The percentage of black-owned businesses that come to a screeching halt before they even reach the finish line is currently at an all-time high. It’s easy to feel singled out on the road to entrepreneurship but alarming statistics reveal you are anything but alone in the (what seems to be endless) quest to increase your clientele. Unfortunately, 8 out of 10 black-owned businesses fail within the first 18 months and COVID-19 has exacerbated that decline. Just when you think you’ve proven all the naysayers and “What if-ers ” wrong, you begin to see the worst fate for your business manifesting before your very eyes.
Are you currently wishing you could reverse time and bring your business back? Are you preparing to embark on a new venture and haven’t the slightest idea how to protect your vision from the kiss of death? Below are a few of the top reasons black businesses fail and the courses of action that should be taken to keep things afloat.
Lack of Funding
According to recent data from the US Federal Reserve, more than half of black-owned companies were declined for loans. This rate is double that of white business owners. The report yielded data showing that while black-owned businesses are the most likely to apply for bank financing, less than 47% of these applications are successfully funded. However, though this is a grim reality, it does not need to mean the end of the road regarding funding your dream. Place the power in your own hands by researching minority-owned black business grants as an alternative route to funding. A great (and free) resource that black aspiring entrepreneurs can utilize is their local SBA (Small Business Association) office. The SBA offers services such as business plan creation, Bank and Funding Research, and Free Market Research.
There are many ways to generate funding for your business, here are a few other funding options:
Build Business Credit – Check the list below, these are the credit lines that I am currently personally using:
Uline – Office Supplies + Shipping Materials
Quill – Office Supplies + Shipping Materials
Shell – Gas Card
Amazon Business Account – Office Supplies + Shipping Materials, etc. (Note: Sign up for the account and then apply for Net 30 account)
Business Prime American Express Credit Card – They are offering a $125-200 gift card right now for approved applications.
Look into platforms such as Hello Alice
Apply for grants such as the Amber Grant
We are planning to do a more in-depth explanation of business credit in the future! Stay tuned.
Inability to Adjust and Adapt
Just because your venture and marketing plan worked when you first started doesn’t mean it will ensure long-term success. We discussed the “Art of the Pivot” in last month’s post and this is the perfect opportunity to reintroduce that strategy. Sometimes as entrepreneurs, we can become so married to an idea that we fail to see the culture is shifting and that our consumers’ needs are evolving. Keep a keen eye to the streets and social media to find out how your industry could be potentially shifting and make certain that you evolve with it. Learn to diversify your products and services to accommodate the needs of the people.
Failure to Establish a True Market Differentiator
Find your niche and work what makes your business unique. A lot of black entrepreneurs never reach their full potential because they unknowingly mock the business model of a peer or other successful business owners in their industry. The old adage that “Imitation is the best form of flattery” is not always effective in business. Just because one venture model worked for a fellow competitor does not mean it will work for you. Imitating someone else’s exact vision can limit your own and cause you to fall into the shallow pool of market saturation. It’s okay to be inspired but once that inspiration is sparked, incorporate your own individualized consumer grabber. Locate what you’re good at and learn how to monetize it and make it unique. Last but not least, continue learning and researching because you can’t be a brand expert if the market is moving faster than you are learning.
Failure to Market Online
It’s my personal belief that this could very well be the top reason most black businesses falter. Failure to research the various resources that can be utilized to better market your business and increase chances of success could be the catalyst that serves in making or breaking your new vision. Invest your due diligence by investigating and digging to ensure you are taking advantage of all the free marketing resources and exhaust all your social media outlets to effectively advertise your business. After you’ve established a good Twitter, Facebook, and IG following, begin reaching out to marketing professionals to leverage your reach and take your business to the next level. This is an imperative step that must be taken to flourish which is why DMM is here to assist you in all of your Digital Marketing needs.
Last but not least, there’s nothing like family and there is something to be said about the quote “Blood is thicker than water.” Family businesses that excel do so because every member understands their role and shares a common vision for the company. However, just because Pookie is your cousin doesn’t make him your accountant. Successful family-owned businesses thrive at the art of being able to differentiate which family members have the knowledge, experience, and maturity to help grow the company and not stagnate it. Anyone who does not fit that description should be omitted from vital family business roles. Sure, Pookie may be mad initially, but he’ll get over it. If he doesn’t, encourage him to get in touch with his inner Monica, (Don’t take it Personal).