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Financial News

Jan 28, 2022

Advancing Black-Owned Businesses

By Sarah Netter

Here’s how Black Americans are overcoming bias to build successful businesses

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Kezia Williams is a successful entreprenuer whose passion is supporting, training and promoting other black entreprenuers so that they don’t face the type of workplace discrimination she says she experienced—discrmination that is all too common.

Williams was once a federal government employee with a high security clearance, as well as multiple promotions and professional recognitions. 

About a decade ago, she says she was living the definition of success that was set by her mother, a 42-year federal government employee who was honored by President Barack Obama upon her retirement. 

But the ground fell out from under her, Williams says, when her department changed bosses.

“The new boss that I had was a white woman who clearly was coming into the role with bias. She told me instead of writing these national level security reports, I would now be demoted to organizing travel for the office,”  Williams says, noting that she was the only black woman in the office.

“I did that for three months and then she came back to me and said, ‘I think this is too complicated for you.’ And I got demoted again to making badges for people who visited the office,” Williams said. “Then another three months passed and I was demoted yet a third time and that was to badge people out of the ladies’ and the men’s bathroom.”

That professional fall from grace, as she calls it, led her to quit her job in 2014 and find her passion—becoming an entrepreneur and promoting Black entrepreneurship and Black job creation so that she, and other Black professionals, could break out from having their only income stream controlled by a boss or employer that may or may not treat them fairly. 

Williams, based in Washington D.C., is now the chief executive officer and founder of The Black upStart, a pop-up training school that has trained more than 550 Black entrepreneurs since 2016 in several cities such as Atlanta and Baltimore, and helped secure more than $3.75 million in financing. She also manages United Negro College Fund’s entrepreneurship initiative.

“The people who don’t have capital in a capitalist economy will remain economically weak,” she says. “I think that entrepreneurship is that road to economic independence.” 

That road, however, is a rocky one. 

According to the 2021 Small Business Credit Survey’s report on businesses owned by people of color, Black-owned businesses continue to lag behind white-owned companies and have more acutely felt the effects of the pandemic: 

  • 85% of Black-owned businesses reported a decrease in revenue during the prior 12 months, compared to 76% of white-owned businesses. 
  • 77% of Black-owned companies said that they were experiencing poor or fair financial conditions, versus 54% of white-owned companies. 
  • 67% of Black-owned firms reduced their operations because of the pandemic, while 54% of white-owned firms did the same.

Challenges for Black entrepreneurs

Starting a business is hard enough, but Black entrepreneurs can face additional challenges, biases, and obstacles that their white counterparts do not, including higher interest rates and potential discrimination at traditional banks and lending companies. 

“You ask any small business owner, they would say access to capital is their number one concern. But if you ask an African-American, they’ll say their top one, two, and three concerns are access to capital,” Ron Busby, president and CEO of U.S. Black Chambers (USBC), says. 

Busby says it is common for Black entrepreneurs to be held to a higher standard when applying for business funding, with lenders requiring higher credit scores from Black people than white people. And when they do get loans, often the rates can be much higher than for white-owned businesses, he says. 

In a USBC statement put out in 2020, Busby points to the story of Freddie Lee James Jr., a St. Louis, Missouri entrepreneur who was denied a business loan from a bank even though he had a credit score of around 750 and his product —homemade barbecue sauce —  generated about $200,000 in profits and was sold in 1,000 stores, including major retailers like Home Goods and Hy-Vee.

Overcoming barriers

Williams points to historical Black entrepreneurs, including hair product entrepreneur Annie Malone and bank president Maggie Walker, as inspiration for how today’s entrepreneurs can push through racist and discriminatory practices to create and fund companies, and then hire and train employees.

“There is a Black history entrepreneurial blueprint that Black people could follow and be very successful,” she says, “without looking at other entrepreneurs who are not Black who were successful but didn’t have obstacles of racism and discrimination to overcome.” 

Some major financial institutions are paying more attention to the Black business community, including JPMorgan Chase’s Advancing Black Pathways initiative and Capital One’s training programs on unconscious bias and micro-behaviors. And spurred by protests during the summer of 2020, some banks have responded to criticism that they’ve exercised discriminatory lending practices. For example, Citigroup, JPMorgan Chase, and Bank of America promised to lower fees for Black and minority-led companies seeking supply-chain financing. 

But Busby and Williams say Black entrepreneurs still rely heavily on personal loans or crowd-funding and using their own personal savings as well as loans from Black-owned banks, such as Liberty Bank.

“We have to be resourceful, we have to look harder and we really have to have our information together when we go to these financial institutions,” Busby says. “It is a huge challenge for Black business owners.” 

Shifting Focus in the Black Business Community

While funding and profitability are usually the main focus for entrepreneurs, Black business leaders like Williams and Busby are now spearheading a push further into both job creation and harnessing the immense buying power of the Black community.

Williams says she wants to see more Black entrepreneurs start businesses that create the products and services that the Black community already buys.

We have $1.3 trillion of buying power,” she says, “but we spend that money making other entrepreneurs that are not us, rich.”

Williams says she’d like to start seeing Black entrepreneurs move into the spaces where Black consumers spend the most money, including: 

  • $1.04 billion on non-refrigerated juices and drinks
  • $829.8 million on detergents
  • $152 million on women’s fragrances
  • $136.8 million on cookware

Busby believes the best way for Black-owned businesses to succeed is by supporting Black-owned businesses. And while that may seem obvious, it really requires all consumers to work to seek them out. 

“We do have to take the extra step,” he says. “When we look, we can find.”

To that end, the USBC keeps a searchable directory of black businesses that is now 107,000 strong.

The Black upStart is also increasing its focus on Black wealth management to encourage growth and spending for everyone, even if they don’t have the capital or the desire to become an entrepreneur. That includes “demystifying” wealth language and educating people on retirement accounts such as of 401(k)s and 403(b)s, investing in the stock market, or in the creation of their own Black-owned business.

“How do we begin to acquire assets, something that we can pass down to our children, that our children’s children can benefit from?” Williams says. “But then also the type of assets that can make us money while we sleep, which is, of course, a goal.”

Photo: by Christopher Creese

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Written by

Sarah Netter

Sarah Netter is a is a freelance contributor for Stash Learn, based in New Orleans. Her work has appeared in The New York Times, The Washington Post and ABC News.


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