We live in a world where there’s an increased focus on minority-owned and -operated businesses, and that’s a good thing. More than ever, people are looking to support and recognize these companies as essential to our economy and the heart and soul of our nation’s traditions. They represent the fact that hard work and dedication can bring success, and they represent the essential cultural diversity and inclusion that makes the United States great.
It’s equally important, however, for a Black-owned business to seek support from a multicultural marketing agency. Let’s look at some statistics regarding Black-owned businesses, why it’s so important for people to support these companies and how the right Black marketing agency can make all the difference.
An Overview of Black-Owned Businesses in the US
Recent data indicates that 2.2% of the more than 5.5 million businesses in the United States are Black-owned. While this is a disproportionately small share, the numbers are on the rise. An even more interesting statistic is that 36.1% of all Black-owned businesses are owned and operated by women. Black women, in fact, show the highest ownership percentage compared with men in any racial category.
The distribution of businesses owned and operated by African Americans is also telling: 32% of all African American-owned businesses are in the health care and social assistance sector, 13% are in technical, professional and scientific areas, and 8.2% are in administration, support and waste management. Of these, 53% of health care and social assistance businesses are female-led, while only 38% of professional, scientific and technical businesses are female-led.
Numbers on the Rise
The good news is that the numbers, while still disproportionately small, are on the rise. Between 2002 and 2017, the number of Black-owned businesses increased by 31.2%, while the African American population increased by just 16.7% over the same period. The raw numbers show there were 94,518 Black-owned companies that had employees in 2002 and 124,000 in 2017.
As a smaller snapshot, in the five years between 2007 and 2012, the number of Black-owned businesses increased by 34.5%. There were 1.8 million companies that were sole proprietorships or otherwise without employees in 2007 and 2.5 million in 2012. (Full numbers for the 2002-2017 period aren’t available for this demographic.)
Finally, self-employed workers (also known as gig economy workers) who don’t work for an actual incorporated company make up 5% of working Black Americans. Overall, the total number of Americans who make up the self-employed sector is around 0.6%.
A Strong Employment Force
Black-owned businesses generate over $150 billion in gross sales across the country. While fewer than 125,000 have employees, those that do have workers employ almost 1 million people across the nation. Among these businesses, 7% have 10 or fewer employees, while 38% have up to 5 employees.
By comparison, 38% of businesses across the nation have up to five employees, and 12% employ up to 10 workers. The numbers also show that 34% of African American business owners founded their companies because they were looking to be their own boss, and 44% started their companies with their own cash. By comparison, 37% of businesses overall were started with the founder’s own cash.
Unique Challenges of Black Businesses
Black businesses face unique challenges. They tend to get less funding and are approved for fewer loans. When they are approved for loans, Black businesses often pay much higher rates. There is a very real and clear racial funding gap. While 80.2% of white business owners get some form of loan or other bank funding, only 66.4% of minority-owned businesses can say the same. This figure includes not just African Americans, but all people of color.
Furthermore, the amount of funding given to BIPOC (Black, Indigenous and people of color) business owners is, on average, $30,000 lower than that given to white-owned businesses. BIPOC business owners also see 1.4% higher average interest rates. These numbers are highly discouraging; in fact, they are so discouraging that nearly 38% of all Black business owners don’t bother to apply for loans because they assume they won’t get funded. Only 1% of Black business owners get a business loan within their first year of operation. In the end, this leads to an average startup capital for African American companies of $35,205, while white-owned businesses generate an average of $106,720 in startup capital.
Why It’s Important To Support Black Businesses
All of this leads to a razor-thin margin between failure and success for Black-owned businesses. It’s more important than ever for people to support these companies to ensure their success. Black-owned businesses can be a strong, driving force in the economy and can help fight racism and normalize diversity and inclusion across the board. Just a few other reasons why it’s vital to support Black businesses include:
- Closing the wealth gap
- Driving local economies
- Aiding in job creation
- Celebrating culture
- Holding big business accountable
Closing the Wealth Gap
We’ve already discussed the wealth gap between Black-owned and white-owned businesses. There’s also a measurable wealth gap between people of color and white people in general. This dates to the Jim Crow era of discrimination and racist policies like the Social Security Act of 1935 that ignored domestic and agricultural workers, many of which were African Americans. The median wealth of white families is roughly 12 times that of Black families.
Black businesses tend to employ diverse workforces and offer higher rates of pay for their employees. Supporting and increasing the number of such businesses with diverse practices helps to address this disparity. There’s a long way to go, but supporting Black business is a strong start. Placing these businesses in high demand raises their profits, and that in turn drives up employment and wages.
Driving Local Economies
When a local business thrives, the community benefits. The disparity in bank loans and funding makes this more difficult for BIPOC-owned businesses. The U.S. economy is driven by consumer spending, which accounts for 70% of the gross domestic product (GDP). More spending directed toward Black-owned companies can help elevate entire neighborhoods. It’s estimated that nearly 50% of small business spending goes back to the local economy.
Support for Black-owned local small businesses benefits employees, families and even other business owners in the same community. This in turn can make investors like lenders see that there is a reason to invest in the area, which will help to address the loan discrepancy.
Aiding in Job Creation
It’s not a stretch to point out that when a business sees high demand, that business sees higher profits and ends up needing to hire more help. In short, making a Black-owned small business successful means they will need more employees. Black entrepreneurship, if properly supported and driven, creates jobs in a community.
Any successful small business offers a good or service that’s essential or in demand in a given community. That means that businesses serve the culture of their neighborhood and community. Supporting Black businesses not only celebrates African American culture but normalizes it, which can go a long way toward combating institutionalized racism. Whether it’s a Black-owned clothing store, cosmetics shop, hair care store or children’s toy store, these businesses celebrate the richness of African American culture and uplift their communities across the board.
Holding Big Business Accountable
By spending money on these businesses that actively elevate and celebrate culture, you’re not spending money at big chain stores that want to offer a homogenized view of the United States, ignoring what makes us unique and diverse, and painting us all as exactly the same. Look at the number of companies that have recently been taken to task for their patently insensitive and sometimes outright racist products and ad campaigns.
Supporting local businesses owned by people of color holds these big businesses accountable for their behavior; the best way to vote, as they say, is with your wallet. Even more, however, supporting Black small businesses leads directly to more Black-owned big businesses as small businesses become successful and grow. This is perhaps one of the most important reasons to support African American small business operations: to increase diversity and inclusion and hold big business accountable for their actions.
What a Black-Owned Company Can Do To Get Noticed
The biggest challenge for any business, and minority-owned companies in particular, is getting noticed. It’s all well and good to hang a sign out on Main Street and wait for customers to come in, but in this day and age, the internet drives almost every business. You need to be out there to be found, and getting your name out can be tricky.
There are a number of things you can do to get noticed, but in the end, the right African American marketing and advertising, from a strong website to the right social media marketing, is going to be essential to your company’s success.
What Can I Do Myself?
Start by setting up social media accounts on Facebook, Twitter, TikTok, YouTube and Instagram. The greater a social media presence your company has, the more likely you are to get noticed. Never get involved in social media wars, know the difference between being socially conscious and getting into political flame wars, and stay away from hot-button topics like religion.
Because many businesses have a political agenda, being socially conscious and delivering your message is vital, but social media isn’t the place to hash it out with people you don’t know; it can, if nothing else, hurt your business. Keep your posts light, fun and in some way related to your business offerings. Don’t shy away from your message, but remember that your goal is to bring people through the door.
Next, get your business listed on every app you can. Certainly, the mainstream resources like Google and Yelp are essential, but also look to sources such as:
- Support Black Owned
- Black Nation
- Official Black Wall Street
- I Am Black Business
- And others
Finally, invest in the services of a Black marketing agency. The right Black advertising agency can help get the word out there in ways you haven’t considered and can help you with your online presence. Best of all, they can help you focus on what you do best: getting your product or service out to those who need it.
What Can an African American Marketing Agency Do for Me?
The right agency focused on Black advertising and marketing can make all the difference in driving your company’s success. It’s important, however, to find someone who can get to know your business, who understands who you are and what you do, and knows how to build a campaign that speaks of authenticity.
Being authentic is in a lot of ways even more important than raw visibility. That’s because while visibility gets you seen, authenticity converts leads (those who see you) into regular customers who come in and decide to stay. An authentic campaign inspires your audience as well as catching their attention. It doesn’t transparently market to BIPOC consumers, because it doesn’t have to. For a Black-owned business, just marketing honestly will achieve that goal.
Make sure that the company you choose understands that honesty and authenticity go hand in hand. Be sure that they can apply those concepts to your business and are willing to get to know you and your company to create the best campaigns possible.
Constant Collaboration Is Vital
Too many ad agencies will take a glance at your website, offer up a few tweaks and then run with their ideas of what you need. That’s possibly the worst way to start such an important relationship. True collaboration simply isn’t a common thing. You need to find a Black marketing agency that will put ego aside and work with you to find marketing solutions that are unique to your company.
Sharing Your Vision With the World
The right multicultural marketing agency knows how to share your vision with the world. Your journey together is a relationship that is built on a foundation of trust and transparency. You’ll get to know each other and overcome a world of tough obstacles and hurdles, but in the end, it’s about driving diversity and inclusion, never exclusion. Authentique Agency is an LGBTQIA+ and African American owned marketing agency that understands the target audience, timing and the art of delivering at the right time. To learn more about who we are and what we do, check out our website and get in touch with us today.