It won’t be an overemphasis to say that every business face numerous challenges in its initial stage. According to the Small Business Administration, 20% of entrepreneurs fail in the first year, 30% in the second year, and 50% in the fifth. A business is incomplete without proper resources that have a direct impact on its success. These resources include financing, capital, and, most importantly, constant support. However, not everyone gains easy access to such resources that build the foundation of a business.
Black entrepreneurs face numerous challenges as compared to other business owners. The entrepreneurial drive in black people is considerably larger than the rest, with new business ideas springing up exponentially. A study shows how people of color are less likely to own businesses than others, and their companies are less successful on average than are white-owned businesses.
Black companies have the highest failure rates, and it’s because they face double the challenges faced by an average white person. What are some of the struggles that black business owners face, and what can we do about it? Keep on reading to find out.
Lack of Resources and Funds:
As mentioned above, resources and funds are essential components that build the foundation of a successful business. Unfortunately, black entrepreneurs struggle to get their hands on the resources. According to an article published by US Chamber, financing is one of the biggest challenges faced by every entrepreneur.
However, unlike white entrepreneurs who can seek help from traditional funding sources such as loans to fulfill their financing needs, black entrepreneurs are at a disadvantage. The most popular financing methods for black business owners are cash and help from family and friends. Lack of resources and financing options makes it harder for them to hire employees, purchase materials, or market their products and services.
Lack of Access to Networks:
Your business usually grows due to networking opportunities that help in guiding you. As for black business owners, there are limited networking opportunities due to a racial gap. Many networking groups attend to bigger businesses with money for marketing and advertising, which are stereotypically white-owned.
Furthermore, there is a lack of a strong network of supportive institutions that can provide managerial training, technical assistance, and strategic advice. A well-informed contact can help a potential entrepreneur decide whether to purchase a franchise for up-front capital or to construct an independent business. But unfortunately, black entrepreneurs struggle with a lack of access to networks.
Problem with Scaling:
It’s more than challenging for black business owners to scale their businesses. Since there is a lack of funding and resources, it is hard for them to expand their business. In order to scale a business successfully, it’s important to deliver to all the new customers. If a company fails to hire sufficient staff or doesn’t have enough manufacturing or delivery capacity, it fails to grow.
Why do black entrepreneurs fail to scale their businesses? It’s because scaling requires planning, funding, the right systems, good staff, technology, and most importantly, networking.
Struggle Finding a Mentor:
Mentorship is valuable and beneficial for a business to thrive, but there are fewer opportunities for black entrepreneurs to get proper mentorship. Many black entrepreneurs don’t have access to actual mentors.
On average, not nearly as many black people have successful entrepreneurs within their families or social circles. This limits their chances of gaining an insight into the industry they wish to operate in and attain more knowledge. The challenges to expanding their network and reach new markets that can be difficult to access elevates.
Inability to Increase Profits:
The primary goal of any start-up involves ensuring the business’s survival and increasing its profitability. However, Black entrepreneurs’ mistrust of institutions based on their experiences and history of discrimination makes them suspicious of using potential resources outside their communities. This includes a lack of informal and geographic networks to such resources, including venture-capital networks, which can isolate black entrepreneurs from prospective support sources.
There are very few black-owned start-ups that survive the initial stage. And when they do, they struggle with debt and raising capital. Not to mention, they also struggle with the unavailability of relationships in the business community.
The Bottom Line
There is no doubt that black entrepreneurs have been facing numerous challenges for many years. From raising funds to finding a suitable mentor, it has always been more difficult for them to initiate and run their businesses than others.
At Global Black Industries Inc., we understand every black entrepreneur and business owner’s struggles and make every effort to assist them with financial and other aids so they can succeed. We look forward to partnering with as many black entrepreneurs as possible to create a favorable environment that promotes businesses.
We want to create a suitable platform that will allow black businesses to thrive. We are introducing our first product Blk Cent$ Add Up, to help collect funds for the black community in need. These funds will be used for the projects intended to improve the condition of black communities in underprivileged parts of the world. In this way, we can help them complete their education, acquire better opportunities, and fulfill their dreams of becoming successful entrepreneurs. Contact us today and learn more about our products!