By Zachary Rinkins
A widely circulated sentiment explains some of the economic challenges of Black Americans contending for the American dream posits: When mainstream America catches a cold, Black America catches pneumonia. But what happens when the entire globe confronts a once-in-a-generation pandemic?
“Black businesses were disproportionately affected by the pandemic based on quite a few parameters. COVID-19 exacerbated what those parameters were,” said Constance Y. Jones, senior director of network delivery services at the National Minority Supplier Development Council Inc., or NMSDC.
Global consulting powerhouse McKinsey’s Institute for Black Economic Mobility attributes much of the Black enterprises’ unequal path to recovery to multi-generational challenges like lack of access to capital, racial biases, unresponsive capital markets, and government regulators that have historically created hurdles to economic progress.
During the height of the pandemic, Black-owned businesses declined by more than 40%, per the “State of Black-owned Small Businesses in America,” a congressional report prepared by the U.S. House Small Business Committee Majority Staff. The report further reveals Black enterprises sustained the largest drop across any ethnic group.
“Now presents a great opportunity for Black-owned businesses. They are coming back, being more innovative, transformative and agile. It has taken some work to get there,” Jones said. “But I do think that they are now providing ample solutions and getting back into the supply chain.”
Noted industry, nonprofit, business advocacy and minority business groups have secured new initiatives to strengthen Black-owned businesses and help them succeed with programs to address technical assistance, access to capital, capacity building, and increase procurement opportunities. Federal and state governments have extended support through low-interest loans and procurement programs.
“Our members would not be in the [Billion Dollar Roundtable Inc.] if they were not supporting minority-owned businesses. Many of the corporations that are members of the Billion Dollar Roundtable have had a consistent year in terms of 2020-2021 year-over-year performance and revenue,” said Shelley Stewart Jr., chairman of the Billion Dollar Roundtable, an organization that recognizes corporations that spend at least $1 billion with Tier I minority-owned firms.
“I think the fortunes of many of our Black-owned businesses rise and fall with how our Fortune 500 and the 28 members of the BDR are performing,” he added.
NMSDC’s Jones agrees that minority-owned businesses and mainstream businesses have a shared economic destiny.
“With the murder of George Floyd and everything else that has happened and transpired over the last year and a half, we are seeing more focus on providing real opportunities for those smaller businesses,” she said. “You have some corporations that are being very deliberate and intentional about putting Black businesses on their shelves and then their stores.”
Corporate America helps diversify supply chains
Last year, Target Corp., for example, announced a commitment to spend more than $2 billion with Black-owned businesses by the end of 2025. The Minneapolis, Minnesota-based retailer’s commitment is one component of its’ larger Racial Equity Action and Change, or REACH, a diversity, equity and inclusion strategy. REACH’s focus areas are:
• Building an inclusive work environment for Black team members.
• Creating an inclusive guest environment for Black Americans.
• Supporting Black communities.
• Convening partners to impact civic discussions.
“We have a rich history of working with diverse businesses, but there’s more we can do to spark change across the retail industry, support the Black community and ensure Black guests feel welcomed and represented when they shop at Target,” said Christina Hennington, executive vice president and chief growth officer in a company release.
Target’s commitment includes increasing products from Black retailers, spending more with Black marketing agencies and establishing the Forward Founders program for startups. Black Beyond Measure initiatives and the Black-Owned Business Vendor Fair opportunities align with the retail giant’s ambitious inclusion strategies.
“The bold actions we’re announcing today reflect Target’s ongoing commitment to advance racial equity for the Black community,” Hennington said. “They also represent a significant economic opportunity for hundreds of new Black-owned companies, [that]we look forward to doing business with for years to come.”
The U.S. Census reports that Black-owned firms generate $133.7 billion in annual receipts. Corporate America has reportedly announced distinct pledges to inject $50 billion into Black communities and entrepreneurial ecosystems collectively. Corporations like Meta [formerly known as Facebook Inc.] announced its $100 million grant program. Apple Inc. pledged $100 million to its Racial Equity and Justice Initiative.
Black-owned companies are also investing in economic progress. Chicago, Illinois-based Ariel Investments LLC has partnered with other financiers to create Ariel Alternatives LLC. Its Project Black initiative resolves to scale minority-owned businesses to serve as suppliers-of-choice to Fortune 500 companies, driving economic equality from the entry-level to the boardroom. It aims to close the wealth gap by generating jobs and economic growth within underrepresented communities, focusing on Black and Latino communities.
“It is no secret that the racial wealth gap in America continues to widen, day by day,” said Leslie A. Brun, co-founder, chairman and CEO Ariel Alternatives LLC, in a company statement.
“While we have been encouraged and inspired by the supply chain diversity commitments recently made by large corporations, we believe that it is time to accelerate these promises with real, measurable steps,” he added. “Our work will aim to bring operational excellence, financial resources, minority ownership, and leadership to these companies.”
Research from University of California Santa Cruz economist Robert Farlie concluded that the number of Black firms rose to roughly 1.5 million since the pandemic — representing a 38% uptick. Comparatively, in the same period, Hispanic firms increased by 15%, white and Asian entrepreneurs fell by 3% and 2%, respectively.
These corporate efforts — combined with highly publicized racial incidents, re-energized buy-Black campaigns, highly successful women-led enterprises and government support, coupled with old-fashioned hard work and innovative business practices — have helped Black enterprises nearly recover pre-COVID levels.
“We’ve made some good strides. But there are always opportunities to make great strides,” NMSDC’s Jones said.
Several resources are available to help Black entrepreneurs create an ecosystem for business success. They include:
National Minority Supplier Development Council Inc., or NMSDC, advances business opportunities for certified minority business enterprises, or MBEs, and connects them to corporate members. Whether you’re a small minority-owned organization or a billion-dollar powerhouse, NMSDC is committed to helping you solve the growing need for supplier diversity. To learn more, visit nmsdc.org.
Billion Dollar Roundtable Inc., or BDR, was created in 2001 to recognize and celebrate corporations that achieved spending of at least $1 billion with Tier I minority- and women-owned suppliers. BDR promotes and shares best practices in supply chain diversity excellence through white papers. In discussions, the members review common issues, opportunities, and strategies. To learn more, visit billiondollarroundtable.org.
U.S. Black Chambers Inc., or USBC, is known as the “National Voice of Black Businesses.” USBC provides committed visionary leadership and advocacy in the realization of economic empowerment. Through creating resources and initiatives, USBC supports a network of African American chambers of commerce and business organizations in its work of developing and growing Black enterprises. To learn more, visit usblackchambers.org.
U.S. Department of Commerce Minority Business Development Agency, or MBDA, is the only federal agency solely dedicated to the growth and global competitiveness of minority business enterprises. The agency’s programs, services, and initiatives focus on helping MBEs grow today while preparing them to meet the industry needs of tomorrow. To learn more, visit mbda.gov.
U.S. Small Business Administration, or SBA, works to ignite change and spark action so small businesses can confidently start, grow, expand or recover. It continues to help small-business owners and entrepreneurs pursue the American dream. SBA is the only cabinet-level federal agency fully dedicated to small business and provides counseling, capital and contracting expertise as the nation’s only go-to resource and voice for small businesses. To learn more, visit sba.gov.
The National Urban League works to provide economic empowerment, educational opportunities and the guarantee of civil rights for the underserved in America. It is a historic civil rights and urban advocacy organization with 90 affiliates serving 300 communities, providing direct services that impact and improve the lives of more than 2 million people nationwide. For more information, visit nul.org.
Black Americans NMSDC Constance Y. Jones senior director of network delivery services National Minority Supplier Development Council Inc. Institute for Black Economic Mobility Global consulting powerhouse State of Black-owned Small Businesses in America Black-owned businesses Billion Dollar Roundtable BDR Christina Hennington Leslie A. Brun University of California Santa Cruz Robert Farlie MBE USBC The National Urban League