Black entrepreneurship on the rise amid COVID-19 pandemic
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Vendor Tiffany Spears talks about Blacktoberfest on Saturday, October 30, 2021. The festival featured over 100 Black-owned vendors, as well as food and entertainment.
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For Tiffany Coker, the lowest point in her life came in September 2020.
A single mother of two, she had no car, no job and was within 30 days of being deported.
She had been looking for work for months, she said, but without success; and his unemployment benefits had ceased the previous month.
“I literally can’t do it,” said Coker, thoughtful. “I had to make a change and do something, or I was going to be on the streets and that was never an option.
“So it was like good, what am I doing?” “
This was a question many people were asking, as reported by the Bureau of Labor Statistics. more than 8.8 million Americans faced unemployment in 2020, in large part because of the COVID-19 pandemic. Black Americans, like Coker, have been disproportionately affected, records the largest drop in employment-to-population ratio.
The answer for many black people: entrepreneurship.
Anita Williams, chair of the board of directors of the Indian Black Chamber of Commerce, which serves black-owned small businesses in central Indiana, said her organization had grown from 248 members in 2020 to 330 in 2021, an increase of 33%.
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This follows a national trend that began in 2020, when a report from the Ewing Marion Kauffman Foundation revealed a 30% increase in black entrepreneurship pre-pandemic levels.
That year, in October, Indy Black Chamber of Commerce launched Chamber 465, the only black-run business incubator in Indianapolis, Williams said.
“We’re looking at something new here,” Williams continued. “The number of black start-ups is higher than ever.”
Take control of your own destiny
Coker decided to take matters into his own hands.
She had seen an ad on Facebook to become a loan signing agent and found that she could use a notary certification she held from a previous job to potentially earn $ 75 to $ 200 per appointment.
She decided she would start a mobile notary business named Harris Consulting Indy.
To get started, she needed additional training, insurance, another license, a printer, a car and at least $ 500, she said – which she didn’t had not.
She couldn’t apply for a bank loan; his credit rating was too low. So, Coker said she sent a private message to 75 friends on Facebook asking for donations of $ 5 to $ 20, and ultimately received $ 1,300.
In her first week of business on September 28, 2020, she drove Ubers to every corner of Indianapolis, worked around the clock and made $ 3,500, Coker said. She was then able to catch up on her mortgage payments and at the end of October she bought a new car.
His company became a limited liability company in 2021.
“I am completely grateful and humbled to be in the position I am in,” said Coker. “God gave me grace and he heard my prayers.”
The difficulty of black entrepreneurs
Reports consistently show access to capital as a major barrier to entry for businesses owned by Blacks and other minorities, which only represent 20% of small businesses in the United States when they represent about 40% of the population.
Sara Cochran, an assistant clinical professor in the Department of Management and Entrepreneurship at IU, believes systemic racism and unconscious bias play a role.
According to Federal Reserve data, black-owned businesses are refused bank loans at more than twice the rate white companies. And a report from the Brookings Institution found that only 1% of black business owners were able to get loans in their founding year, compared to 7% of white business owners.
As a result, “black-owned businesses are in a more hectic situation,” Cochran said.
She also mentioned the delay in generational wealth and disproportionate access to social capital – family or friends who can provide essential mentorship or financial resources – as additional challenges for future black entrepreneurs.
The average net worth of black households is one tenth of the amount of white households, according to Brookings, attributed in large part to the legacy of racism: the “violent massacre” of Black Wall Street in Tulsa, Oklahoma; Jim Crow’s segregation, which lasted until the 1960s; and redlining, which prevented many black Americans from accumulating wealth through home ownership.
“Explosion of entrepreneurs”
Despite these hurdles, reports show that there has been an “explosion of entrepreneurs” in the past 18 months, Cochran said, especially among the black population.
She attributes part of this increase to disproportionate unemployment rates among black Americans, who have lost their jobs by nearly twice the rate of white Americans in 2020, according to data from the Bureau of Labor Statistics. In Indiana, the unemployment rate for Black Hoosiers was 11.1%, compared to 6.4% for the white population.
Oladele Omosegbon, professor of economics at Indiana Wesleyan University, explains it in two words: creative destruction.
“As some jobs are destroyed, new jobs are created,” Omosegbon said.
Because people have the freedom to choose, he explained, whenever the economy suddenly contracts and jobs are lost, the freedom of individuals to find new ways to generate income will often lead to a loss. economic growth in unpredictable but predictable ways.
Marshawn Wolley, CEO of consultancy firm Black Onyx Management, said the decision of many to create jobs for themselves was born out of necessity; the feeling that they had no other choice.
A phenomenon defined as entrepreneurship of necessity.
“Basically they said I have nothing to lose or have less to lose,” Wolley said, “so I’m ready to go out and take that risk.”
He added a growing concert economy, federal stimulus provided by the CARES Act and the largest black civil rights movement in history as additional contributors to growth.
Consumers began to look for other ways to support black businesses, he said.
In 2020: Yelp reported a 617% increase in reviews mentioning black-owned businesses; locally, Facebook groups Indy Black’s business matters and Black Indy Doll launched (the latter bringing together 40,000 members); and Equity creation for Indy.
The sudden influx of community interest and dollars encouraged others to participate, Wolley said.
Experts warn black entrepreneurs must remain cautious
Shana Tate started Brown skinned coffee, a door-to-door mobile coffee shop integrated into the back seat of a Smart Car, in August 2020.
“When COVID hit,” Tate said, “I had to do a twist. I had to be creative.
After being turned down for a business loan twice, she said, to bring her idea to life, she bought two cars with financing from CarMax and used a maximum of two personal credit cards to obtain the necessary equipment. She relied on her friends and family as employee volunteers.
Now, Tate is less than a month away from having his own brick and mortar location at 5724 North Green Street in Brownsburg.
She calls it a “blessing” and believes her success is directly linked to the movement to support black-owned businesses.
The owners of the building offered her a deal that she described as “too good to be true”.
She said they accepted her despite her poor credit rating; gave him the first six months without rent; awarded him $ 55,000 in leasehold improvement allowance for the renovations; and were flexible with the payment of his initial deposit.
“I didn’t think I would be able to accomplish something like this,” Coker said. “It’s monumental.”
However, Omosegbon said recent advances by black entrepreneurs should always be seen as “atypical.”
“We have to be wary of how we got here,” said Omosegbon, “we cannot look at this and say that the barriers that black entrepreneurs face have completely dissolved.”
Sources show that eight in ten black businesses will fail in the first 18 months, he added, vs. around 3 in 10 companies overall, during the same period.
However, what the recent growth of black-owned businesses demonstrates, Omosegbon said, is that if given the opportunity, black entrepreneurs can take advantage of the incentives and opportunities.
“It doesn’t show me we’ve arrived,” Omosegbon said, “it shows me the potential.”
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