Recent Study Says Black Entrepreneurs Strive For Business Success Despite Challenges
Whether in success or in adversity, Black entrepreneurs keep fighting to flourish, despite facing a challenging business climate. A new study shows some encouraging signs, as almost 70% of Black business owners recently surveyed reported they are either breaking even or making a profit with their enterprise.
Yet the owners are vulnerable to economic challenges and emergencies, as 80% have less than three months’ worth of cash reserves, and fewer than one in three possess just a few weeks worth of those resources.
The latest findings were shared exclusively with BLACK ENTERPRISE by the Accion Opportunity Fund (AOF). For its “Empowering Excellence: Building Ecosystems for Black Entrepreneurs” report, AOF received 660 responses from Black entrepreneurs. Examining areas such as entrepreneurs’ business, support, and financial health, the study exposed how owners keep facing barriers impacting their ability to pursue and achieve long-term growth.
Calling itself one of the nation’s top nonprofit small business lenders, AOF reported it originated $113 million loans to 2,421 borrowers in 2022. Over 90% of its clients are women or people of color.
Another top disclosure in the report was that 76% of respondents said access to capital was a challenge. Based on those who have never received money for their business, about 80% reported they either could not find the right support or were unable to pay for services connecting them to the capital.
According to Joshua Miller, AOF’s VP of research and policy, the report shows women respondents were more likely than men to face significant disparities. For instance, they have lower average revenues and less than one month of cash on hand.
The study also revealed that many Black entrepreneurs are looking to start businesses that not only generate a profit but also will have a positive impact in their communities.
“We would all benefit from the boost in jobs, business activity, and economic output they would create,” Miller noted.
To help Black business owners boost access to capital, Miller suggested they seek lenders, including AOF, that have an explicit mission to provide responsible, accessible financing to under-invested entrepreneurs.
He said that many of the lenders provide free coaching services to help business owners improve their financial management and position themselves for successful loan applications. He also suggested researching specific loans or grant programs for minority-owned businesses.
Shanayla Sweat, founder of A Few Wood Men, reflected on how AOF has helped her watch and accessories business.
“I struggled to understand my options in terms of growth and equity and felt excluded from traditional financial institutions,” she shared via email. “I was so glad to have found AOF this year because not only did they provide funding options, but they also provided business advising support that has helped me form strategic and lasting relationships, taking my business to the next level.”
An AOF webinar will take place Oct. 5 at 11 a.m. PDT and 2 p.m. EDT; register here.
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