Entrepreneurship

Bigger Than Buying Black

An entrepreneurship program explores the challenges facing black-owned businesses

Ellen Hao

On August 12, at the chapel of Gifts from God Ministry (GFGM) in Englewood, twenty young adults sang and danced to James Brown’s 1968 hit “Say it Loud—I’m Black and I’m Proud.” Holding in their hands Future Business Certificates issued by the church, they celebrated their graduation from a six-week entrepreneurial experience program designed to show them the ins and outs of running a black business.

The program they were a part of—its full title is ““Dr. Webb Evans Black South Entrepreneurial Experience: Say it Loud, I’m black and I’m proud”—was one of sixty-four recipients of a $1000 grant from the Chicago Community Trust, a citywide community foundation. GFGM designed the program to let a younger generation “get a first-hand understanding of what it takes to develop and maintain a successful business,” according to the church’s video submission for the award. Young participants of the program toured local black-owned businesses including a beauty salon, a hardware store, and a McDonald’s, and listened to the owners share their experiences.

After all the field trips and meetings, the program culminated in an assignment, wherein the participants were required to sell toilet paper using what they learned from the past few weeks. The final winner succeeded in selling a total of 109 rolls of toilet paper with $40.33 worth of net profit.

“We feel this experience will be educational, informational, and inspirational, leading our youth to explore black business management courses as they continue their education,” said GFGM co-pastor Elder Chisum in the video submission.

The goal of the program was not simply to introduce the participants to ideas about entrepreneurship. As the name suggests, the color of local enterprises matters greatly to the creators. In fact, the course was established in honor of Dr. Webb Evans, a legendary social activist who earned the nickname “Mr. Buy Black” by encouraging African Americans to invest in their own community. Dr. Evans’s philosophy suggested two ways of making such investments: first, buying from local black businesses and second, to establishing local black businesses to facilitate buying black and offer jobs to unemployed people in the neighborhood. As a result, the two parts of the strategy complement each other and money circulates within the community.

The Buy Black movement has gained new attention in recent years. In her 2012 book, Our Black Year, Maggie Anderson, who lives in the Chicago suburbs, described her family’s endeavor to buy only from black businesses for all of 2009. In a New York Times profile, Anderson described how inconvenient this sometimes became: for example, she had to purchase gas from a black-owned Citgo thirty-five miles from her home.

Of course, Anderson is relatively wealthy and well-educated (she has an MBA and a law degree); for the majority of consumers, inconvenience can make it more difficult for them to change their habits. Our Black Year reflected, in particular, on the lack of growth, and perhaps even decline, in the number of black businesses within the city’s mostly black areas. “It was heartbreaking taking in how the West Side and the South Side used to have so many business owners, and now most of those businesses are owned by outsiders,” Anderson told the Times.

According to the 2012 Survey of Business Owners published by the United States Census Bureau in 2015, 9.4 percent of firms are owned by African Americans, who make up 13.3 percent of the population. For comparison, white-owned firms are 78.0 percent of the total, while white Americans occupy 77.1 percent of the population.

There are historical reasons for the underrepresentation of African Americans in business. As  research done by the Economic History Association reveals, the economic status of African Americans experienced significant growth during wartime in the 1940s, but starting from the seventies the introduction of new technology, coupled with a low education rate among African-Americans, severely hurt blue-collar manufacturing jobs. That was especially true in cities, that became information-processing and financial centers.

“The economic engine behind the mid-century improvement in black economic status was based on employment in the manufacturing and state sectors of the economy,” said University of Chicago Political Science Professor Michael Dawson, who is also the director of the UofC’s Center for the Study of Race, Politics, and Culture. “The devastation these two sectors experienced from the late 1960s to the present has led to massive un- and under employment in black communities, such as the South Side of Chicago… [These changes] also led in part to disproportionate failing of black businesses during the same period.”

GFGM’s program, if it becomes an annual event, will thus carry on Dr. Evans’s legacy perfectly: it encourages a young generation of black business owners while making sure the ethos of buying black is instilled in the program’s participants, who are promising consumers as well as potential business owners. It is a brave attempt to revive black entrepreneurship, grounded in the hope of alleviating the toll that structural change has taken on black communities.

However, such an attempt might have a hard time making real change if not accompanied by other societal changes. According to academics, the institutional challenges faced by African American communities cannot be solved solely by black entrepreneurship. An entrepreneurial strategy is only a partial answer, one that has to be accompanied by other structural reforms that fight existing racial discrimination and cover up the racial economic gap that has only been exacerbated over the last forty years.

A revival of black entrepreneurship, and an improvement in the socioeconomic status of African Americans in general, require separate pushes for institutional reform, social change and government support—but most of those pushes are still lacking. According to the official site of the City Treasurer of Chicago, for example, there is no governmental financial support specifically dedicated to minority business enterprises (MBEs). Instead, small businesses are the general targets. Even for small businesses, the Treasurer’s Small Business Loan Programs function mostly as an intermediate connecting small business owners to third-party lenders, in response to President Obama’s Small Business Jobs Act of 2010.

But according to Dawson, entrepreneurs who come from underserved communities are less likely, when subjected to the same standard as others, to get fully funded by third-party lenders, since the track records of their enterprises, the scale of their business, and the number and the quality of their employees all suffer from the existing racial inequalities.

“Research at many leading universities show that substantial racial discrimination continues in loan, retail, housing, and employment markets,” he said.

John Stallworth is the owner of John’s Hardware and Bicycle Shop in Englewood, the store where young participants of the GFGM program went to receive training in hardware business. When he started the business, he applied for the federal Small Business Loan, which granted him $70,000. That took him ten years to pay back, but he had trouble procuring the loan in the first place. “There were a whole ton of issues for whatever reason…Finally, someone else had to step in to put up a guarantee,” Stallworth told the Weekly. “They refused me because their policy was that, I had to put in ten percent [of the loan.] At that point I had ten percent, but I didn’t have the collateral. They also wanted collateral.”

There’s also lingering cultural hostility toward the expansion of black businesses. According to a Tribune article, many successful black entrepreneurs will hide that their businesses are black-owned in order to market their products to new clients. Only when the new customers become regulars do they consider revealing the nature of their business. When asked whether they realized this will only add to the racial discrimination, they gave the Tribune answers such as I’ll worry about it later, and “There’s a perception that black people can only do black stuff [which limits black-owned business].”

Together with a lack of institutional support, these social stereotypes can lead to strong resistance against significant growth in black businesses. And if black entrepreneurship cannot grow significantly, black-owned businesses will have difficulties realizing Evans’s vision of hiring the unemployed to create self-reliance within the community and founding more black businesses to invest in.

“It is true that a partial answer to bridging the wealth/income racial gap is building up black businesses and increasing the amount of a time any given dollar circulates within the black community before it leaves.  But that is only a small part of the problem,” says Dawson.

Of course, the GFGM program participants will encounter an additional problem: being a teenager doesn’t always square well with being a CEO. During the course, participants got to meet Jayden Hammond, the twelve-year-old entrepreneur who runs his own gourmet vegan popcorn business in Englewood. When asked what challenges young entrepreneurs are likely to face, Jayden immediately answered, “The first challenge will be not having the money and supplies.” Jayden himself solved that issue with a thoughtful business model: by making popcorn, Jayden could start his business simply with the popcorn popper he already had at home.

The biggest challenge young entrepreneurs will encounter, however, is a limited business scale, since they also have to go to school. “Usually every week we have about fifteen to twenty orders [online],” says Jayden, whose popcorn varies from three to eight dollars in price. “I do want to expand the business when I’m older, but right now the schoolwork is my priority since I want to have very good education.”

And black youth entrepreneurs should gird themselves for even more obstacles, since they’ll face the same problem as adults when they try to expand their business: existing racial inequality reflected in lending, marketing, and buying.

At the end of the interview, Jayden took an optimistic stance:  “I want people to know that J-Rock‘s Pop is a small business now, but it will grow larger and it needs people’s support,” he said.

When he grows up, that support may be bigger and more robust than a simple commitment to buying his products.

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