Building a Business While Black - It's Not So Easy
Without generational wealth, the foundation can be shaky
Hello friends, here’s another installment in my “While Black” series, inspired by a conversation with a friend.
Thanks for reading,
Sharon Hurley Hall
Building a Business While Black - It's Not So Easy
In talking to a friend the other day, she asked "why is it so hard for Black people to build businesses?" My immediate answer: the lack of generational wealth.
I'm not saying there aren't Black people who are rich, and even super-rich, but that's the exception, rather than the rule. A Business Insider report on the Forbes Billionaires List shows that only 7 of the 614 billionaires in the US are Black (and you can probably guess who's on that list).
A McKinsey report shows that the wealth gap between Black and white families is large. The median white family is $152,000 wealthier than the median Black family, and the median wealth of Black families hasn't grown much since 1992. In other words, the wealth gap is widening.
There are lots of reasons why this can happen. A cartoon I saw a while back shows the stark differences between how Black and white people grow up in the US (and not just in the US, as you'll see). This has a huge effect on both their personal wealth, and their ability to access alternative sources of funding.
Another instructive example is David Horsey's 2014 cartoon showing how Black and white people progress towards the American Dream.
It shows how few systemic obstacles there are to white people's advancement, and how many systemic obstacles there are for Black people. And it shows that some of the biggest systemic drivers of white people's progress have been the same factors that impeded Black people from progressing (yes, I'm talking about enslavement).
We know that Black kids are more likely to be excluded or expelled from school than their white peers, and about the school to prison pipeline. (If you’re interested, learn more about the school to prison pipeline in these articles from the ACLU and Tolerance.)
Once Black kids have been stigmatized as troublemakers, the opportunities available to them continue to shrink. This makes it less likely that they'll attend a "good" college or be able to easily start a business.
If they manage to avoid the school to prison pipeline, and make it to college, many Black students still have a different experience than their white peers.
That wealth gap I mentioned earlier means that with no generational wealth to fall back on, BIPOC students may have to take out loans and get jobs. It’s no wonder that Black people also graduate at a lower rate than their white peers.
Those who remain in the system still have to maintain a 4.0 GPA because they have to be better than the best to succeed. That’s because, whether you're talking about education, the workplace or launching a business, many people are ready to believe the worst of BIPOC. That attitude is racism, and another factor that makes life harder.
Sure, some white students also struggle, but the stats show that Black students leave college with more debt than white students.
When it comes to starting a business, some Black people may not have personal wealth, let alone generational wealth. Yes, there are exceptions (Madam CJ Walker springs to mind). But most Black people in the US didn't have the chance to start to amass meaningful wealth until the 1960s. Meanwhile, their white peers had a head start of a couple of centuries, thanks to Black people’s enslaved labor. Just let that sit with you for a while.
No matter what the color of your skin is, banks don't think someone who's carrying a lot of debt is a good risk. And remember, Black students typically have higher debt than their white peers. So you can imagine now much more difficult it is to for a Black business to get finance. And in a capitalist system, the inability to access funding also limits business growth.
That's without even considering the issue of whether a Black face "fits" or whether lenders are predisposed to apply harsher criteria to Black people. It happens in so many other situations that I wouldn't be surprised. In other words, it looks like we're all running the same race, but BIPOC are starting with a 10-ton weight on their ankles.
Sometimes Black people seek a white partner to circumvent the system. The white face makes it easier for them to access finance, and therefore makes it more likely their business will succeed. That just goes to show how deep the racist "white is right" attitude can go.
These differing experiences for Black and white people aren't unique to the US. In the post-colonial society where I live, most of the wealth belongs to the descendants of the enslavers. Their kids get the chance to have summer jobs in family-owned businesses. They can choose where they want to attend college, even if it's thousands of miles away. And they'll graduate without owing a cent, then return to a safe job in another business owned by the family.
Some white people in this situation don’t even bother with college, because they don’t have to. They know that nepotism will ensure that they outrank and out-earn Black people with PhDs and MBAs.
That's not the experience of most Black people. For some Black people, the norm is to struggle a little to provide opportunities for their children. There's a lot of juggling of priorities to make sure everything is paid for. And some kids don't get the option of living abroad. (I don't want to give a false picture; there are many who manage it, but they all talk about the financial hit, and some have to get into debt to ensure their children will be debt-free).
Similarly, many Black-owned businesses have to operate without the type of financial safety net most white-owned businesses take for granted. They can't guarantee that if business slows and they have to miss a payment or two, they'll still have a business in a few months' time. Black business owners just don't get the same kind of grace. And they're likely to get even less in the current economic climate.
Yeah, building a business while Black can be hard.
Update: one of my LinkedIn connections reminded me that while many Black people have always been enterprising and have sought to make something out of virtually nothing, the white world usually destroys their efforts. One such example is Black Wall Street, but there are many, many others.
Thanks for reading my perspective on this issue. Got feedback? Hit the comment button below:
© Sharon Hurley Hall, September 2020. Cover photo courtesy of Canva.
Have you read my book? Learn more about colorism in Exploring Shadeism.