Managing Your Business
How to Support Black-Owned Businesses and Why It Matters
When the Black Lives Matter movement sparked national discussions on racial injustice after the murder of George Floyd in May 2020, people across the U.S. realized that declaring oneself to be "not racist" just wasn't enough anymore. It never was.
Instead, to effectively tear down systemic racism — racism embedded as routine practice in institutions like finance, education, and law enforcement — we need to continually work towards equality for all races, striving to undo racism in our minds, personal environment, and the world at large.
For many, that means putting their money where their mouth is by ditching online ordering from giant corporations and instead actively supporting Black-owned businesses in their local communities. A recent Yelp report showed that from May 25 to July 10 of 2020, there was a 7,043% increase in searches for Black-owned businesses compared with the same time period of 2019. What's more, a 12-month graph from Google Trends showed the search term "Black owned" reached a value of 100 (which indicates the peak popularity) during that same timeframe.
However, as news outlets shifted their focus to the newest headlines, searches for the term began trending down — just as the need to support Black-owned businesses became more crucial than ever before.
The harsh reality is that Black Americans don't have the same economic opportunities as whites. Black-owned businesses have faced greater challenges in establishing and growing their businesses, including securing bank loans, capital, and finding investors. Only 4.3% of the United States' 22.2 million business owners are Black, according to a February 2020 Brookings Institute report.
Even worse, data from J.P. Morgan Chase reveals that small businesses in predominantly Black communities are rarely very profitable, with less than 1% having a median profit margin above 20%. This is in comparison to nearly 40% of businesses in majority-white communities. Additionally, 95% of small businesses in mostly Black communities hold a cash buffer of two weeks or less, meaning that if they faced an economic downturn, like maybe some sort of global pandemic, it'd be nearly impossible to keep their business going.
Today, as the nation celebrates Black History Month, we are once again reminded of the critical role we all need to play today and every day. Truly supporting Black-owned businesses means turning it into a movement, not a trend — one where people are continually working to break down barriers.
Here's why supporting Black-owned businesses is more vital today than ever before — and how every one of us can amplify the mission and the message.
Why Supporting Black-Owned Businesses Matters
Projecting your purchasing power to more Black-owned businesses in your community might seem like a small gesture. But when you choose to purchase your candles, clothing, and bath bombs from someone in your community instead of heading to Amazon, your support can be a catalyst for so much more.
Here are just a few reasons why your support for Black-owned businesses matters.
It helps to close the racial wealth gap
White people are not only systematically given more opportunities to hold more jobs and economic capital, but they're also more likely to benefit from generational wealth.
A 2016 Survey of Consumer Finances showed that Black families have only 10 cents for every dollar held by white families. What's more, today, the median wealth for white families is about 12 times that for Black families, and one in four Black households has zero or negative net worth compared to less than one in 10 white families without wealth. But perhaps the most concerning number is that by 2053, the median wealth for Black families is projected to fall to zero.
When you choose to support Black-owned businesses and entrepreneurs, you help close those racial wealth gaps by introducing more opportunities for meaningful savings, property ownership, credit building, generational wealth, and so much more.
It strengthens local economies
When small businesses flourish, so do their communities. If consumer spending accounts for 70% of the entire U.S. economy, imagine what directing even a portion of that spending power to Black-owned businesses can do. And how it can help local communities grow and thrive.
By supporting Black-owned businesses, you're supporting families, employees, and other business owners, as well as attracting community investors who provide banking services, loans, and financial literacy — all things that build sustainable economic strength.
It fosters job creation
A study from 2017 concluded that 56% of Black Americans surveyed experienced discrimination at least once when applying for a job. It's no surprise, then, to learn that the Black unemployment rate reached a high of 16.6% in May 2020, and as of August 2020, it was still at 13.2%. In contrast, the white unemployment rate fell to 6.9% in August 2020 from a high of 12.8% in April. That's nearly half of the Black unemployment rate.
Because Black-owned small businesses are likely to hire from the local community, your continuous support means a reliable source of income. And with that income, Black business owners can, in turn, create the job opportunities people need to achieve financial stability.
It creates a sense of community pride
Many Black entrepreneurs start businesses inspired by what makes their community so unique in the first place — the richness of African American culture itself. Whether it's soul food, local art, or curated record shops, walking into any one of these stores becomes a celebration of what makes our country so dynamic. Other Black-owned businesses are created to make services and goods specific to the community's needs more accessible.
These business ventures help uplift communities and foster a sense of pride in the people who live there. When you support Black-owned businesses, you also support the community, character, and culture that big-name companies just don't have.
How Can You Support Black-Owned Businesses?
While becoming a new customer now is a significant first step, there's so much more work that needs to be done to keep the momentum alive. Here are a few ways to show your support for Black-owned businesses — and to ensure support continues now and into the future.
Find your starting point
To truly support Black-owned businesses, your interest needs to come from a place of respect and connection, not from the hype of the news cycle. To make your support of Black-owned businesses a long-term commitment, take the time to seek out brands that align with your values, beliefs, and interests.
That's why it's essential to familiarize yourself with who is on the market, what they're selling, and why they're selling it. Here are a few resources to help you get started:
- Support Black Owned: This massive directory is available as either a website or mobile app, and it can help you find Black-owned businesses from all over the country.
- African American Literature Book Club: This comprehensive database makes it easy to search for and find Black-owned bookstores across America.
- EatOkra: This app has become a go-to for foodies to find Black-owned restaurants and other food services.
- Instagram: Instagram has become an invaluable platform for both businesses and consumers. By following some common hashtags, such as #SupportBlackBusiness, #SupportBlackArt, #ShareBlackStories, users can quickly discover small and independently-owned Black businesses.
- WeBuyBlack: This is one of the largest marketplaces for Black-owned businesses. It lets you search for big-name brands you would commonly buy and instead suggests similar products created by Black businesses.
Never underestimate the power of word of mouth
Supporting Black-owned businesses isn't only about your financial contributions. When money is tight and you just don't have the resources to make a purchase, word of mouth can be a powerful tool.
Even if you aren't an influencer with half a million Instagram followers, you have the ability to recommend a Black-owned business to a friend or family based on your own positive experience. As a result, you're able to turn them into a buying customer. If you can't actively support businesses financially, word of mouth helps amplify their business purely by creating a new pool of potential customers.
Subscribe to newsletters
This seems like a small gesture, but it can have a huge impact on many businesses. For any business — however big or small — newsletters are an opportunity to directly inform customers about what's happening behind closed doors.
Whether it's upcoming sales, new inventory, product releases, or just-for-fun shop updates, this keeps you connected to a business even when you can't always set foot in the store. That constant line of communication keeps the business on your radar, so when you are ready to whip out the debit card, you know the exact spot to visit.
Turn every positive experience into a positive review
Smaller businesses rely on public-facing review platforms like Google and Yelp to bring in new customers. Whenever you visit a Black-owned business, make it a habit to leave positive reviews. This third-party validation is vital, and it can easily convince a potential customer who's on the fence to choose a Black-owned business over the big box chain store down the street.
Keep the momentum going
Money can mean support, success, or a push forward. For Black-owned businesses, those financial contributions can be the difference between sustaining business or folding under pressure.
But that support is at its most valuable when it's long-term and unwavering. Make sure that you continue to support Black-owned businesses well past the headlines and social media frenzy. It's also important to remember that it's not enough to just buy one jerk chicken lunch platter, pat yourself on the back for your support, and then go right back to buying from the multinational fast food chain conglomerate. Truly supporting Black-owned businesses means being a committed customer all year long.
Supporting Black-Owned Businesses Today and Everyday
Elevating Black-owned businesses and giving them the money, support, and shelf space they deserve has felt like an uphill climb for many, but it's important to recognize the powerful advancements we've made. For example, Aurora James of Brother Vellies recently called on larger corporations to stock 15% of their inventory from Black-owned businesses. Since then, many big-box retailers, including Nordstrom and Sephora, have joined the 15 Percent Pledge.
Initiatives like these mark the beginning of an unstoppable movement — one that's focused on dismantling systemic racism with real and lasting action. By seeking out and supporting Black-owned businesses in your area now and always, you're effectively joining that movement, too.
Every small business has faced far too many recent hardships, but it's no secret that Black-owned businesses must overcome further barriers others don't. If you know or are a struggling entrepreneur of color, you may be interested in our recent article "11 Essential Resources to Help Black-Owned Businesses Thrive." This article discusses the financial, educational, and networking resources available to help Black entrepreneurs businesses succeed.