This entrepreneurship boom is particularly evident within the Black community. The number of Black self-employed professionals jumped from 1.1 million in February 2020 to 1.2 million in February 2022. Additionally, there are currently more than 2 million Black-owned small businesses in America.

 

Black entrepreneurship is just as diverse as the community itself, encompassing sole proprietorships and small businesses with either a handful of employees or hundreds of them (the U.S. Small Business Administration defines a small business as a company with fewer than 500 employees).

But why are more Black Americans making the leap into entrepreneurship? Several factors are driving this trend, which could have positive long-term implications for the community and the broader economy.

Black business ownership has experienced positive gains and setbacks, largely due to the pandemic.

Black businesses were disproportionately impacted by the pandemic and closed at twice the rate of other businesses. These businesses initially also had more challenges accessing the massive influx of federal aid made available through mechanisms like the Paycheck Protection Program (PPP). They were more likely to be denied bank loans from small or mid-sized banks where lending determinations often were more subjective, according to the National Bureau of Economic Research.

But there is another side to the story of Black entrepreneurship. Black business ownership was already growing before the pandemic, but surged during this period — increasing 28% by the third quarter of 2021 compared to before the public health crisis. Some experts argue Black business ownership rose during this time because Black workers were disproportionately affected by layoffs. Four out of the five occupations that employ the largest number of Black workers — retail sales, cashiers, cooks, and waiters and waitresses — experienced the highest rate of job losses at the beginning of the pandemic. With limited options in these industries, it is not surprising that some workers decided to redeploy their skills, start their own businesses, and try to control their own destinies.

Additionally, many Americans received stimulus checks they used as seed money for their businesses. Take, for example, Ellie Diop, a mom of four who launched her financial coaching and education business with her $1,200 stimulus check. Three years later, she is now running a seven-figure business.

Post-pandemic, Black entrepreneurship continues to rise. The number of new Black business owners has risen 38%, and 17% of Black women are either in the process of launching or already running a new business. A report from SCORE, the nation’s largest network of volunteer and expert business mentors that works with small businesses, also found that Black business owners are experiencing higher rates of annual revenue growth compared to U.S. businesses overall.

Though the future is bright for Black businesses, there is still more work to do to ensure Black entrepreneurs have the tools and resources they need to thrive.

How We Can Advance Black Entrepreneurship

It is clear Black businesses have experienced positive momentum in recent years. However, they still face a range of challenges, including limited access to capital, mentorship, and a lack of strong banking and lender relationships. All of this is on top of the daily pressure of running a business. Still, society can better support Black entrepreneurs in several ways.

Amplify and Elevate

As consumers, we can amplify and elevate these businesses. We can recommend Black businesses to friends, family members and colleagues. We can leave a positive review online and share our positive experiences with these businesses on our social media channels.

Many businesses rely on word of mouth to grow, so these small steps can generate a big impact.

Invest

We also can invest in Black businesses, whether it is our time, expertise, or resources. Black entrepreneurs have historically faced challenges accessing capital — not just from traditional banks, but also venture capital firms. Compared to their counterparts, they often lack generational wealth that can provide seed money for their businesses or family connections that can open certain doors.

At an individual level, we all can do our part by lending our time and professional expertise to business mentorship organizations like SCORE or any additional resources we have to diversity-focused funds and venture capital firms that target underrepresented groups, such as Harlem Capital Partners, or become an angel investor if you meet the requirements to become an accredited investor. Even if you do not have thousands of dollars to invest, you can make introductions for talented entrepreneurs to other professionals in your network, whether it is via LinkedIn or in-person.

Impactful Public Policy

At a policy level, federal, state and local governments can establish and maintain funding and operation support for programs that spur entrepreneurship within the Black community or that provide ongoing mentorship, connections and resources to Black entrepreneurs. Some examples include The U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund and microlending programs like Invest Detroit. Standing up new or strengthening existing supplier diversity programs can also create an additional growth pathway for Black entrepreneurs.

Positioning Black Entrepreneurs to Thrive

When Black businesses do well, so do their communities and the overall economy.

Small businesses are the lifeblood of their communities. They create jobs, give back and make their neighborhoods more enjoyable places to live. The goods and services Black businesses produce contribute to our nation’s economic growth, and the creativity and resilience of Black entrepreneurs fuels future innovations that transform the world around us.

The bottom line is that when Black entrepreneurs are positioned to thrive, we all benefit. So, we must ensure the current rise in Black entrepreneurship is not just a passing trend, but a long-lasting one.