February is designated as Black History Month in the U.S. to honor the achievements of Black Americans. Among the accomplishments to celebrate is the rise of Black-owned businesses. However, despite progress made, Black business owners still face significant challenges. According to the U.S. Census Bureau’s 2021 Annual Business Survey, an estimated 140,918 Black-owned businesses have employees, earning $141.1 billion in annual receipts and employing 1.3 million workers. But Brookings reports that Black Americans comprise 14.2% of the population but own only 2.3% of all employer firms. Additionally, about three million Black-owned businesses operate without employees. In total, there are approximately 3.12 million Black-owned businesses generating $206 billion in annual revenues and employing 3.56 million workers.
Intuit QuickBooks recently published a report about the Black entrepreneurial experience in America, revealing that Black business owners must navigate racism and biases that threaten their success. The report found that 79% of Black business owners experienced racism from a customer, with 48% reporting a racist customer interaction in the past year. Moreover, 86% believe their businesses face more critical judgement than non-Black-owned businesses. Black business owners often behave differently in customer and vendor interactions to avoid negative racial stereotypes. A considerable motivating factor for 94% is the desire to disprove racial stereotypes. However, 46% of Black business owners who advertise their businesses as “Black-owned” think it could deter non-Black customers, despite a temporary surge in consumer support following the murder of George Floyd and the Covid-19 pandemic.
Access to funding remains a significant issue for Black-owned businesses. The Intuit QuickBooks report reveals that 57% of Black business owners were denied a bank loan when starting their businesses, compared to 37% of non-Black business owners. Analysis shows that an average of $5,000 more is required for Black entrepreneurs to start a business than their non-Black peers ($21,000 versus $16,000). Although it could take over 200 years to close the Black-white wealth gap, 73% of Black business owners surveyed are optimistic that the gap will significantly decrease in the next 100 years.
Black-owned businesses are critical to thriving Black communities, according to 75% of the Black entrepreneurs surveyed by Intuit QuickBooks. To support community growth, 55% of Black entrepreneurs want more mentoring from other Black business owners. However, 44% of Black business owners did not have a mentor, and 56% were self-taught. Black entrepreneurs want easier access to funding, as 40% don’t believe they’ll ever achieve equal access to capital. Moreover, 75% of Black business owners believe they have to work harder to achieve the same level of success as their non-Black peers.
Despite the challenges, however, all three reports found Black business owners to be optimistic about their businesses’ present and future success. Some Black business owners have been successful in obtaining the necessary capital needed to execute their visions, and they are hopeful that the success of these entrepreneurs will support and nurture the next generation of entrepreneurs in their community. Goldman Sachs’s 10,000 Small Businesses Voices is calling for more significant change, asking Congress to reauthorize the Small Business Administration to improve access to capital and financing options for Black-owned small businesses and simplify the certification process for minority-owned business programs. Goldman Sachs says that modernization could help Black businesses thrive.