VIEWPOINT: Empowering minority businesses will enrich Delaware
As our economy continues to readjust from the impact of the global COVID-19 pandemic, we have learned many things from our experiences over these past two years. From a global health crisis to civil unrest, and even social injustice and racial inequity, our experiences have shined a bright light on the unique challenges, as well as extraordinary opportunities, facing Delaware’s minority-owned business sector.
Minority business owners face the same challenges as other entrepreneurs – developing a sustainable business plan, understanding the market and competition, and creating products and services that customers need. For Delaware’s Black and Brown entrepreneurs, there are even more challenges that they face. When exploring challenges and opportunities for minority business owners these past two years, several issues are evident. Minority entrepreneurs often face systemic racism, difficulty in securing funding, and a lack of social capital on which to draw. However, there is hope in the form of support and resources becoming more accessible.
Whether overt or subtle, racism and discrimination are very real for minority business owners. Minority business owners have traditionally had less access to much-needed business and management skills that are helpful when running your own company. People of color have had access to less capital and collateral and lower credit scores, and they may be charged higher interest rates or may be denied more frequently when applying for loans. While people of color start businesses at the same rate as white entrepreneurs, there is a vast disparity in profitability, size, and early survival rates.
Programs to increase access to capital for underserved populations and support business training and mentorship are badly needed and will increase in the number of successful small businesses, while reducing ethnic income gaps.
One area of disparity that is most significant for minority entrepreneurs is the gap in business financing. Minority-owned businesses are often less likely than non-minority owned businesses to secure funding. While many small businesses have been able to access federal relief and Paycheck Protection Program (PPP) loans from the impact of the pandemic, some small business owners struggled to navigate funding programs this past year. According to a CBS News report, minority-owned businesses were among the last to receive PPP loans.
We’ve observed four primary reasons why lending disparities exist, and they are driven by:
- lower net worth
- lack of collateral
- poor or no credit
- lack of business planning and resources
Lack of access to monetary capital is just one barrier facing minority business owners. Another is a lack of social capital. Having powerful networks of advisors, peers, colleagues, and other business owners is essential for entrepreneurs wanting to market, seek advice, and lean on others.
Further, many businesses are often, and understandably, time-consumed with serving their customers, delivering their products and services – working in their businesses, rather than working on their businesses – strategic planning, and growth initiatives.
In 2020, the Delaware Black Chamber of Commerce (DEBCC) was launched to provide peer support eco-systems, networking opportunities, educational programming, and other resources designed to foster deeper connections between Delaware minority and non-minority business owners. A part of DEBCC’s mission is to provide support to entrepreneurs to help them focus on working on their business and not just working in it.
The DEBCC has also successfully launched EnrichDelaware in order to address barriers to entrepreneurship and empower minority business owners to add focus to working on their businesses, obtaining training and resources, and achieving growth. By providing these much-needed services, EnrichDelaware not only strengthens the minority business community, but Delaware’s business sector at large.
Navigating today’s economic landscape requires business owners to focus on business growth along with carrying out their respective mission statements. Being prepared is essential, taking stock of strengths and weaknesses; identifying opportunities and threats is also key. Fundamental to navigating today’s business landscape is a focus on political, economic, social, and technology factors that a business owner faces.
It is critically important to underscore for the entire business sector that, when all races, cultures, ethnicities, and diversity of thought is seated equally at the table, the entire business economy wins.
Ayanna Khan is the founder, president and CEO of the Delaware Black Chamber of Commerce.