Black businesses in the U.S. hit a notable milestone to close out 2022. After taking a financial tumble during the onset of the COVID-19 pandemic with more than 40 percent of small businesses shutting down between late 2019 to 2021, last year was nothing short of a major comeback.
Despite cumbersome challenges that most Black entrepreneurs encounter, whether accessing capital or attracting investors, the foundation of Black-owned businesses has been fueled by an insatiable desire to forgo the traditional 9-to-5 in favor of building one’s own legacy.
“I think we all began to realize that the typical 9-to-5 grind we were in wasn’t working for us,” Lisa Baker, a financial coach and founder of Acenstim, told Finurah. “With the pandemic, the murder of George Floyd, and all of these things that were converging at the same time really shed a light on how people wanted to spend their time.”
While uncertainty is prevalent in the global economy, some business highs in Black America are worth highlighting as optimal opportunities for development and growth are still on an upward trajectory.
1) Increase In Black Businesses
According to the 2020 census data, there were 3.12 million Black-owned businesses in the United States, generating $206 billion in annual revenue and supporting 3.56 million U.S. jobs. While the pandemic wreaked disproportionate hardship on Black business owners, leaving many to suffer personal financial loss and a reduction of assets, a wave of Black-owned microbusinesses was birthed, from 2021 to 2022. The National Bureau of Economic Research found an uptick in new business registrations and that pandemic- issued stimulus checks aided high rates of business formation in Black neighborhoods.
2) Black Women Are Leading The Charge in Entrepreneurship
Women of color are the fastest-growing group of entrepreneurs, and Black women are at the forefront of being their own bosses. Often underpaid and overlooked for promotions at conventional institutions, a record number of Black females set out on their own business ventures well before the pandemic.
“At a time when folks are rethinking their lives and choices, it is not surprising that more Black women are electing to become CEOs of their own companies rather than waiting for their intelligence and skills to be recognized at their current firms,” Melissa Bradley, the founder of 1863 Ventures, an agency for Black and brown entrepreneurs, told Business Insider.
In partnership with Global Entrepreneurship Monitor, Harvard Business Review found that 17 percent of Black women are in the process of starting or running new businesses. That’s compared to just 10 percent of white women, and 15 percent of white men.
3) Blacks Investing more in Insurance
For far too long, Black Americans didn’t think about life insurance or that it was something that they could not afford, largely because of misunderstanding how life insurance works.
“We are starting to realize that it’s not a luxury, it’s a necessity because we aren’t wealthy enough to self-insure, said Baker. “We are also starting to recognize that life insurance is not about having enough money to bury your loved ones but it is a way to pass on generational wealth.
According to the 2021 Insurance Barometer study, conducted by LIMRA and Life Happens, 56 percent of Black Americans own life insurance, which is higher than the national average 52 percent, yet, nearly 46 percent of Black Americans who participated in the study are underinsured, a key indicator of the life insurance coverage gap in Black communities.
As more people view life insurance as affordable and accessible, some misconceptions about life insurance are starting to be debunked
4) Collaboration Over Competition
Financial support for Black businesses from corporations pledging capital funding and governmental programs to level the playing field for small businesses led to entrepreneurship appearing more attainable rather than a pipe dream. The move toward entrepreneurship also led to Black businesses partnering, promoting one another’s brands and encouraging people of color to “buy Black.”
“I’ve seen a number of groups and Black entrepreneurs coming together to support one another,” said Baker. “Dispelling some of those old cliches of being crabs in a barrel where we don’t support each other I think is changing.”
An uptick in Black investors working at investment firms or launching their own VC funds has also opened the gateway for Black entrepreneurs to allow them to secure a bigger share of capital. Last year, less than 4 percent of venture partners and just 1 percent of angel investors were Black, according to TechCrunch. But as more Black VC firms sound the alarm about the disparity of funding in the nearly $174 billion dollar industry, the emergence of venture funds being created to bankroll marginalized groups’ business ventures is expected to grow.