Here are some hair-raising statistics: Some 53% of Black business owners have seen revenues fall by 50% or more since COVID-19 became a widespread concern, compared with just 37% of white business owners.
And this year might not get rosier as 47% of small business owners are not optimistic about their success in 2021. Over 59% are reporting less revenue than originally expected in 2020. Simultaneously, Black business owners are enduring even more severe impacts from the pandemic according to those surveyed. The new findings are from the “Small Business Recovery Series,” an ongoing study by Block Advisors, part of tax giant H&R Block. Black businesses have been disproportionately hit harder by COVID than other businesses.
In a move to help deal with the disparities, H&R Block is channeling support and resources via Block Advisors to Black business owners nationally. A new program—being piloted with the Urban League of Greater Kansas City—is geared at easing pandemic-related strain on those businesses. Among other things, it aims to improve financial management and readiness for small Black businesses and other historically underrepresented groups to gain access to capital.
Ian Hardman, vice president and GM of Small Business at H&R Block, reflected on some of the most surprising study findings to Black Enterprise by email. “One of the most important revelations from this survey was that during a global pandemic, people of color and Black business owners are still among those most severely impacted, specifically as it relates to revenue loss and access to financial services.”
National Urban League President Marc H. Morial stated, “Black communities revolve around Black-owned businesses. When they thrive, Black communities thrive. By offering coaching and financial counseling to Black business owners, Block Advisors are helping to create an economy that is equitable, robust, and resilient for all Americans.”
As part of its program with the Urban League, Block Advisors small business certified tax pros will offer free personalized coaching designed to improve financial management, tax compliance, and bookkeeping and payroll. The effort intends to help business owners gain greater confidence when trying to gain access to capital. Plus the Urban League will offer free credit-building services as needed.
Other findings showed Black business owners, compared to their white and Latinx counterparts, are more likely to report trouble establishing a strong digital presence (46% versus 26% and 36%).
Further, Black business owners are more likely to find in-house or outsourced tax assistance, (76% vs. 69%), bookkeeping (65% vs. 41%), and payroll (44% vs. 18%) to be important factors for their business than their white peers.
On strategies Black-owned firms can apply to cope with COVID this year, Hardman offered some tips:
1. Don’t take on everything yourself
Many small business owners take pride in being able to run everything from operations to payroll to taxes. They’ve built their businesses from the ground up and more and more responsibilities can build up over time as they grow. There is no shame in asking for help and is, in part, why we launched Block Advisors. We want to take the mundane administrative and financial tasks off the shoulders of small business owners so they can focus on doing what they love.
2. Apply for assistance through Block Advisors and Urban League
For Black-owned small businesses, Block Advisors and Urban League are joining forces to offer free coaching and counsel to qualifying owners. We’ll be announcing more about this program and we encourage all those who qualify to apply.
3. Get Organized
The complexity of accounting for expenses associated with stimulus loans or forgiveness requirements can be overwhelming—it requires not only time but also 100% accuracy. Block Advisors can get you through the maze of paperwork and help maximize your readiness at tax time and guide you through your financial options preserving cash flow.
4. Lean into your community
If we’ve learned anything during the pandemic, it’s that we’re able to get through the hardest situations with the help of others. Don’t be afraid to reach out to your community, your constituents, customers, and more for help or guidance. Partners with your local Urban League affiliate or other organizations who have a vested interest in preserving the economic vitality of our collective communities can be a door opener to capital and growth.