A call to action: to generate $1.4T in revenue and 5.9M jobs through Black and Brown entrepreneurship!
Entrepreneurship is the core engine of economic growth in any country. It’s responsible for generating the majority of net new jobs in the US over the last 25 years. According to the most recent census and the US Department of Commerce, there are 28M small businesses generating $33.5 trillion dollars in the United States!
- 8M of the 28M small businesses are minority-owned
- 2.6M (of the 8M) are African American-owned
- 3.3M (of the 8M) are Hispanic-owned
These are all wonderful and exciting data points that we can rally around. However, there is a major problem that is not very often discussed.
Based on the same census data, a vast majority of black-owned businesses (96%) are sole proprietorships. See chart below:
In comparison with the Asian- and non-minority-owned businesses, where 2 out of 10 companies within each demographic have paid employees, only 1 in 10 black-owned companies has paid employees.
A company with paid employees encourages growth of jobs and revenue. Envision the scenario where just 2 out of 10 black-owned businesses had 5 employees. This alone would generate 2.6M jobs and an estimated $494B in revenue in the US.Think about what this could do to help reduce unemployment and reverse the growing income and wealth gaps in America. If similar parity is achieved for our LatinX brothers/sisters, it would generate another $871B in revenue and 3.3M jobs. This means a combined addition of $1.4T in revenue and 5.9M jobs to the US economy!
It gets even more interesting! The difference in the amount of annual revenue generated between employer-based small businesses versus sole proprietorship businesses is astounding. See below:
Across all demographics, employer-based firms generate between 4x and 16x revenue than sole proprietorships. There is an urgent need to build scalable, employer-based African American and Hispanic small businesses to drive greater revenue and job creation to the US economy. It becomes even more imperative when you think about the demographic shifts in the US that predict the minority population will be majority by 2044, a mere 26 years from now!
What’s Holding Us Back?
Ultimately the answer is us. However, there are a wide variety of reasons why we have 96% of our businesses as sole proprietorships. Here are my top 7 reasons:
- Historical, institutional and systemic racism especially as it pertains to business loans, equity investments and how business partners/contracts are selected.
- Lack of infrastructure support e.g. lack of consistent and ongoing access to successful serial entrepreneurs, experienced mentors, workshops and stage focused programs.
- Lack of education/know how which causes opportunities to be missed. More incubator and accelerator programs, especially at earlier stages, would provide the required knowledge to build a successful business.
- Our General Mindset of risk aversion. This mindset needs to be altered to think bigger and leverage resources.
- Lack of access to funding which can stagnate the growth of business.
- Lack of access to networks (business and personal) since access to business opportunities and funding is largely relationship based and as a minority demographic, we tend to not be tied into these networks.
- Lack of access to opportunities that hinder us as we lack visibility and platform to take advantage of opportunities.
We, the black community, are aware of these obstacles. We have so many organizations working to address different aspects of these challenges. However, collectively, we need to be doing much better via more intentional collaboration focused on a defined mission for black and brown entrepreneurs!
I am an advocate for the creation of new and better ecosystems that facilitate collaboration with existing entrepreneur ecosystems of all demographics. An inclusive and supportive structure can increase not only the number of successful entrepreneurs of color in the US, but of investors and mentors of color.To the leaders in the entrepreneurship communities, our leadership is needed now more than ever.
A call to action to generate $1.4T in revenue and 5.9M jobs through Black and Brown entrepreneurship!
We can generate this sustainable growth economy in the US by focusing on getting 20% of African American-owned businesses and 20% of Hispanic-owned business to build and/or scale their businesses with employees, which would be at parity with their Asian and Non-Minority (White) peers, starting in 2018.
Here are the next steps in what you can do help us achieve this goal:
- Commit to the Initiative- be a part of establishing a nationwide initiative that creates alignment amongst all people and key organizations that can help drive impact. From corporations to the government, small Business agencies to universities to entrepreneurial focused organizations, we can work in lock step to achieve a common goal!
- Put Your Stake in the Ground- We need to hold ourselves more accountable to the 20% goal every day, every month and every year! All of small business and startup organizations founded by people of color need to instill a new mindset of expectations to ensure that the expectations bar is being raised.
- Establish a more transparent path to scalable business development-Be intentional about who needs to be your strategic partners to create that pathway. Identifying and collaborating with your key partners to establish a pipeline of diverse entrepreneurs will help us identify the gaps in the entrepreneurship pathways.
- Encourage Innovation and Leverage Technology- In modern times, businesses not leveraging technology are going to find themselves falling out of competition and out of their markets very rapidly. We must help more businesses think innovatively and leverage technology more effectively to help them scale and grow their businesses regionally, nationally and globally.
We have identified the problem and the major factors contributing to the problem and now we’re ready to move forward. I believe we have a wonderful opportunity to better collaborate within entrepreneur ecosystems with this defined mission!
Our mission must be focused on building as many scalable businesses as possible and generating an additional $1.4T in revenue and 5.9M jobs through Black and Brown entrepreneurship. We must take on the responsibility of identifying and unleashing the hidden entrepreneurial talent in our communities. We must establish a target goal of 2 in 10 entrepreneurial ventures be employer based and define the consistent path of how to get there. We have to create a mindset shift in the next wave of entrepreneurs to think bigger, be fearless, be passionate, innovative and focus on building businesses of scale.
This can only be done when we come together and work together for the good our our people, our communities and our country!
The time is now! Let’s go!