What you need to know:
Black Buying power is estimated at $1.3 trillion
Black-owned Businesses face unique challenges
Covid-19 has been devastating for Black-owned Businesses
Less than 2% of Black-owned businesses received a paycheck protection program (PPP) loans
According to a 2018 report published by Nielsen, the Black Buying power in America is estimated at $1.3 trillion. This is a remarkable growth trajectory from $320 billion in 1990. This is almost twice the combined military spending of China, India, Russia, Saudi Arabia, France, Germany, the United Kingdom, Japan, South Korea, and Brazil. With such metrics, one could expect that Black-Owned Businesses are thriving. However, the reality is that in America, Black-owned businesses are most likely to go under. Recent events such as the spread of the Covid-19 pandemic have made things worse. This is despite the fact that new Black-Owned Businesses are being established faster than any other racial group.
Black-owned Businesses face unique challenges compared to other businesses. Most of these challenges are rooted in a history of discrimination - anything Black has automatically been stereotyped as not good enough. Sadly, white supremacy has led this mentality to take root within the Black community, as well as the larger community. It is no wonder that it is harder to keep money circulating in Black communities. It is disheartening to note that despite having $1.3 trillion as buying power; only 2% of this is re-circulated within the black community.
Black-owned businesses are starved of money vital to business growth and expansion. Evidence suggests that even a small adjustment to support Black-owned businesses will significantly empower Black communities. A study by the Kellogg School of Management at Northwestern University established that if higher-income Black households spend on $1 for every $10 at Black-owned establishments; it will directly result in the creation of up to 1 million jobs! Now imagine how much stronger our businesses would be if money circulation within the Black community improved from just 2% to 20%.
Why it is an Urgent concern
Covid-19 has been devastating for Black-owned businesses. A study commissioned by Goldman Sachs established that 43% of black-owned businesses may not survive the pandemic. This is scary, to say the least. Also, the fact that less than 2% of Black-owned businesses received a paycheck protection program (PPP) loans portends a dark future for surviving businesses if immediate help is not received.
For many such businesses, the options for help are limited. Banks could have been the next best alternatives, but Black businesses are less likely to get help from mainstream banks. It doesn’t help that there are very few Black-owned banks with the financial muscle to support businesses in distress. Given the way racism is set up, one of the most feasible and consistent ways for us to steer change is to buy from Black-owned businesses in large numbers. The immediate result of this is that it will inject the much-needed cash to navigate through these difficult times.
Finding and supporting black businesses through a purchase is not rocket science. If you are wondering how to get started, of course, platforms such as the theNilelist.com are a great place to get started. We make finding Black-owned businesses as simple as a search. We’re also building a forum on our site to help get you more personalized recommendations, as well as recommendations, and checking out black business groups for recommendations.
For a better America
Being Black in America is hard. The challenges don’t end with police brutality - they cut across many facets of life, including business. If Black-owned businesses are consistently supported by all, we have a real shot of tackling some of the inequalities that have been the reality of America since its founding. It can be a great tool for ending racism. Buying purposefully with Black brands is a powerful way of saying that things need to change, that Black is normal, and that Black-owned also means quality.
And no, supporting a Black-owned business should not imply racism, nor is it a fad that will slowly fade into the horizon. It means understanding the reality of the society we live in and working to change it for the better. According to a 2020 Brooking Institute report, only 4.3% of the 22.2 million business owners in the United States are Black and these businesses are largely unprofitable with less than 1% reporting a median profit over 20% vis-à-vis the nearly 40% for white-owned business. Moreover, 95% of these businesses don’t have cash reserves to last more than two weeks.
That African Americans are entrepreneurial is without a doubt. Unfortunately, for many, the dreams for success often end too soon because of structural challenges. Whereas business failure is often a result of other well-known factors that cannot be overlooked, it’s the systemic issues that often wreck Black-owned businesses. Now is the time to put words into action. Finding and supporting Black-owned Businesses with your dollars is one powerful way of ensuring that things don’t remain the same.