By Bekitembe Taylor
It’s been said that 90 percent of all businesses fail within their first year. Though the unemployment rate nationwide since April has been 5.4 percent, it is twice that number consistently for African-Americans.
As the nation continues the debate on raising the national minimum wage state by state from $7.25 to $15, could the solution to the income gaps that occur between Blacks and their counterparts lie in entrepreneurship? Michael T. Hill, president of the Atlanta Metropolitan Black Chamber of Commerce (AMBCC), thinks that being a business owner is a great uncharted horizon for the Black business professional.
“Anyone who can come up with a great idea, or identify a need that can be addressed, or can commercialize it, that individual can sustain himself and his community with it,” he said. “One of the best ways to become an entrepreneur is to franchise… to buy into a brand that is already proven to work.”
Though McDonald’s restaurants were founded in 1940, it was Ray Kroc who helped usher the brand into a full-fledged corporation in 1954 by opening franchises nationally from the single store he bought in Des Plaines, IL. Colonel Sanders of Kentucky Fried Chicken, like Kroc, began his visibility in commercials and merchandising for his brand because of the American love of southern fried chicken nearly 80 years ago, and the restaurant chain still stands.
“Banks don’t give financing to people they don’t know,” said Hill. “They are more willing to give funds to names they recognize. That’s what makes franchising so important.”
Hill, 45, remembers that his grandparents had both trades and professional businesses that were able to sustain each other during changes in the economy. In the Black community, the businesses that were able to sustain themselves during the recession of December 2007 to June 2009 were barber shops, soul food restaurants and hair salons because they were services that African-Americans continued to frequent aside from the issues of the economy.
BlackDemographics.com stated that while all races earn a median income of $50,502, the African-American household averages at $33,460. Atlanta is viewed by Forbes Magazine, in a January 2015 article, as the top city for Blacks to become successful because the median income is $41,803, but self-employment is only 17.1 percent.
Hill said that one of the pitfalls that keep Black businesses from growing is that they may not be able to afford to expand.
“At the Chamber, we want to help that business owner gain the resources necessary to expand, so that they can hire more people and they can move onto something else,” he said. “That’s how you can stimulate the economy in the community. If we could just get one quarter of our buying power, that’s over $200 billion. Think of all the jobs that can be created from that.”
A 2013 Nielsen study revealed that African-Americans have a buying power of $1.1 billion, which will expand to $1.3 trillion by 2017. During the Christmas holidays of 2014, there was an outcry on social media in the Black community to only buy Black in response to the police shootings of Michael Brown and Eric Garner. The officers involved in both cases were not prosecuted.
While Hill sees the validity of the campaigns to buy Black as an emotional response to solidarity, the overall market remains untapped because the African-American consumer is only responding to what is most accessible or elicits the most relevance to a personal need.
“People will do what marketers tell them,” said the former telecommunications professional. “If a report comes out that says coffee is good for us, coffee sales go up. If a report comes out that says coffee is bad for us, coffee sales go down.”
Hill and his compatriots of the AMBCC teach that there are five fundamental issues that continue to keep African-Americans at or below poverty level:
Lack of knowledge– I don’t know anything about this, so someone has to tell me what to do
Apathy– The lack of belief that someone can succeed, lack of feeling
Dependency– I need someone else to provide the resources in order for me to become successful
Trust– Once I am successful, my real estate may change, and I may not be able to hold onto the same relationships before I started business because I no longer trust the people who were around when I started.
Lack of resources– Materials, data, feedback and capital needed to sustain long-term growth
“By overcoming these issues, we can then become a collaborative community,” said Hill. “We don’t need another seminar or conference on how to do business. We need to follow proven models of success.”
Hill explained that the Chamber puts potential business owners in the room with industry partners who can give their members a model to follow to their continued success. For instance, UPS is a partner because the company can show businesses how to maximize their shipping needs. The big question for most prospective entrepreneurs, aside from owning a restaurant franchise, is what industry they should expand into.
“Black people own more cell phones than anyone in the country,” said Hill. “Why not get in the supply chain for the cellular industry?”
A 2014 demographic study by the Pew Research Center of Internet, Science & Tech revealed that, “72 percent of all African Americans—and 98 percent of those between the ages of 18 and 29—have either a broadband connection or a smartphone.”
This is good news for inventors like Eric Hamilton, who came up with an HDMI device called Tinystic that allows the user to broadcast their cellular apps onto an HD screen. The digital divide or the tech industry could be the next frontier for the Black entrepreneur, but Hill said that you can only jump into business once ones craft has been skillfully studied.
“Go to school, get an internship in the field you want to go into, find ways that you can learn about the business you want to create,” he said. “The next thing you do is become the owner.”
Hill also said that having a social media presence once getting a company off the ground will help to sustain it in the long run. The Pew Research study showed that, “Overall, 73 percent of African American internet users—and 96 percent of those ages 18-29—use a social networking site of some kind. African-Americans have exhibited relatively high levels of Twitter use since we began tracking the service as a stand-alone platform.”
Along with the Black Chamber, prospective business owners can also receive tutelage on how to begin and sustain their business from local incubator Club E in College Park , or the BizLynks Center in Chamblee, which allows professionals to stay connected to their emails and important announcements while receiving offsite training.
