The number of minority-owned small businesses continues to grow throughout the U.S. In its 2018 National Report, Kauffman’s Indicators of Entrepreneurship reported that the share of new entrepreneurs representing minority groups is reaching 50 percent, almost double what it was 25 years ago.
This is good news for a number of reasons. Black-owned businesses strengthen local economies, foster job creation, stabilize neighborhoods and help reduce poverty. Successful owners create generational wealth and provide education opportunities for their families. Black businesses are historically civic-minded, helping create strong communities through partnerships with churches, schools and neighborhood groups.
Unfortunately, studies also find that black-owned businesses face disproportionate challenges in starting and sustaining their operations. Lack of capital, access to financing and capital readiness are hardships many minority entrepreneurs face. Because of their urban locations, many black businesses have higher insurance premiums, are subject to city taxes, have a difficult time retaining employees and lack the resources to develop a wide customer base.
For these reasons and more, it is critical that we all advocate for black businesses – both in our personal and professional lives. Consider minority businesses for all of your personal spending – everything from tax preparation and high fashion, to handmade goods and fine dining.
As business leaders, we must stand up programs that help minorities become business owners. I’m proud of DEGC’s Motor City Match, which has launched more than 100 brick-and-mortar businesses in the city, and another 300-plus home-based businesses in Detroit. With our partners, we’re relaunching a procurement program that certifies Detroit businesses and connects them with local and national buyers. Additionally, our philanthropic partners provide financial support for programs aimed at closing the gaps that impede business growth.
There is no overstating the importance of black-owned business to our continued development and growing the black middle class in Detroit. While 35,000 Detroiter’s have moved out of poverty since 2013, Detroit Future City reports that the city’s middle-class population lags behind the region, state and all major U.S. cities.
Frederick Douglass once said, “Who you give your money to, is who you give your power to.”
In Detroit, the nation’s largest black-majority city, people of color must be represented at all levels – especially as business owners. We all have a role in making that happen.
Kevin Johnson is the President and CEO of the Detroit Economic Growth Corporation