For decades, African Americans have contributed immensely to the business landscape in the United States. Our achievements have changed the way we live our daily lives from the development of caller ID technology to the invention of the traffic light, African American business professionals and creative minds have forged pathways for others’ successes.
Although the number of black-owned businesses is rising every day, black entrepreneurs must contend with existing barriers rooted firmly in place, making it difficult for many to raise capital and garner the attention their businesses need to succeed.
There’s more support for multi-billion-dollar industries to reach potential customers than for many black-owned small businesses to break into the market. Funding is always a challenge for any small business, but it’s especially challenging for black entrepreneurs.
Did you know that the average male-owned black startup raises about $7,000? That might seem like a decent figure for a small business, but it’s a minuscule number when you consider all the expenses necessary to operate and market a business. It’s even more shocking of a number when you consider that the average startup raises $5 million in capital.
Without the standard cache of capital—both human and financial—you have to be resourceful. You'll have to teach yourself how to do the skills necessary to keep the operation low-budget and self-fundable. Once you prove the service’s potential, and that there is a market for your service, you'll then able to build a network to raise capital.
You won't be the only black entrepreneur who will find gradual success in the face of adversity, but to get to a point where funding becomes easier to obtain, you have to have grit and persevere through the tough times.
Check out these tips for overcoming adversity as a black entrepreneur.
#1—Be Resourceful and Find Other Means to Fund or Bootstrap Your Business
You'll have to assume many roles early in the development of your business. Without traditional capital to pay for operating costs or marketing, many black entrepreneurs have to develop their own skill sets and be DIY business owners.
When you’re operating on a shoestring budget, the more services you can get for free or barter for within your network, the quicker you’ll turn a profit. Once you turn this corner, traditional capital funding options become more attainable.
#2—Learn as Much as Possible About Your Industry
The primary challenge that many black entrepreneurs face beyond raising funds is learning how their industry operates, especially when there’s not a proven path to follow. When you're the first to start your business in an empty industry, you'll have to carve out your own path to success.
You'll have carve out your own path to success with respect to funding, manufacturing/production, packaging and marketing. Leverage the network you've built over the course of your career and commit to be a student of all components of creating your business.
Start by attending conferences, meeting with industry experts, and studying other similar successful businesses. Learning as much about your industry means dedicating time and energy not only in developing a great product or service but learning the business too.
#3—Have a Tribe of Supporters
To succeed as a person of color in business, you must have a tribe of people who understand the struggle to raise capital, to differentiate yourself, and to find the right marketing or promotional tools to move forward. The most accomplished black entrepreneurs haven’t made it to their level of success without the advocacy, support, and resources from their tribes.
You can’t keep everything to yourself. Black entrepreneurs tend to hold back asserting their ideas, especially in terms of tech and product ideas. It’s not like this for non-people of color. They don’t have shame pushing their ideas because they know they have a tribe of people who will have their back. For black entrepreneurs to be successful, they need to talk about their business aspirations and also support others as well.
#4—Understand What Your Cash Flow and Requirement Is to Start Your Business
Know your cash flow, cash burn, and cash requirements for your business. I wouldn't suggest quitting your job and jumping right into a new business venture.
Prepare wisely. Determine how much money you need to operate your start-up for 6-12 months. Figure out how much personal savings you need to focus on building your business on a sturdy foundation.
#5—Focus On the Things that Will Drive Your Business Forward
It’s easy to overlook this part of the planning process, but it’s an essential part of launching a business. Schedule time each day to focus on what needs to happen to create a sustainable venture. This part takes the most time, but it puts you in a better position to manage and grow your business.
#6—Have Clear Agreements and Understandings with Yourself and Others
Do this early into the formation of the business. At the beginning of a new start-up venture, everyone feels great, and the future looks bright. However, there needs to be a clear plan in motion for how to handle challenges across all scenarios. When there’s not a clear understanding of movement, things can go left quickly and businesses fall apart.
It’s important to establish clear agreements of movement with stakeholders and business partners, so there are no misunderstandings down the line. For example, how do you and your partner or stakeholders plan to handle low earnings? Do you expect your partner to invest a certain amount of money if earnings fall short? Have you agreed on a 50/50 or 60/40 financial arrangement?
These are just examples of the kinds of conversations entrepreneurs need to have with their business partners.
Adversity is a part of the entrepreneurial journey, but it doesn’t have to break your spirit. When you have clear goals and strategies to meeting these challenges, you’ll move through them with steady confidence. You’ll grow a stronger business that adds diversity to America’s business landscape and contributes to the legacy of black entrepreneurship.