One wonders why great African Americans like Clarence Thomas (Supreme Court Justice) and Tim Scott (Senator from South Carolina) are not held up as role models, unlike the polemic reverends, Al Sharpton and Louis Farrakhan.
Tim Scott, by the way, was a successful small businessman in Charleston, running a prosperous Allstate Insurance business, before beginning his national political career. A survey of more than 2,700 small businesses conducted near the end of last year by small business financing company Guidant Financial, an online credit marketplace LendingClub Corporation, found that African American businesses grew by more than 400% in 2018.
One of the most impressive statistics, as mentioned in the graphics above, is that women are entering the workplace as entrepreneurs in significant numbers. The survey found that 38% of African American businesses are female-owned, up considerably from the prior year. As we’ve noted previously, business owners entering the current marketplace are younger than they were generations ago.
With that comes somewhat different business types and desirable outcomes. Yes, they want to make money, but the Gen Z group, in particular, puts an emphasis on doing social good as well. This mindset is shown in a recent HP Small Business Today Study Global Insights Report. It noted the following regarding small business owners:
- 46% take a stand on controversial societal and/or political issues.
- 46% won’t work with other companies if they feel those companies do not support their community or respect their culture and heritage.
- 44% won’t work with other companies if they do not do their part to protect or advance the rights of underrepresented groups.
David Nilssen, CEO of Guidant Financial, stated, “It is exciting to see the growth in minority-owned small businesses, a trend that has steadily been rising since we began our survey in 2015.” America is still the hotbed for entrepreneurs, and they cut across ethnic and cultural lines. Following African Americans, Hispanics were the next largest group of minority small business owners representing 14% of the business owners interviewed for the survey. In addition, Asians made up 8% of the business owners surveyed while Native Americans made up 4%.
The mindset of the entrepreneur is somewhat universal, regardless of being in the majority or the minority. They have the desire to pursue a passion and make a living at it. With that said, the demographic within this minority demographic that is enlightening is the fact that women of all make-ups are entering the entrepreneurial marketplace at record numbers.
There are more female African American small business owners than the average by a solid 15 percentage points. Thirty-eight percent of African American small business owners are women, a big distinction from the average small business owner, of whom only 23 percent are women.
Financing is at the crux of the problem with African American owned businesses. While growing in number, the average black entrepreneur surveyed will say that getting capital for growth is particularly hard. The capital is acquired in familiar methods.
The lending community will likely view this as an opportunity to tap into a potentially lucrative lending market. Supporting African American (or any other minority-owned) business assists the entire economy. For example, minority-owned businesses are more likely to hire minority workers, some of those most affected by unemployment. Let’s make financing available and allow these minority-owned businesses to flourish.