According to the 2016 State of Women Business Owners commissioned by American Express OPEN, there are an estimated 1.9 million African American women-owned firms in the United States, employing 376,500 workers and generating $51.4 billion in revenues. Between 2007 and 2016, the number of African American women-owned firms increased by 112% – more than doubling in number and far out-shadowing the overall 45% increase among all women-owned firms.
Black women-owned businesses range from home-based to less traditional women-owned businesses in construction, engineering, and technology. Many new and growing businesses don’t have access to capital, contracts, or the ability to reach the markets that will support expansion of businesses.
Dr. Julianne Malveaux, Economist and President Emerita of Bennett College for Women, said in the recent Black Women Leaders Accessing Capital workshop during the 46th Annual CBCF Legislative Conference, “Black women have to start thinking bigger with a business growth mentality.” Having a home-based business does not mean you cannot think beyond the walls of your home for better opportunities to build wealth and create jobs.
While there is significant growth in Black women-owned businesses, access to capital funding remains a disparity. Business growth depends on a variety of needs, from seed funding for establishing new firms, to working capital and business loans to expand businesses, to private equity for acquiring and merging with other firms. Without adequate capital, minority-owned firms will fail to realize their full potential. Recognizing the disparity in capital access, equity, and financial investments, we must seek alternative methods as well as become savvy in thinking ahead to our long-term needs when we obtain loans.
Some things to consider when seeking capital investments are:
- Obtaining assistance from agencies that provide financial and technical services, such as Minority Business Development centers, which have national networks and direct access to lending organizations and corporations.
- Researching non-traditional lending sources to include grants, crowdfunding, micro loans, Internet-based lending, and business invoice factoring.
Developing relationships with lending officers in smaller banks.
- Supporting Black-owned banks.
- Considering non-traditional women-owned businesses with programs that assist with funding. Jenell Ross, President of Bob Ross Auto Group in Detroit, says there are many opportunities in the automotive industry that women do not seek and suggest a resource for more details is gmwomensretailnetwork.com.
- Joining organizations that have direct contact with supply chain networks where you can meet corporate diversity managers and government agencies. The National Supplier Diversity Council has offices in most major cities. They have been effective in supporting and integrating minority-owned businesses into corporate and private sector supply chains.
The most important access to capital is getting out and “beating the pavement.” You have to put in the extra work. Preparation is a viable tool and education is the best preparation. Staying abreast of the trends in your industry and long-term planning supports success in acquiring capital. Remember, entrepreneurship is power and we can’t afford to leave power on the table because we lack opportunity.