See the big picture before jumping into business

There’s no denying that small business ownership is on the rise amongst African Americans. In Minnesota alone, people of color have become the fastest growing demographic in the state, according to a 2017 survey by the Aspen Institute in Washington, D.C.

Black business ownership, along with its benefits — financial freedom, legacy, self-empowerment — is not a new conversation. How people are approaching it is.

“The landscape has definitely changed,” said Nerita Hughes, dean of business, technology, career, and workforce development at North Hennepin Community College.

Just a generation ago, she said, the thinking was to go to school, get a degree, and “position yourself for a corporate job or a job that’s going to see you above and beyond ‘let’s just pay the bills,’” she explained.

Now she’s hearing, “‘I don’t want to have to work for somebody else and build somebody else’s empire. I want to be able to build my own. I want to be able to utilize my skills and take it to the next level.’”

It is also easier to start a business now than ever before, said Uzoma Abasi, Minnesota Black Chamber of Commerce (MBCC) president, about the boom in ownership. “You don’t need to pay a lawyer thousands of dollars to set up your LLC. You can go to a website, for instance the State of Minnesota [website], and set it up yourself,” said Abasi.

“A lot of the barriers to starting a business have gone down, and that’s allowing us to not feel like it’s not for us. When you see someone that looks like you doing something, it makes it okay for you to do it.”

Hughes said that access to information is the biggest paradigm shift. She reports seeing an increase in Black students, especially women, seeking advice for launching businesses post-graduation. “They are not necessarily wanting to pursue and confer their degree to get this bigger and better, greater job. It’s more so to [get] collateral and credentials to validate [their] business.

“They know that once they get out there and they start trying to brand themselves, the first thing people are gonna jump to is credentials: What validates you to do what you’re doing? That is not the conversation that we were having, I would say 10, 15 years ago.”

Black women account for nearly 60 percent of all Black business ownership and, according to a 2015 report by American Express, have seen a 322 percent increase in ownership between 1997 and 2015.

“The growth is empowering,” said Abasi. “Everyone talks about how quickly the Black dollar gets circulated outside of the community. But, being able to see that Black face when you walk into Golden Thyme or wherever it may be that you visit and you spend your dollars, it’s empowering to know that you took a step in the right direction at correcting those headlines.”

Just celebrating the creation of a new business, however, doesn’t fund it or keep it going. “The idea of me having my own, I think we take that idea and run with it,” said Hughes. “But there’s also the other factors that come with it.

“That is definitely a shift of people realizing ‘I need to be looking at everything,’” This includes the greater picture of ownership, feasibility and market analyses.

“Who else is doing what you’re trying to do?” Hughes asked a student who was exploring business options. “What’s going to make you stand out? What’s your value proposition? What’s your brand? It was almost like the light bulb went off.

“The average business we know is going to fold or flourish in five years; but for us [African Americans], it’s less than five years, because we’re already somewhat starting off [with] a deficit.”

The rates of survival are skewed. Some research shows that just 20 percent of new businesses survive past their first year of operation. The Small Business Administration (SBA) says it’s 50 percent, with close to 66 percent of those who remain? making it through their second year. That’s easy to track for a restaurant or other brick-and-mortar enterprises, but what about pop-up shop vendors and freelancers?

Despite an increase in ownership, Black-owned businesses account for less than seven percent of all businesses, although Blacks make up 13 percent of the population. That is due in part, said Abasi, to Black businesses lacking access to a funding network.

“When it comes to start-ups, [the biggest challenge] is having that capital,” said Abasi. “So, we end up with businesses that take little capital to start and get stuck in the same industries.”

Many small businesses also report a lack of knowledge of educational services and resources.

“There are a lot of organizations where people like us don’t know they exist,” said Lili Hall, CEO, and president of Knock Creative Agency, who is a client of the Metropolitan Economic Development Association (Meda). She told MSR contributor Judith Hence she learned of the organization while working with another Meda client.

“When you start a business, your head is in the sand and you’re just trying to survive,” said Hall. “You don’t know what you need.”

Meda’s services include a Mini-MBA program, along with other services designed to help create growth strategies, navigate paperwork, and avoid common stumbling blocks.

Abasi said the MBCC is a viable resource, as well. “We provide business education, we have a loan fund, and we provide business and sponsorship opportunities for all members,” as well as advocating policies for businesses.

He said the chamber is also in the midst of finalizing a plan to provide more service and marketing opportunities, including revamping its business directory. “We want to create a model for the nation.”

Hughes frequently refers students to resources via the Northside Economic Opportunity Network (NEON), where she sits on the board. NEON provides entrepreneurship training to help build and support businesses owned by lower-income Northside residents.

“They have what’s called TAB [Thinking About Business] workshops and give you some idea if [business ownership] is the route that you want to go. And they can speak more from a holistic perspective…and you actually will have a business advisor [and talk through] how are you designing your business. What are some of the things that you need to know? So if you don’t have a clue or if you’re not even thinking about that, then how are you going to start something?”

Hughes also refers prospective entrepreneurs to the Minnesota Department of Employment and Economic Development, which has resources to promote business recruitment, expansion, and retention.

“I try to give them as much information that they can have up front as they’re thinking about it, versus ‘I’m going to jump in with both feet and sink or swim.’”

For more information about the resources mentioned, visit:

NEON at neon-mn.org

Minnesota Black Chamber Commerce at minnesotabcc.org

Metropolitan Economic Development Association at meda.net

Minnesota Department of Employment and Economic Development at mn.gov/deed