Hello Alice‘s VP of Product Kelsey Ruger sat down with NAACP President Derrick Johnson and CEO of Phillip Ashley Chocolate Phillip Ashley Rix on February 23 to unpack the current — and future — state of Black entrepreneurship in the U.S.
One of the things we do here at Hello Alice is survey owners around the country to get a temperature check on how they’re doing. As such, many of the fielded questions came from small business owners and offer valuable insights into their current concerns. Read on to learn more about the key numbers from the virtual roundtable, and be sure to check out the recording at the end.
1) 84% of Black Business Owners Predict Growth
According to data from Hello Alice and the NAACP’s combined 2.5M+ members and small business owners, Black owners are optimistic about 2022, with about 84% of them predicting growth. This increase is more than double the increase reported by non-Black entrepreneurs in the same time range, from 2020 to 2021.
“I’m very optimistic about ’22,” Phillip Ashley said. “And I think a lot of it came as a result of this intersection, during COVID, of everyone having this heightened awareness of Black business and supporting Black businesses.”
2) Revenue for Black-Owned Businesses is Growing
COVID’s presence pushed entrepreneurs to pivot and embrace new methods of business they may have previously neglected — mainly, technology.
“With the onset of COVID and being isolated, those businesses that survived did so because they were agile enough to adapt,” NAACP President Derrick Johnson explained. “I can think of a very smart restaurant where I live, and I ask the owner, ‘How’s business?’ He said, ‘It’s up 35%.’”
The reason for this? People may have stopped physically coming in, but the restaurant employed an app to facilitate pickups. Now, customers order food, drive over, and pick up their freshly made meal.
“All that is about new technology,” Derrick said. “But here’s the most unique thing: the restaurant owner said, ‘I don’t think we’re going back. I think this is the new way we’re going to be doing this.’”
3) Raising Capital is the Number One Concern
What is the top business challenge that owners expect to face in 2022? The number one answer time and time again seems to be the ability to raise capital.
In fact, 34% of Black owners cite raising capital as their primary obstacle. And this challenge is substantially over-stated among Black entrepreneurs — only 24% of other demographics cite this as the top challenge. Many Black owners have to pivot and explore other options to bootstrap their ventures. Phillip Ashley, CEO of Phillip Ashley Chocolate, was able to raise capital by diversifying his revenue streams. “The primary thing was, we started with corporations,” said Phillip Ashley. “So some of my first customers were larger insurance companies that were doing corporate gifting.”
Forty-eight percent of Black owners reported that they would deploy new capital to cover general operating expenses such as utilities, rent, permits, and cost of goods. “With every new band of revenue that I raised,” says Ashley, “I was able to buy equipment or hire someone and that sort of thing.”
Meanwhile, 21% would use this capital for marketing and advertising, which leads us to the number two concern.
4) Marketing is Number Two
When asked, outside of capital, what would be most helpful to their business, the number one answer from small business owners was simply “the opportunity to market my business to generate sales.” Growing and marketing their businesses are ranked as the second and third challenges for Black business owners, with 25% and 15% reporting this, respectively.
Technology has definitely helped increase exposure. A shift to digital offerings has also crept into the marketing side of things, transforming traditional ways of learning about businesses. People are sharing links on social media and “word-of-mouth” has become “touch-of-keys.”
“Technology has provided more exposure,” Derrick confirmed. “If you say, ‘What is a quality product?’ you will begin to see an acceleration of people saying, “Have you tried?’ ‘Have you heard? Traditional marketing that has taken place in our community, whether it was through a local Black paper, or word-of-mouth, or the church has now been put on steroids.”
5) Enterprises Can Interact More Constructively with SMBs
So how can big corporations and large enterprises help small businesses succeed in 2022? The NAACP President has some ideas.
“Corporations suffer from a level of myopic approaches to procurement,” Derrick observed. “They often go to the people they know, the processes they’re familiar with, and create a very limited pool of individuals. They have to create avenues like what we are doing here.”
This means, next time your procurement team needs to secure a vendor, reach out to local small businesses. Diversifying your vendors starts with diversifying your search parameters.
To hear the full discussion, be sure to check out the complete recording.
Watch It Now!
And check out Hello Alice’s Black Business Temp Check for a review of the numbers.