Black Entrepreneurs and Their Role in Economic Empowerment and Community Development
Although the challenges facing Black business owners have historically been and remain daunting, many successful Black entrepreneurs have forged a path and shown the way to others when it comes to wealth accumulation, job generation, and community investment. The early promise of these pioneers continues today in the modern fight for equality in the entrepreneurial arena. Black business visionaries are champions of economic empowerment and social development.
Historical Challenges of Black Entrepreneurship in the United States
Large gaps in earning potential and wealth accumulation have always existed between different racial populations in the United States. And no demographic has faced a steeper economic uphill climb than Black Americans.
After listing contributing racial inequalities in areas that range from student loan debt to medical care, the independent investment information resource Investopedia singles out a persistent lack of access to startup and expansion capital as a primary challenge for aspiring Black entrepreneurs. Banks and other lending organizations have long been reluctant to work with Black Americans.
When a Black entrepreneur does manage to start a business in the United, that business is historically more likely to struggle or fail. For example, the Jim Crow laws that arose during the racial segregation of the early 1900s made Black-owned businesses extremely vulnerable to discriminatory targeting and destruction. Similar examples of institutional racism persist to this day.
Successful Black Entrepreneurs in History
Despite the challenges they face, countless Black Americans have overcome the odds and managed to carve out rewarding entrepreneurial careers over the years. Stories of Black entrepreneurialism even date back to the days of slavery.
One of the first Black business leaders to attain a high degree of success in the United States was
Madam C. J. Walker. The child of former slaves, Walker began her entrepreneurial journey by making hair care products for herself. She subsequently started to sell these products to others and, ultimately, grew her business into a massive cosmetics corporation by the beginning of the 1900s.
Walking the roads that Walker paved roughly a century before, entrepreneur
Janice Bryant Howroyd rose to unprecedented levels of success in the employment sourcing and consultancy sector. As the force behind the ActOne Group, she became the first Black female CEO to lead a billion-dollar company. Today, she remains one of the most successful business leaders of any race or gender in American history.
Current State of Black Entrepreneurship in the United States
While Walker and Howroyd are just two among many Black entrepreneurs to launch and sustain successful careers in the US, the path to business leadership remains fraught with difficulty for the vast majority of Black Americans. In fact, the
Pew Research Center reports that only 3 percent of all US firms are majority-owned by individuals of African descent. By contrast, Black adults make up approximately 12.4 percent of the US population, according to the latest figures from the Census Bureau. The vast majority (86 percent) of US firms are owned and operated by white business leaders.
While these statistics may be discouraging, there is reason for Black entrepreneurs in the US to be hopeful. The Pew Research Center has determined that a firm majority (58 percent) of adult Black Americans consider supporting Black businesses a “very effective” strategy for gaining racial equality.
Perhaps spurred by these sentiments, Black business ownership is on the rise in the US. While there were only 124,004 majority Black-owned firms in 2017, that number increased to 140,918 in 2020, according to the most recent available data. This marks a 14 percent increase in Black business ownership over a period of just three years.
Overcoming Challenges
While it's important to recognize that systemic barriers and economic disparities still persist, it’s also incredibly vital to acknowledge that real progress has been and continues to be made. Black entrepreneurs have demonstrated a remarkable level of resilience and determination, overcoming adversity to pursue their dreams of business ownership.
Building strong support networks within the Black community has played a crucial role in the success of many Black entrepreneurs. These networks provide access to mentorship, education, advice, and funding, as well as help navigate the challenges inherent to starting and growing a business. Many Black entrepreneurs have also chosen to create businesses that positively impact their communities, further contributing to economic empowerment and community development.
In response to overcoming discriminatory lending policies, alternative funding sources such as community development financial institutions (CDFIs), crowdfunding platforms, and angel investors have emerged to focus on supporting underrepresented populations in the business sector. Such initiatives support diversity and inclusion in venture capital and corporate investment to begin to address the capital gap.
Government programs and policies like Small Business Administration (SBA) loans, Minority Business Development Agency (MBDA) resources, and initiatives promoting supplier diversity in government contracts have also helped provide opportunities and resources to Black-owned businesses. Through a combination of government support and grassroots, community-based initiatives, there is plenty of cause for optimism regarding the state of Black entrepreneurship moving into the future.
How Black Entrepreneurs Impact the Economy and Their Communities
From Madame C.J. Walker to Janice Bryant Howroyd, Black American entrepreneurs have a rich history of driving social change. Beyond blazing new trails in the business world and showing other Black business leaders the way, they have served as a powerful force for good in the Black community, often employing large numbers of people and injecting a tremendous amount of capital into the economy. Many Black entrepreneurs also launch or support initiatives to build public infrastructure or provide charitable services in the communities that they serve. For these reasons and many more, the US Small Business Administration supports a range of advocacy, funding, counseling, and training programs to encourage the creation and development of minority entrepreneurs from underserved communities.
Building a Supportive Ecosystem for Black Entrepreneurs
While the initiatives of organizations like the Small Business Administration are certainly important, the Black community has done much to support Black entrepreneurs at the grassroots level. As discussed above, most Black consumers like the idea of buying goods and services from Black-owned businesses. Other ways to build a supportive ecosystem for Black entrepreneurs include widening access to business training and developing strong and mutually beneficial community relationships among business, educational, religious, government, and nonprofit entities.
Resources Available to Support Black Entrepreneurs
Building a business ecosystem that eliminates barriers to entrepreneurship for Black Americans could add an estimated $290 billion in business equity to the US economy. Beyond the Small Business Administration, there are many other public, private, and nonprofit organizations with a range of resources for aspiring Black entrepreneurs. These organizations include:
Benefits of Pursing an Entrepreneurship Certificate
The benefits of Black entrepreneurship extend far beyond business to engender dramatic transformations in the realms of economic empowerment and community development. It is important to do whatever you can to further these transformations by supporting Black entrepreneurs in your community.
If you are a current or aspiring Black business professional considering an entrepreneurial career, you can make a difference by starting your enterprise with the full confidence that only a solid business education can provide.
eSpelman offers a range of online business training opportunities through its online certificate programs, including an
Entrepreneurship Certificate Program that imparts foundational business knowledge while honing students’ entrepreneurial skillset.
For more information about the Entrepreneurship Certificate or any other Spelman College certificate, complete a short online
information request form or attend one of our
virtual information sessions.
