Struggles For Black Business Owners
Starting a small company is always a challenge. If you’re a Black entrepreneur, your road to success often comes with some additional obstacles.
The good news is that these can be overcome with proactive strategies, patience, and determination. Yes, it is possible for you to make your passion a career if you take the right steps!
In this article, we will discuss some of the most common problems Black entrepreneurs face and list 7 tips on how to overcome them. We will also discuss some of the strengths unique to the Black community and how you can harness these to effectively market your business.
1. Realize That Money is Not The Only Form of Capital
The average female-owned Black startup raises $30,000 in capital.
While that may seem like a decent amount, statistics also show that the average startup in America is operating off of $5 million in capital. Many small business owners, especially Black entrepreneurs, don’t have access to the family money or types of investors that can provide millions of dollars to get their business off the ground.
Small business owners without generous funding must be creative and resourceful when it comes to starting their businesses. Although raising money is essential, so is investing in yourself and those around you. There are many skills that can be self-taught that will help you avoid a lot of the normal startup expenses, such as web design, the basics of marketing, and other tech skills.
Tap into the expertise of those around you for help, and don’t be afraid to negotiate or barter when it comes to an expense you can’t avoid.
2. Network, Network, Network
Cash-strapped startups often benefit from their ability to connect with their community and put their new business in front of many potential new buyers. Consider joining your local Chamber of Commerce and ask them if they can refer you to any professional networks that can help connect you with buyers.
Here is the best selling tip for beginners: put yourself and your company out there. If your company has a strong digital presence on social media and you make a commitment to attend as many networking events as you can, your business can flourish.
Meeting as many people as you can - either in person or online - could also put you in contact with potential investors, employees, and others who can connect you with more resources.
3. Understand Your Cash Flow Down to The Penny
If you’re a Black entrepreneur that doesn’t have access to large pools of funding, then you need to always be in control of your expenses. That means that you must have a detailed financial plan in place before you start your business. You should have the “holy trinity” of financial documents in order: balance sheet, income statement, and cash flow statement.
- A balance sheet will provide you with a snapshot of how your business is doing at any specific time, taking into account all assets and liabilities.
- An income statement is very similar, although this document focuses more on the money your business has earned versus the expenses you’ve had to pay.
- A cash-flow statement takes into account your operating, investing, and financing expenses without factoring in future incoming/outcoming money on credit.
Accounting is complicated, but there are many resources on the web that can help guide you. It’s not always necessary to hire a professional accountant! One of the most basic fundamentals of business ownership is keeping track of all your invoices. The good news is that there are many web-based invoicing services available that are easy-to-use and can be customized to fit your business needs.
4. Be Patient
Big things take time. Small business owners that accept that “failing forward” is often the only way to progress end up being successful. Your business is like watering a small seed: although it may seem like your efforts are going nowhere, sometimes you don’t see all the progress you’ve made until you see it sprouts.
According to data from the U.S. Bureau of Labor Statistics, about 20% of U.S. small businesses fail within the first year. By the end of their fifth year, roughly 50% have faltered. After 10 years, only around a third of businesses have survived. It’s important to remain patient during the hard times if you want your small business to last.
Remember that rough economic times don’t last - although your customers and clients might not be buying now, they may want to in the future. Keep in contact with all your leads and former customers by running a consistent email marketing campaign. As countless studies have shown, email marketing is still more effective at engaging and converting users than any social media channel in existence.
5. Establish Boundaries with Employees and Investors
When you first start a business, it’s easy to get caught up in the positivity and happiness that comes with your decision. But as we all know, owning a business isn’t all sunshine and rainbows. There will frequently be occasions during which you will have to have difficult conversations with employees, partners, and investors.
Be clear about your expectations with all the people involved in your business and hold them accountable for their role. Prepare yourself for tough conversations with investors and learn how to convince funders for more money during difficult times as a way to propel your business forward. Communication is key, and the more clear you are about your expectations going forward, the more your team can do for your business.
6. Be Adaptable
Dr. Shirley Ann Jackson, an African-American theoretical physicist, was hired by AT&T to conduct research in theoretical physics, solid state and quantum physics, and optical physics. While conducting her research, she invented the technology responsible for Caller ID, a feature now considered essential to modern life. She saw a problem that existed and found a solution for it, and the rest is history.
You have to be prepared to adapt your business and go in different directions in the pursuit of profit. For example, during the global coronavirus health crisis, many restaurants and gym owners had to find ways to pivot and continue providing value to their customers under new laws and restrictions. Sometimes changing tracks is not only necessary, but the way to lead your business to new heights.
7. Never Forget That You’re The Boss
Changing circumstances and new market trends will hopefully result in your business trying new things. However, never let anyone convince you to do something with your business that you don’t feel entirely comfortable with.
Sometimes, as Black a business owner, listening to your gut entrepreneurial instincts is the best move you can make. Never lose sight of the fact that you understand your business best - after all, you’re the one who has invested so much time, energy, and money in it! It’s always best to listen to the advice of others around you, but ultimately you are the decision-maker. After all, isn’t being your own boss the best thing about owning your own business?
We hope you’ve found this article useful in navigating the unique challenges of Black business ownership and keeping the Black entrepreneurial spirit going strong!