The Kiss of Death for Black Businesses
Why aren’t there more Black businesses? Why when Blacks are much more likely than whites to want to own their own businesses do Blacks own proportionately far fewer businesses than whites? The traditional answer to these questions is that Blacks lack the financial resources that whites in America enjoy. The statistic that the average white family has twenty times the wealth as the average Black family is cited. Redlining, lack of diversity in venture capital, on loan committees and other issues that limit Black access to capital are also mentioned. Lack of capital is certainly a contributing factor to the lack of Black business success but, I believe that fundamental Black business aspirations are suffering from the kiss of death.
The kiss of death that I am referring to is not a poisonous bite but the lack of knowledge, infrastructure, support, and security that combine to systematically abort most black business aspirations. The kiss of death’s impact on Black businesses is amplified because most people are unaware that it even exists. Like a disease that one has not been vaccinated against, the kiss of death is present in the Black community but seldom addressed. What is this kiss of death?
Black entrepreneurs and aspiring entrepreneurs generally do not understand business. In 1933, Carter G. Woodson noted in the Mis-Education of the Negro that most of the significant Negro businesses in existence in 1900 had failed or were struggling. Unfortunately, I can say the same thing about the past 33 years. Eight decades has not brought a significant change. Too many Black business owners think that businesses are there primarily to make money forgetting that they really are designed to deliver products or services. With the focus on money, too many try to find some way to take a shortcut to maximizing their income to the detriment of their businesses.
Many Black entrepreneurs are so personality focused that their institutions are just a personal reflection of themselves. When they die, their businesses die also. The businesses had no life independent of the founders. They did not understand that a business is a system or processes and procedures. They did not understand that succession planning and exit planning are two fundamental steps to running a good business. The list goes on, most Black entrepreneurs don’t know about bootstrapping, lean startups, and other leading edge entrepreneurial practices. And perhaps most damming, most Black entrepreneurs do know about the successes, struggles, and strategies of other Black entrepreneurs past and present. Black entrepreneurs often lack the knowledge that they need. In addition, many are unaware that they lack that knowledge.
The infrastructure supporting Black business that is lacking includes financial institutions, however, it covers much more. Successful businesses are supported by a host of services. There are the trade organizations that provide peer counseling, government relations, market research, and professional networks. There are the professional service firms or attorneys, accountants, and consultants who are knowledgeable about the businesses and the issues that affect their success. There are the statistical agencies and market research firms that provide actionable intelligence. There is also the educational sector that trains employees, salesmen, and managers for the businesses. These infrastructure institutions are largely missing from the Black community. Often, Black businesses depend on majority institutions and organizations for these services with limited success. Black businesses that do business in the Black community are not just white businesses with Black people at the helm. There are significant differences in Black social and business dynamics that make generalized approaches that fail to account for the particulars in the Black community less than ideal.
Given that so many Black men, women, and youth wish to start businesses, it is amazing that entrepreneurship receives so little community support. Although, it is rare today to hear “get a good government job”, the Black community tends to be very conservative in the endeavors that it encourages. The standard approach of getting the best education possible and then going to work for the largest most stable organization in a profession with the least perceived risk is repeated over and over again. Small start-up companies are to be avoided. Commission based compensation like sales are to be avoided.