area.

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But that growth hasn’t been without its share of challenges, the most daunting of which came courtesy of a global financial crisis that left banks of all shapes and sizes scrambling to meet liquidity requirements and seeking government aid. “We didn’t think it would affect us as much as it did, but obviously that happened after September 2008, as panic went through Wall Street and the large banks,” says Mitchell. “We didn’t have any exposure to [mortgage-backed derivatives], but as the economy got worse it started to affect areas of our portfolio.”

As unemployment rose, the team began to identify potentially troubled loans as quickly as possible to ensure that the bank had the proper reserves. They began reappraising property—since values declined so sharply— and took write-downs on properties that were underwater. To ensure that borrowers could keep making payments, they contacted them and renegotiated terms.

“We’re still attempting to do modifications for some of our borrowers and shore up where we can,” Mitchell says, “but we’ve made provisions for loan losses.” Funds that would have gone toward the bottom line were reallocated, and reserves for bad loans were increased to $2.5 million in 2009, $2.1 million in 2010, and are likely to reach $2 million for 2011. “That’s a lot of money, but fortunately we did it before the examiners made us do it.”

But other measures needed to be taken as well. For example, vacant positions at the bank weren’t immediately filled. “We stopped officer bonuses, executive management bonuses.
We froze salaries for executive management,” says Mitchell, a graduate of Rutgers University. “We did everything we could to get through this. It didn’t feel good, but we have employees who understand that these are tough times.”

Financial results took a hit, but Industrial stayed in the black. Profits for 2008 totaled $1.8 million. For 2009, a year when many banks posted losses, Industrial netted $77,000. By 2010, profits grew to $303,000, and 2011 is forecast to come in at around $1 million.

Regulation Blues
While Industrial Bank deals with the aftereffects of the crisis, it must also contend with stricter regulation. Community banks have to comply with much of the regulation that’s aimed at curtailing the big banks that received bailout funds. But these smaller institutions, unlike the big banks, often struggle to secure the manpower and financial means they need to ensure compliance. As a result, Industrial is identifying new revenue lines.

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The traditional banking model is simple: Consumers deposit funds that a bank lends to businesses or other consumers while collecting fees for ATM use and other services. According to the Mitchells, Industrial is considering selling insurance and investment products, or offering such fee-based services as financial planning. Consolidation is also on the table. “We want to do an acquisition because the bank needs to be larger,” says Patricia. “There’s thousands of dollars in new compliance costs as a result of the new regulations, and the only way to absorb a lot of that is to grow. We are currently in a strategy to raise capital that will, in turn, lead to an acquisition.”

How to Obtain Bank Financing for Your Business

While small business loans slid 4.1% from 2009 to 2010, there was still some $310 million that banks extended. So while credit may be tight, capital is out there. But what do banks look for these days before extending a small business loan? “I think a lot of people have the impression that banking is rocket science,” says Douglas Dillon, senior vice president of commercial lending for Industrial Bank. “But even non-bankers can understand the basics.” He says banks look for the following criteria:

• Strong historical cash flows. A banker will first examine your income statement and bottom line, and then add back a few things that are fairly essential to the cash flow analysis, such as depreciation, a noncash expense. They’ll use the business’ interest expense to come up with a rudimentary cash flow number. “That’s important because bankers just want to have an idea of your capacity to repay their loan,” says Dillon.

•  A good debt-service coverage ratio. This is the ratio of cash available for debt servicing to interest, principal, and lease payments. The banker will calculate this by adding annual net income with amortization/depreciation, interest expense, and other items, and dividing that sum by the borrower’s loan principal, interest payments, and lease payments. “This is the key ratio that most bankers are going to look at,” Dillon says. He notes that most banks consider a debt-service coverage ratio of 1.20:1, or 1.25:1 to be very good.

•  Core financial strength versus just operational strength. Dillon cites loan applications from two restaurants, both of which look good operationally. “One has a little bit stronger following—both serve good food. But one negotiated a lease with a rent that’s below market and has low annual escalations. It’s also in an excellent location with major tenant improvement allowances from the landlord. Plus, it’s secured a contract, so some of its revenue is assured. The second did a good job establishing a financial foundation, but not as good as the first.” As a result, while both have operational strength, the first one also has a more established financial foundation.

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•  A solid credit score. There’s no getting around the fact that banks will look at the majority shareholder’s credit history. “It’s important to know your credit score. If it’s lower than 660 or 680, you need to start thinking about ways to improve it, if at all possible, before you walk into the bank,” says Dillon. “Now, if you don’t have a 660 credit score people may still take a look, but it makes it a bit harder. At some banks, your personal credit score for small business is one of the key determinants of whether the bank is willing to lend or not. That’s not necessarily the case with us, but a credit score is an indicator of ability and willingness to repay personal debt.”

•  Collateral. The C-word isn’t something many small business owners want to hear from a banker, but according to Dillon, collateral can come into play right behind cash flow in terms of importance. It is even more critical now as banks continue to try to mitigate risk. “We need to have a secondary source of repayment behind the operating cash flows of the business,” Dillon says. “That can be hard to find these days, so we sometimes use Small Business Administration guaranties to make loans where collateral strength is minimal. We’re utilizing the SBA’s CAPLines line of credit product and actively seeking out clients that need lines of credit. The SBA has made the product more attractive to lenders, and it helps mitigate some of the collateral concern so that we don’t necessarily need a 100% collateralized loan.” 

(Image: ThinkStock)

Before the last of the Thanksgiving leftovers have even been gobbled up, the big announcement came that retailers just enjoyed their “biggest Black Friday ever!” Rather than hit the gym to work off those yummy candied yams and pies (pecan, apple, sweet potato… Oh, my!), Americans raced to…. the malls! Or, they just sat back at home, scratched their full bellies, and chugged antacids as they shopped online, getting their Cyber Monday fix on early. The final tally? More than $50 billion in total sales for the “holiday” weekend, up from $45 billion last year!

Major network news correspondents, otherwise credible financial analysts, and so-called money-honeys of all genders, sizes and hues, treated this bit of shopping trivia like it was a great big Christmas present! Despite still outsized unemployment, foreclosure, homelessness, and national debt statistics, legitimate journalists actually posed the question: “Does this mean our economy is finally turning around?”

I love Christmas (and a killer sale) as much as anybody, and I hate to be a Scrooge, but bah, humbug, and let’s be serious, folks! The fact that 227 million of us opted to go out and shop the day after Thanksgiving (and the day after that, and the day after that…) is an indicator of little else other than the fact that it’s what we’ve been successfully conditioned to do—even in the face of crisis. In fact, especially in the face of a crisis!

After all, isn’t that exactly what we were urged to do by none other than then-president George W. Bush in the immediate aftermath of 9/11? He didn’t suggest that we batten down our financial hatches in preparation for the colossal war bill we’d be facing, or that we collect goods from our already overflowing closets and cupboards to help sustain those with less in our communities, or to send to troops and their families. No. He said, go out and shop!

And we did.

Then, we kept on doing it. For the last decade, we have spent money and racked up debt at record levels—and why wouldn’t we when at every turn, when the economy has stalled, disaster has loomed, and the so-called great financial minds of the world are thoroughly stumped, they say the same thing: Go shopping.

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(Image: ThinkStock)

This message has been so consistent and all-consuming, that holidays from the most pedantic (President’s Days) to the most frivolous (Halloween) to the once most holy (Easter) have become little more than consumer-fests. And technology has taken this all over the top. Forget store catalogs and paper sales circulars; retailers begin their constant assault of sales promos in October and they don’t stop until the holiday clearance racks have been emptied in mid-January. My email inbox overflows with them, as does my phone, which delivers no fewer than three texts a day with “special” sales codes and “exclusive” deals. There is no avoiding it, or the mark it leaves on you whether in the time it takes to view and delete items, or the I’ve-gotta-have-it desire to not miss a grand shopping opportunity. For better or worse, the retailers approach works!

So, I got to thinking, what if we were able to duplicate their very successful strategies in the areas of our lives that truly need improvement? Those areas that wouldn’t just benefit us individually, but collectively, as communities and as a nation? Here are a few ideas that quickly came to mind:

• Education: What if all private schools from nursery through college offered a buy-one-get-one-free deal so that if you pay full price for one child to attend, the next child goes for nothing? You’d get four diplomas for the price of two, six for the price of three and so on. It would encourage family unity and institutional loyalty, and it would enable more families to educate multiple children without breaking the bank.
• Volunteerism: The point of volunteering is, of course, to give of your time for giving’s sake. But what if we incentivized things like teaching prison inmates to read, leading fun activities at eldercare centers, or maintaining community gardens and parks? What if for every 20 hours a month you spent donating your time and talents to the betterment of your community you received an income tax rebate or a post-graduate tuition discount or a gift card for a free checkup that you could use yourself or re-gift to someone who has no healthcare insurance?
• Health: Ever watch The Biggest Loser? It’s incredibly inspiring to witness the morbidly obese overcome years (in some cases, lifetimes) of poor eating and exercise choices and towering self-doubt in a 13-week television season. But let’s be clear about their motivation: Cold, hard cash. One of the greatest cripplers of our economy are our nation’s healthcare costs and they keep climbing higher, as all that ails us keeps getting worse, even as we live longer. Wouldn’t it be cheaper to actually pay people to get healthy? The looming threat of stroke, heart disease, disability and premature death if you don’t get healthy has made little impact. But what if you received a text today guaranteeing you an actual cash prize if you did get healthy? How much would it take for you to make some key changes in your lifestyle? Probably less than you think.

I could go on, but you get the idea. A great education accessible to the masses, stronger, more interactive communities, better physical and emotional health, these are truly the gifts that keep on giving. We just need a better marketing plan—and maybe a few cash incentives—to get the message across. We could start by putting the Thanks back in Thanksgiving. Clearly, we’ve got the giving—and getting at a bargain—part down.

This Saturday, November 26, has been designated by American Express as Small Business Saturday for the second year. Observed on the first Saturday after Thanksgiving, this is a campaign to get consumers to devote at least some of their holiday shopping budgets to spending with small businesses.

As I did last year, I enthusiastically support Small Business Saturday and commend American Express for establishing this tradition and others for promoting it, especially because we are all looking to small businesses to take an even greater role in driving our economy and creating jobs. But I’m going to challenge you to go one better: Use Small Business Saturday as an occasion to spend with Black-owned small business. These are the businesses most likely to create jobs where they are most desperately needed, in the urban communities that are suffering from the highest levels of unemployment.

The positive economic impact of spending more money with Black-owned businesses is well established, most recently by The Empowerment Experiment, the project of Chicago’s John and Maggie Anderson, who followed through on a commitment of devoting an entire year to spending only with Black enterprises. One conclusion of the experiment: If Black households with annual incomes of $75,000 and higher increased their spending with Black-owned businesses from 2 percent to 10 percent of their total spending, it could create up to one million new jobs in Black communities.

For us as consumers, this represents a major opportunity to support  Black entrepreneurship, which is predominantly comprised of small businesses. Don’t forget small businesses based in low-to-middle income communities in rural and urban areas. Be willing to spend in nearby neighborhoods that may have been hit hardest by the recession. I urge you to celebrate Small Business Saturday by spending as much as you can with small Black-owned businesses. Who knows? Perhaps you’ll be inspired to make this little “empowerment experiment” a new resolution for 2012.

Watch below to see which Black-owned businesses folks are supporting this holiday season

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It’s official, recession or not, Americans are going to be out in full force shopping and spending on Black Friday, the day after Thanksgiving. If you’re one of the 74 million consumers expected to open your wallet for the official start of the holiday gift-buying season, follow these tips to score the best Black Friday deals—and to avoid several financial pitfalls lurking on Black Friday.

HOW TO FIND THE LOWEST PRICES

First, here are a few pointers on how to get the best bargains, no matter what you’re buying.

Tip #1: Let Technology Be Your Guide
You could run yourself ragged driving all over town trying to find the best deals come Black Friday. Or, you could take the safer and saner route and let technology save you a lot of time, trouble and money.

Two of the best ways to use technology for holiday shopping are:

• 1) Sign up for deal websites that blast promos, new ads and special offers. Two good picks are Dealnews.com and 2011BlackFridayAds.com. Simply supply your email and these sites will tell you about new deals as retailers announce them.
• 2) Download various shopping apps to your mobile phone. This way, if you’re already out at a store, you can find any special deals, coupons or other bargains you might not have discovered on your own. Many retailers now offer their own apps, so check your favorite stores. But some of the best all-purpose, holiday-shopping apps come compliments of TheFind, Coupon Sherpa and FatWallet.

Tip #2: Ask For a Price Match
Have you been scouring Websites, tracking local circulars and advertisements or visiting stores in search of the best prices on clothing, holiday toys or electronics? Well, if you see something you want at one store but you’re shopping in a different establishment, always ask the manager or even a store clerk if they’ll match a lower price you’ve found elsewhere.

In many cases, you have to provide proof of a cheaper price, in the form of a published ad. But if you do show that a competitor is offering the same goods at a lower price that will almost certainly net you a price match from most merchants on Black Friday.

Tip #3: Don’t Be Afraid to Negotiate
For some reason, when consumers see a price listed in black in white, they automatically accept that price as “gospel.” But there’s nothing that prevents you from asking for an even lower price. Believe it or not, many retailers are eager to do deals and move inventory on Black Friday, so they’ll take 5% or even 10% extra off the lowest listed price based on any number of factors.

The most common things that will get you an even lower price are: if you offer to pay in cash, instead of credit; if you’re buying in bulk or are buying more than one item (especially high-priced goods); or if you’re interested in getting any merchandise that’s slightly damaged, irregular, or is part of a retailer’s floor model.

Tip #4: Use Those Coupons
There’s no shame in shopping with coupons, especially if you’re buying expensive merchandise. So when you walk into a retail store, always ask if they have a coupon book, or a circular that highlights goods on sale or merchandise for which you might use a coupon. If you’re somewhere that is offering a coupon and you don’t have one, ask the manager for one. They’ll often have extra coupons on hand, or will simply ring up the discount for you.

This happened to me recently at the Kohl’s store near my home. My family had a coupon for 15% off everything in the store, but my husband had it and he wasn’t with me. I tried to get him to scan and email it to my phone so I would have the bar code on the coupon to show the manager or cashier. But when the email didn’t come in, due to poor phone reception, the manager simply went in the back and found a 15% coupon for me. That single moved saved me more than $40 off my bill—and reminded me why I love shopping at Kohl’s.

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(Image: ThinkStock)

WHERE THE DEALS ARE

Now let’s talk about which retailers are offering big “door buster” sales and other in-store promotions on Black Friday. If you’ve got kids, Toys “R” Us is probably high on the list of places to hit. And this year, for the first time ever, Toys “R” Us will open its doors at 9pm on Thanksgiving night.

Meanwhile, a slew of other stores, including Best Buy, Gap, Kohl’s, Macy’s and Target will all be open for business at midnight.

In fact, all this week, each of these retailers is currently offering pre-Thanksgiving specials with discounts averaging 20-40% off regular prices. It’s the latest in the trend toward earlier and earlier Black Friday deals. So much for waiting until the traditional 5am rush at WalMart, which will also have its own bargains on display early, and is opening at 10pm on Thanksgiving.

Most retailers don’t officially release their Black Friday deals until the day before Thanksgiving. But if past trends hold true, deals of 50-70% off will be common.

THE FREEBIES AND DEALS WAITING IN YOUR WALLET

No matter which stores you hit, there may be another way to purchase holiday gifts without actually dipping into your savings account or using your credit cards. It’s by cashing in rewards points that you may have racked up based on your past spending.

According to a survey called the Capital One Rewards Barometer, 75% of consumers are unaware that some credit card rewards issuers offer special deals during the Black Friday shopping frenzy. And since only 16% of those polled plan to redeem rewards for holiday gifts this season, this suggests that many Americans on a budget may be underutilizing this rewards points-for-gifts option.

AVOID THESE BLACK FRIDAY TRAPS

Now that you know how and where to nab those rock-bottom deals, be sure that you don’t blow it financially by getting sucked into two Black Friday “deals” that are best avoided.

The first so-called deal to avoid is the extended warranty or insurance plan that retailers will be offering left and right. If you buy any electronics, household appliances or gadgets, you will definitely be pitched relatively expensive insurance (10% of more of the purchase price) to “protect” the product. Such coverage is generally a bad deal, so you should just say “no” to it and not waste your money.

Besides, your credit card may offer you some extended protection. Also, if the merchandise you buy does have problems down the road, chances are the insurance you’re being encouraged to buy won’t replace the item with a brand new product, but only with something of lesser value or a refurbished model.

The other financial trap you need to be aware of on Black Friday is the proliferation of retail store credit cards you’ll be offered. Invariably, some nice lady or cashier ringing up your purchases will ask: “Would you like to save 10% off your purchase today?” Again, your answer should be “no.”

Store credit cards carry higher interest rates than do national brand cards, such as a Visa or MasterCard. Additionally, every time you apply for a new department store card, that triggers a “hard inquiry” on your credit report, which lowers your credit score.

So, do yourself a favor and follow these tips for enjoying Black Friday shopping that doesn’t bust your budget—and doesn’t hurt your credit rating either.

Watch below to see which Black-owned businesses folks are supporting this holiday season

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Though the U.S Senate recently voted against President Obama’s $447 billion jobs bill, everyday workers — employed and unemployed — still find ways to push forward, with persistence, faith and a will to remain positive by any means.

Despite continuously devastating setbacks, many professionals are finding motivation within themselves to triumph over the woes of unemployment. One of those is Marc, 32, a bachelor who managed to recently regain momentum after being out of work for two years.

THE DAY EVERYTHING CHANGED

When Marc went to work on February 18, 2009, he assumed it would be business as usual. He’d worked for one of the nation’s leading telecommunications companies for nine years, moving from a customer service rep to manager of large business accounts.  With a team of 13 staff members, Marc took pride in his career and enjoyed his work.

Though others had been laid off in the company, Marc was sure that he was safe and even joked at times that he’d be with the company forever. As a young, single professional with no kids, Marc was often the go-to guy for special projects and big accounts. His experience and ability to work long, late hours often resulted in more work, especially since so many others had been laid off.  When he was called into his boss’ office that day, he assumed it was to discuss a new project — until he saw another colleague leave in tears.

Marc was given 30 days notice of his termination.

Completely shocked and unprepared, Marc had no idea of what to do next.  He had never been unemployed and had spent almost of all his adult years working for a company that no longer needed him. For the first year, in a state of denial, Marc decided that he’d make the use his severance pay and unemployment insurance to  vacations, spend time with family, and live an adventurous stress-free life.  “I did all the things that I could never do because I was always working so much.”

A WAKE-UP CALL

Marc was in no rush to get back into the job market until the day his mom gave him a much needed wake-up call.  “She asked me how long I was going to live like this.”  This was the just the reality check that Marc needed especially since his money had begun to run out.

It had been years since Marc had been on the job market, and he honestly thought it wouldn’t be that difficult to find a new job.  “I never had a hard time finding work in the past. I didn’t think it would be this difficult.”

After a few months of sending out tons of resumes and even going on several interviews, Marc got no job offers. The intensity of being unemployed at the height of the recession began to take a toll on him. He found himself at a disadvantage because he never completed his bachelor’s degree. “I had friends with master’s degrees who also couldn’t find a job. So, I knew if they were having a hard time, it would be even harder for me.”

There was a slight gleam of hope when Marc took a position with another major telecommunications company in March 2010.  However, after three months he realized he couldn’t afford to keep the job because the cost of the commute was actually more than what he was being paid. He was once again back to being unemployed (this time with no unemployment insurance) and had become very discouraged. “There were days that I didn’t get out of bed until 4 p.m. I guess you can say I was depressed.”

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GETTING BACK IN THE GAME

There was one place that he’d always had a desire to be more involved in but didn’t have the time to fully devote to: church. Deciding to become more active, he began helping to develop his church’s community development corporation, lending his planning, creative, and technical skills to improve and spearhead much of the organization’s projects.  “I felt like God was telling me to put Him first.  When I had a job, I didn’t have time for the church. Now was the time to give back.”  As a result of his work with the church, Marc was asked to do work for other individuals and organizations which helped to bring in some income.

With the faith and support from his church, family, and friends, along with a new stream of income coming in, Marc got motivated to get back out there. He began getting up early every day as if he were going to work. “Looking for a job was my job.” He began to expanding his net, humbling himself and considering positions that hadn’t previously been on his radar.

Eventually, his hard work and humility paid off. He applied and landed an interview for a position as a dispatcher for a leading medical alert company. After three interviews, Marc was no longer being considered for the dispatch position but was asked to lead the company’s new quality assurance department.

Today, Marc is the quality assurance manager for the company, providing service to elderly and home-bound clients.  Though he doesn’t make as much as he did with the telecommunications company, Marc has a job that he loves and is proud of the work he does to help those in need.

LESSONS LEARNED

Don’t waste time: Marc spent his first year of unemployment traveling and visiting family and friends because he didn’t want to face the reality of being out of work.  He urges others who are unemployed not to put off getting back into the job market.  “The longer you’re out of work, the harder it is to find a job.”  Marc doesn’t regret the time spent with his family, but says if he had to do it over again, he would have been looking for a job at the same time.

Develop a schedule or routine for your day as if you’re employed: The hardest part of going back to work, Marc says, was having to get back into a regular schedule.  After almost two years of staying up late and waking up even later, it was difficult for Marc to get back into the routine of working.  Since looking for a job really is a full-time commitment, job seekers are encouraged to keep the same schedule that they would if they were working.  Fortunately, Marc learned this lesson early on and was able to smoothly transition into his new career.

Education is vital: Marc didn’t realize how significant a college degree was until he found himself out of work and competing with others who had several. As a result, he has registered and is scheduled to return to school in January 2012. With a major in Accounting and a minor in Marketing, Marc is confident that he’ll be in a much better position should he ever find himself unemployed again. Also, he wants to pursue a career in accounting, a skill that lends itself to full-time and freelance opportunities.

Aisha Taylor (@realTAYLORmade) is co-owner and chief consultant at TAYLORmade Professional Career Consulting, a Web-based, full-service career consulting company committed to “equipping, preparing, and empowering today’s professional” globally. Check out her weekly insights on job-seeking and interviewing success every Friday on BlackEnterprise.com.

There are several key factors that contribute to this vast disparity in wealth. The most prominent of factors is past (and on-going) discrimination that continues to plague our economic advancement. Two studies summarizing this fact show that up to 80% of an individual’s wealth can be accounted for by intergeneration material transfers, and that three-fourths of where a person winds up—in terms of wealth—is determined solely by the wealth status of their parents. The Black community—due to the long history of racism, employment discrimination, block busting, red lining, etc.—has not experienced the same economic opportunities that have allowed Whites to amass the substantial wealth that they transfer from generation to generation. But, while the history is clear, there are current obstacles that impede the economic growth of our community.

The culture of spending within the Black community has been one of our greatest economic Achilles heels. Simply put, money isn’t staying in our community. For example, the Asian, Jewish and White communities tend to spend money within their own communities first. These various cultures help and support themselves socioeconomically, in part, by spending money this way.

Another factor is that when members of our community achieve wealth, a dependency often develops between friends, family members and even our neighborhoods on the recipient. Here, the wealth of one is now expected to take care of the wishes, needs and desires of mothers, fathers, friends, cousins, nephews, community organizers and church leaders. This is, of course, in addition to the needs and desires of the one who originally achieved the economic success. As an entertainer, myself, I can personally tell you this phenomenon can reach astronomical levels.

But what is not realized is that in the entertainment industry, earning money is far less straightforward than in other industries. A rapper/producer such as myself may have a multi-platinum record or single out, but it can be months or even years before we see our share of the money. Managers, agents, attorneys, and other such professionals, can easily earn a combined 50% off the top, and that’s before we can even start to think about taxes. Since fewer and fewer musicians are working with major labels these days, we often have to pay for our own studio time, engineering, mixing, mastering and more before releasing our music. We have public relations people, producers, collaborators, and other such professionals, all of whom are depending on us to make their living. Beyond that, if every single number isn’t properly accounted for, an artist can end up in a tax situation with the government that can take years to clear up, despite his or her best intentions.

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For many, receiving a $1 million is a holy grail of sorts. In the music industry, however, that doesn’t go very far. Allow me to show you how, for an artist, seven-figure payday actually works out to be far less:

+$1,000,000 in income:
-$150,000 for talent managers (standard 15% fee)
-$100,000 for agents (standard 10% fee)
-$50,000 for business managers (standard 5% fee)
-$50,000 for entertainment attorneys (standard 5% fee)
-$200,000 for various production expenses (20% fee)

Once you total these basic deductions, you’re left with $450,000. Subtract taxes (running anywhere from 30-40%) from this and you quickly see the further erosion of that initial $1 million, which now nets you about $50-150,000. That’s still a decent sum of money, but nowhere near the amount we started with; virtually $850,000 evaporates off the top.

Over three-quarters of that $1 million is gone before we purchase the cars and homes for moms, the clothes for friends, our own personal items (luxury and otherwise) and even the “10%” tithe to the church. This example shows why it is so important to watch our spending and make every dollar count, no matter how much we’re earning. The question for many is how? Well, here are a few of my personal suggestions:

• Be smart and live for yourself and your family. Don’t to live to show-off and live up to the expectations of what an artist is “supposed” to be. I’m a rapper, actor, and producer, and I like to lead a nice lifestyle, help my family, and enjoy myself, but you’re not going to see me buying a new car every time I have a hit single or movie. People are counting on me to stay on top now that I’ve been blessed enough to make it, and I’m never going to let them, or myself down.
• Hire a top business manager. You need someone that makes sure every cent you earn actually finds its way into your account; and that every one of those cents is accounted for correctly. I know that doing things properly now—with the help of my business manager Adam Yorkshire—is what is going to ensure my financial independence for the rest of my life.
• Educate yourself on your financial matters. Just as important as having a good business manager, is having the knowledge to stay on top of your financial matters. No one should care more about or know more about your finances than you.
• Have a financial mentor. There’s nothing more empowering than being around those who are more experienced than you. Toward this goal, having a mentor—someone detached from your financial success—is crucial in order to “watch those who watch your money.”

In the end, I know who I am. I thank God for the ability to make an amazing living doing what I love, and I know myself enough to know that I need not fall into the common cycle of living beyond my means. Too many young artists—and people of color in general—get their shot, and feel they need to conform to the lifestyles they see portrayed in music videos and on TV. They spend their money on buying an image, instead of hiring the right people, and stashing some away for a rainy day. When you really think about, someone in the entertainment industry is really no different than anyone else working a regular 9-to-5 or running their own business aside from the numbers being be a bit bigger. It’s important for any business owner, or worker, to make smart decisions and spend their money in the right places and on the right people.

If you’re a fan of hip-hop be sure to check out the new coffee table book, Hip Hop, A Cultural Odyssey. To purchase your copy of Hip Hop, A Cultural Odyssey click here and every 10 books sold will result in a copy being donated to a HBCU library.

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According to the United States Bureau of Labor, 9.1% of the labor force is currently unemployed. This rate is significantly higher among African Americans, at more than 16%, the highest among any group in the United States. These staggering statistics reflect the hard reality that so many professionals face each day. With  many qualified, educated, and experienced Black Americans out of work, the job market has become increasingly competitive and hard to navigate.

President Obama’s proposal of the American Jobs Act seeks to alleviate our country’s burden of record-high unemployment rates, but it could be quite some time before many American’s return to work. Even with unemployment insurance extensions, many are finding themselves unemployed longer than the average 2-year period of receipt.

So, what does one do in the meantime? Do we sit and hope and pray for a miracle? Or, do we regain momentum and strive to make the most out of being out of work? While being unemployed can be a very stressful and uncertain time for many, it can also become a time for reflection, rejuvenation, and renewal. With the right attitude, an assertive approach, and immense faith, unemployment can materialize into just the change one needs.

Here, we share the story of Marie, 60, stepped out on faith after losing a job she had for decades to transition into an industry she never even knew she could strive in. Be inspired by her perseverance and the lessons she learned in her journey back into the workforce:

NOT READY TO RETIRE

When *Marie learned that her position with one of our country’s leading insurance firms would be dissolved in 2009, she thought that her life had crashed in an instant. After 39 years on the job, she felt lost, afraid and didn’t know which way to turn. Marie was in no way ready to retire and had several years before she’d be able to collect social security. But for Marie, it was about more than not knowing how she’d survive financially. Marie enjoyed her job and the thought of not seeing or working with people that she had been with for so many years made her quite sad. “We were like family,” she says. “We watched each others kids grow up.” With no college education, Marie was convinced that there would be no place for her in today’s job market. She hadn’t written a resume in decades and couldn’t remember the last time she went on a job interview. She was a pro at what she did at the company, but didn’t feel that she had many skills outside of that job.

After a period of fighting depression, Marie began to regain her courage. She sought the help of a professional career consultant and had her resume professionally prepared. Though she feared rejection, she put her apprehensions aside and began searching for employment. Initially, she didn’t receive any responses from employers and started to feel discouraged. When her unemployment insurance was about to end, she became even more concerned about how she’d survive financially. Nevertheless, she continued to work toward her goal. She began taking computer classes in order to maintain and improve her technical skills. She asked colleagues, family, and friends to let her know about any job openings. She became active with her church’s health and wellness ministry and volunteered whenever she could. Marie was determined to not become consumed by the uncertainty of her future. Instead, she did as much as she could to stay busy and active, all while looking for a new job.

STUMBLING UPON SUCCESS

Besides her career in the insurance industry, there was one other thing that Marie was always good at: shopping. She, like most women, has always enjoyed shopping and often found herself participating in a little retail therapy while unemployed. When she went to return a purchase this summer at one of her favorite department stores, she ran into a young woman from her church who was out for lunch. After sharing her desire to work again, the young woman encouraged Marie to go apply at the very store where she was headed to make her return. Despite her fear of rejection, she took a step out on faith and headed to the HR department. Without even a resume in hand, Marie applied, interviewed, and was hired on the spot as a retail associate at one of the country’s largest department stores. Her infectious personality and winning communication skills landed her a new job, when she least expected it. “I still can’t believe they hired me. I always expected that employers would prefer someone younger.”

The reality is that Marie is the only one who was surprised by her new career in retail sales. “All of the managers, my friends, and even customers tell me that I’m a perfect fit for retail.” Since she began her new position, Marie has regained her confidence and has found a new career that she absolutely loves. “I love meeting new people and I love to shop. I never imagined that I’d find a new job that I love so much.” Marie is one of the most senior store employees, at 60, but she doesn’t let her age get in the way. “I’m just thankful to have a job. I enjoy coming to work and I love helping the customers. I’m just glad that I still have something to offer, even at my age.”

LESSONS LEARNED

Never give up: Though she was faced with a devastating job loss, and had been unemployed for almost two years, Marie was persistent. It’s extremely important that professionals don’t allow a job loss to get them stuck in a rut.

Use time being unemployed wisely: Don’t let your pride get in the way. Marie wasn’t afraid to ask for help. She let everyone know that she was looking for work and her candid approach ultimately led her to her new career. Oftentimes, we are ashamed or embarrassed and don’t want others to know that we aren’t working. However, hiding our need for employment only closes doors of opportunity that might otherwise be opened.

Tap into your passions and try something new: The greatest lesson that we learn from Marie is that we don’t know what we’re capable of until we try. “When I first started, I was terrified,” she says. “I hadn’t worked in almost two years and didn’t want to mess up. But once I got the hang of it, I realized that not only could I do this job, but I could do it well.” Sometimes we can surprise ourselves if we just take the initiative to try something new. Marie’s job loss was a huge challenge…one that she thought she’d never overcome. But with a little patience and much perseverance, she ended up right where she never knew she belonged!

Check us out during the next few weeks where we share real-life stories and lessons on how to triumph over unemployment.

Also, e-mail your job-seeking story or questions to careerquestions@blackenterprise.com.

Aisha Taylor (@realTAYLORmade) is co-owner and chief consultant at TAYLORmade Professional Career Consulting, a Web-based, full-service career consulting company committed to “equipping, preparing, and empowering today’s professional” globally. Check out her weekly insights on job-seeking and interviewing success every Friday on BlackEnterprise.com.

Practice Makes Perfect. You’ve got the 9 to 5 job. Your bills are getting paid, you’re making new friends, but in the back of your mind, you know you want to spend that 9 to 5 writing stories, designing layouts, making clothes–doing something that pertains to the degree you spent four or more years obtaining. So it’s 5 p.m. and you’re on your way home, now what? Free time available after you do your everyday gig should be spent honing the craft you’re most interested in. You like to write? Big on sharing your opinion with others? Create a colorful Tumblr page. You want to show off your design experience? Work on a website or re-construct some of your favorite ads to throw in your portfolio. Hope to be the next Alexander McQueen? Keep those sketches coming and continue crafting unique pieces. Look for freelance opportunities that are flexible, but keep busy. A true hustler uses free time to their benefit to become better at what they really want to do, so intern, volunteer, whatever you do, you better work!

Read more at Madame Noire …

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Brace yourself for stock market activity with all the twists, turns and plunges of the Intimidator 305 roller coaster ride. The roller coaster ride is evident with the impact of the Standard & Poor’s downgrade, which gave the markets the worse day since the financial meltdown of 2008: The Dow Jones industrial average dropped more than 5.5 percent, or about 630 points, while the S&P 500, a broader measure of stocks, plunged about 6.6 percent. Investors fled to the new safe haven of the day: gold, which soared to a record high price of over $1,700 per ounce.

From predictions of a double-dip recession to the unprecedented decision of Standard & Poor’s to downgrade the nation’s AAA credit rating, last week’s market performance left investors queasy. Each major index took a steep vertical drop: the S&P 500 plummeted 7.2%, the Dow Jones Industrial Average tumbled 5.8% and the Nasdaq fell 8.1%.

President Barack Obama was finally able to sign legislation to raise the debt ceiling and avert default by the Aug. 2 deadline. Putting an end to the ugly month-long battle between Democrats and the GOP over deficit reduction, the act did little to move the market.

Nervous investors sold shares responding to reports that American consumers had cut spending for the first time in 20 months and manufacturing barely grew in July. The news came a week after investors became jittery over the Commerce Department‘s announcement that the U.S. economy grew less than 1% for the first half of 2011. To make matters worse, a downbeat economic review from Federal Reserve Chairman Ben Bernanke and fears over a widening European debt crisis contributed to the Dow’s 513-point nosedive last Thursday, the largest point decline since Oct. 22, 2008.  Then Friday the Dow had another wild ride, a 416-point swing as investors in response to the better-than-expected jobs report, progress on the European financial front and news of the debt downgrade, which S&P announced after financial markets closed.

Informing the agency of $2 trillion error in its deficit projections, U.S. Treasury officials stated the miscalculation raised “fundamental questions about the credibility and integrity of S&P’s ratings action.” In a conference call with reporters on Saturday, the agency defended its move, asserting the debt ceiling stalemate demonstrated  “a degree of uncertainty around the political policy-making process which we all think is incompatible with a AAA rating.”

The downgrade from AAA to AA+ could lead to higher interest rates and borrowing costs on everything from credit cards to mortgages. And local governments may find access to funds much more expensive.

It also brings another element of uncertainty to the markets. Policy makers and investors are preparing for even more turbulence. Global exchanges had a negative reaction to the downgrade when markets opened Monday: Major Asian indexes in Tokyo and Shanghai were all down more than 2% after the opening bell. Treasury yields fell as gold hit a record.

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Expect Wall Street to be just as volatile. And this seesaw activity will continue as markets react to every financial event, political upheaval, policy decision and economic report.  But even in this environment, you can still make basic moves to fortify your portfolio and protect assets. Studies have shown that African American investors have a greater tendency to avoid risk and volatility than their White counterparts. As a result, large numbers have pulled dollars out of the market, converting paper losses into wealth-depleting capital losses.

In most cases, it’s costly to get off the ride before it’s over. In fact, turbulent markets and economic downturns can present wealth-building opportunities for strategic investors. The following tips may help you find a smoother, more profitable course:

• DON’T PANIC: Our rule-of-thumb: engage in disciplined, long-term investing. It’s true the past can never fully predict future outcomes but it serves as a valuable reference. Note that the stock market crash of 2008 extended to two months of 2009 before equities began to rebound. Between the Great Recession market low of 6,547 on March 9, 2009 to the post-crisis market high of 12,810 0n April 21, 2011,  the Dow posted a spectacular 95% gain in a two-year period.
• LOOK FOR DIVIDEND STOCKS: With increasingly unpredictable environment, consider purchasing shares of companies that make cash distributions to shareholders on a quarterly basis. These stocks tend to be high-quality blue chips that can provide you with additional cash flow from a yield of 2% to 3% . Also, the capital gains taxes on qualified dividends are no higher than 15%.
• TAKE ADVANTAGE OF 401(k) PLANS: In our recent August issue, BLACK ENTERPRISE CEO Earl G. “Butch” Graves, Jr. stresses the value of contributing to employer-sponsored 401(k) and 401(b) plans in his Executive Memo column. For good reason, it’s a systematic way to build your retirement nest egg.  As many of you know, funds are deducted from your paycheck and you get to invest in an array of investment offerings with tax-free dollars. An added bonus is that in many cases your employer will match a portion of your contribution—the maximum is currently $18,500 per year. By doing so, you benefit from dollar cost averaging—the process of investing equal dollar amounts at regular intervals—which enables you to purchase more shares of quality companies when the stock price drops, a likely event in today’s capricious market.  Since these tax-deferred vehicles are designed for retirement, you’ll face stiff penalties and tax liabilities if you withdraw funds before age 59 1/2.
• GO INTERNATIONAL BUT BE PICKY: In diversifying your portfolio, you should still get some foreign exposure. Among our recommended financial power moves is making investments in emerging markets like China and India through mutual funds. Experts suggest such vehicles represent no more than 10% of your holdings, however.
• GET DEFENSIVE. Identify recession-resistant stocks. Companies in sectors such as pharmaceuticals, personal care, household products, food and consumer staples—products consumers purchase in economies weak or strong—will offer some portfolio stability.

U.S. Treasuries are still safe bets. As the debt ceiling battle in Washington came to a close, I asked Jason Tyler, senior vice president of Investment Research for Ariel Investments, L.L.C. (No. 6 on the BE ASSET MANAGERS list with $5.5 billion assets under management) whether investors should still flock to government bonds as safe havens.  He unequivocally asserted that these securities represent the world’s most solid investment—even with the downgrade. “People hold U.S. Treasuries because there’s extraordinary financial stability underneath it and that’s still the case,” he says, adding that the European debt crisis has made that continent’s securities less attractive. “U.S. Treasuries should continue to be seen as the safest place to park money. At the end of the day, nobody holding U.S. Treasuries is going to lose principal.”

Even though you employ these strategies, the market may still take you for a loop or two. Some days you’ll have to hold on tight. If you stay focused, however, when you return to terra firma, you’ll be richer for it.