Empowering Excellence: Building Ecosystems for Black Entrepreneurs
New research by Accion Opportunity Fund (AOF), with philanthropic support from LegalZoom, offers insights into the experiences and motivations of Black entrepreneurs who are driving a nationwide entrepreneurial surge.
Based on a survey of 660 Black small business owners (of which 70% were women) who have been in business for at least three years, as well as a focus group discussion, this research uncovered several key findings.
Key Findings
- AOF’s research demonstrates that Black entrepreneurs remain resilient despite major setbacks during the pandemic and the lingering impacts of record high inflation. Nearly 70% of survey respondents reported breaking even or making a profit from their business. Black-owned businesses are opening at the fastest rate in 26 years, with Black women leading the way.
- While Black entrepreneurs are creating jobs and growing their businesses, their full power as engines of our economy remains untapped because of a lack of support. Seventy-six percent said access to capital was a challenge and of those who have never received money for their business, nearly 80% said they either could not find the right support or could not afford to pay for services that would help connect them to capital.
- Black-owned small businesses are particularly vulnerable to emergencies or economic shocks. Eighty percent of Black entrepreneurs surveyed said they had three or fewer months of cash reserves on hand. Thirty-nine percent had less than a month’s worth of cash reserves.
- AOF’s research highlights that many Black business owners are motivated not just by revenue growth, but community impact. Twenty-six percent of respondents shared community or social motivations for starting their business, including creating meaningful jobs, providing affordable services, and improving their neighborhood. In communities of color, entrepreneurship offers the opportunity to meet broader needs that go unmet due to systemic racism.
Based on these survey findings, AOF recommends that:
- Policymakers tap into the full potential of Black entrepreneurs by investing in community development financial institutions (CDFIs) and public-private partnerships to increase access to capital.
- Small business service providers continue to innovate to provide low-cost products and services such as legal, tax, compliance, accounting, and bookkeeping. In addition to providing the service, there’s an opportunity to centralize and share resources with Black small business owners to access educational materials, connect with other business owners, and network for mentorship opportunities.
- Philanthropic supporters partner with mission-based organizations to build a robust small business support ecosystem for Black entrepreneurs. By investing in the capacity of service providers that focus on the needs of Black small business owners, we can directly address systematic gaps in capital access and support.