The LADA Group shares As I meet and speak with community members from all over the country, I am guaranteed to hear them express concern about the death of sustainable black owned businesses.
Currently, black owned businesses are vastly underrepresented, accounting for less than 7% of all small owned businesses, even though we account for 13% of the population. African Americans certainly have an entrepreneurial spirit as we are more likely to start a business relative to other racial groups. But, limited access to resources (e.g., capital, clientele, etc.), increase our businesses’ likelihood to close its doors. Research suggests that communities’ generational economic empowerment is linked to entrepreneurial success.
Therefore, if we are serious about improving our communities, improving our schools, providing jobs (black businesses are the 2nd highest employer of African Americans after the government), we must advance and strengthen black owned businesses.Over the weekend, The Nielsen Company released “The State of the African American Consumer”, a groundbreaking report projecting African Americans buying power at 1.1 Trillion dollars annually by 2015. To illustrate how massive this figure is, if African Americans’ purchasing power equated to a country’s GDP, we would be the 16th largest country in the world! What does this mean? Black consumers have more economic power than we may realize.
It is important to note that the 1.1 Trillion figure may not necessarily be all cash on hand, as we may be using credit cards and loans to make certain purchases. Also, spending power increases and/or decreases with one’s income. However, as a collective, there is enormous potential for black consumers to leverage our economic power by way of supporting black owned businesses to foster community economic development.The NAACP and other organizations are constantly advocating for policies to create more opportunities for black owned businesses (e.g., increasing access to capital) to succeed. But, while these organizations are affecting change at an institutional level, I want to highlight how we, as individuals, can foster an environment where more black businesses can thrive.
First, we must stop the massive “leakage” of our money out of our communities. Currently, a dollar circulates in Asian communities for a month, in Jewish communities approximately 20 days and white communities 17 days. How long does a dollar circulate in the black community? 6 hours!!! African American buying power is at 1.1 Trillion; and yet only 2 cents of every dollar an African American spends in this country goes to black owned businesses.Maggie Anderson, Co-Founder of the Empowerment Project, decided to address this dilemma by committing to “buying black” along with her husband (and two children) for an entire year. In her book titled, “Our Black Year”, Anderson recounts her experiences patronizing black owned businesses while highlighting the challenges many black businesses face (black businesses lag behind all other businesses in every measure of success). Interestingly, throughout her journey, Anderson fielded accusations of racism for her “buying black’ project. But, what must be understood, and Anderson reiterates repeatedly in her book, is Black economic empowerment is healthy for everyone.
Considering the crux of impoverished communities’ problems are often economics, reinvesting in black businesses is one of the best ways to address socioeconomic disparities.You may be thinking “what if there are no black owned businesses near me? What if the prices are too high? And/or what if their services aren’t on par?” These are all challenges Anderson encounters on her yearlong journey. But what she realized, and many of us must realize, is that this effort requires sacrifice and persistence – just like generations before us sacrificed and persisted to provide us with opportunities (which many of them did not live to see). If we want to remedy problems in our community, many of which are systemic and multi-generational, then we must remain steadfast.
Furthermore, with the internet we now have more options, such as the website for the Empowerment Experiment, to overcome some of these barriers.It may be unrealistic to expect the African American consumer to exclusively patronize black owned businesses for various reasons including budgetary constraints, accessibility, or product availability. But in those instances where you do have options (e.g., restaurants, clothing, printing services, natural hair products, etc.), I challenge you to answer our call to action to try to be a conscious consumer. Over the next week, the NAACP Economic Department’s social media campaign, #knowyourworth, will highlight statistics and resources to support your consumption efforts. We must lead the way in investing in our own businesses, and we can by starting with our own 1.1 Trillion dollars. Because if we don’t support black owned businesses, it becomes that much harder to demand anyone else to.
So start with the contacts in your cellphone. That is your community and connect that community together and that will help build the Black Community as a hold if we just use cooperative economics that The LADA Group www.ladawealthbuilding.com has put together