Revenue helps the world go around. And the pandemic gave E-commerce a huge boost. But although small businesses took a hit, resilience is pushing a steady comeback. Providing financial services and guidance, organizations are helping to set up small Black businesses for success.
It is no doubt that small Black businesses are the one demographic most affected by the pandemic. As Black businesses face financial hindrances such as lack of lending, smaller earnings and a need for better money-management skills, financial stability and literacy continues to be the name of the game. The loss of more than 400,000 Black businesses has a drastic effect on the strength of the Black economy. Weakening an already slighted community, the pandemic also helped to shine a light on problems with access for minorities.
To counteract economic hardship in neighborhood businesses, programs like the Paycheck Protection Program, or PPP, were established but left Black firms out. Locked out by terms of the program, an inability to establish relationships with banks or credit unions, proper business documentation and other limitations, small Black companies accounted for less than two percent of PPP recipients during the program’s first round. Not seeing much improvement, Black businesses were still shut out during subsequent rounds.
Despite the restraints that attempt to hold them back, Black entrepreneurs and their small-scale companies continue to persevere and are poised to return full force.
The loss of Black businesses creates a financial vacuum in its neighborhoods. In numerous instances multiple streams of income are required for some small business owners to make ends meet.
“The impact of small business stretches farther than many may realize. Small businesses account for half of the jobs in the City of Detroit. Additionally, part-time businesses or side hustles as they are often called, provide much needed supplemental income for many households in Detroit and can often increase the economic mobility of our city’s residents,” says Pierre Batton, executive vice president of Small Business Services for the Detroit Economic Growth Corporation.
Personal finances also play a role in financial stability in small businesses. Used to determine loan eligibility and credibility, personal financial standing can drive business finance opportunities.
“Personal finances are a huge factor in the long-term viability of a business. You have probably heard that 90 percent of small businesses don’t survive five years. That isn’t necessarily because the business goes bankrupt or isn’t making money, but the owner may not be making enough money to pay their personal bills or make it worth their while. They may make the decision to move on for another money-making opportunity,” says Mark Kwiatkowski, founder and president of Detroit Financial Coaching.
Visibility of Black businesses is a key factor in revenue. Unable to afford classic marketing, Black businesses are at a disadvantage in reaching a new audience. SCORE, launched in 1964, is a coalition of volunteers in the business and entrepreneurial sectors helping small businesses thrive behind the scenes. As marketing and the ability to afford financial coaching can hinder a business, this organization provides free resources to business owners to gain mentorship in various aspects of small business ownership. For Black businesses, this level of access could be a game changer.
“For years, small business owners have reported that marketing to successfully find customers is one of their top challenges,” says Candice Stennett, vice president of marketing for SCORE. “SCORE offers a wealth of free resources to help business owners become successful marketers, including webinars, e-guides and customizable templates, all of which are accessible through www.score.org.”
Recently, Governor Gretchen Whitmer announced a $650 million plan, as a part of a larger $2.1 billion proposal, to support and grow small businesses. As Black businesses have been shut out of previous financial endeavors, owners are hoping this time will be different.
“A thriving Michigan requires a transformational economic development strategy to advance our state’s competitiveness in a global marketplace,” said Sandy K. Baruah, president and chief executive officer of the Detroit Regional Chamber. “The Chamber continues to advocate for strategically investing American Rescue Plan funds to create the growth-oriented business climate necessary to be leaders in talent development and attraction, small business support and innovation.”