Why We Should Support Black-Owned Businesses in August...and Beyond
- August is recognized as National Black Business Month.
- Support for Black-owned businesses became a mainstream topic after the unfortunate and horrific murder of George Floyd.
- Consumers spending a larger percentage of their income at Black-owned businesses will aid in closing the racial wage gap.
August is recognized as National Black Business Month. The month serves as a needed reminder to use our dollars to support and celebrate Black-owned businesses, regardless of our race. When you choose to spend your money with a Black-owned business, you are choosing to assist them in building generational wealth, savings, and ultimately obtaining ownership.
For centuries, Black-owned businesses have been overlooked and underserved. Recently, shopping Black has become a mainstream topic and initiative after the unfortunate and horrific murders of George Floyd and Breonna Taylor at the hands of police officers. However, what some may have seen as a trendy movement in supporting Black business owners is starting to prove itself to be a lifestyle change.
Here are four reasons why you should support Black-owned businesses in August (and beyond).
Close the Racial Wealth Gap
In 2017, a study run by the Economic Policy Institute indicated that the average wealth of a white family was $678,737 versus only $95,261 for a Black family. The statistic is highly concerning as it shows how different races have polar opposite levels of wealth due to various factors, including lack of financial access and discrimination. In addition, the lack of wealth Black families possess makes it more challenging to create a business due to a lack of “family and friends” funding availability and other financial factors.
According to Fundera, though there are over two million Black-owned businesses in the US, 80% of them fail within the first 18 months due to a lack of funds. Historically, Black founders often do not receive the necessary capital via bank loans that they need to save their business for various reasons, including known racial profiling cases. The National Community Reinvestment Coalition did a study in 2017, which showed that the banks were twice as likely to meet with a white applicant and three times as likely to have a follow-up meeting with them than more qualified African-Americans. With the lower level of wealth, alongside the racial profiling done by banks, it is more challenging for Black-owned businesses to receive funding via a bank loan.
Though Black-owned businesses may not receive money from the banks, consumers are the best source of funding. By consumers spending a larger percentage of their income at Black-owned businesses, those purchases aid them in staying afloat and one step closer to closing the racial wage gap.
Pass Down Generational Wealth
Supporting Black-owned businesses allows the owners to leave their future generations an asset that can help them have a better financial future. When more people show their support and purchase products or services, they will have more to leave to their families when they pass away or decide to step down or dissolve from their business. These assets left by the owners, such as the store or the money generated from dissolving the company, will aid their families in building generational wealth.
Per a study run by Brookings Institution, each Black-owned business helps create an average of 10 jobs to boost its local economy. However, when looking at non-Black-owned businesses, the job creation value is at 23. By supporting Black-owned businesses, it will assist in revenue growth. As a result, it gives the business the opportunity to hire more employees to help deal with consumer demand.
Strengthen Local Communities
Supporting a local Black-owned business in your community will assist in creating a solid bond between the business and the local community. Smaller businesses are more likely to engage with their customers personally versus a larger retail store. Businesses centered in the community are often run by local community members, which helps make the customer feel comfortable. It also creates an environment where the consumer is more than happy to frequent and purchase goods or services from a smaller Black-owned business.
Drop the name of a Black-owned business that we can support in the comment section.
Main image credit: Becc Keezel / Shutterstock.com