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Many minority entrepreneurs have been disproportionately hurt by lack of access to capital and other economic resources necessary for starting or building a business. Unfortunately, these owners often struggle with discrimination and other harmful practices that go beyond economics to further impair their ability to be successful. However, through the support of the community and clientele, these businesses can succeed long-term.
In This Post:
How Do Minority-Owned Businesses Affect the Economy?
When a business is at least 51% minority-owned and controlled (defined as a business controlled by someone who is at least 25% percent Black, Hispanic, Asian, or Native American), it is considered a certified minority-owned business.1 These corporations account for the fastest growing segment of the American economy.
The United States has always been a melting pot of cultures and communities. As more of these diverse groups enter the market, minority owners often find it difficult to obtain sufficient support to stay in business.
Minority-owned ventures are less likely than their non-minority counterparts to receive loans, as well as more likely to receive lower loan amounts, pay higher interest rates, or be denied funding. According to the Survey of Small Business Finances, minority-owned firms receive about 43% of what non-minority firms receive.2 The black-white wealth gap in the United States could cost the economy $1-1.5 trillion per year by 2028.3
What Can You Do to Help Support a Minority-Owned Business?
Discriminatory financing, lack of social capital, and other disparities among minority-owned businesses lead many to rely on the support of their customers. Whether it’s through word-of-mouth advertising or social media promotion, spreading the word about a unique business can help boost awareness and profits.
There are many ways to support a minority-owned business. As with any small company, many owners appeal to a niche market that can’t typically be bought for the same quality as a large-chain store. Coffee shops, florists, restaurants, boutiques, and other services are places that Americans often spend money every day. By swapping a Starbucks drink, McDonald’s meal, or Target run with a visit to a local, minority-owned business, you’re boosting the economy and building diversity, which can further help build community prosperity.
Amid the COVID-19 pandemic, it may take a bit more time and effort to actively seek out minority-owned businesses. However, once you identify more of these shops and restaurants and add them into your daily routine, buying from these businesses can become second nature.
Another useful tool to help promote minority businesses is social media. Though you might be aware of minority-owned businesses in the area, those in your social circle might not. Engaging with family and friends on social media can help bring awareness to diverse entrepreneurs. Your pictures of new purchases or meals can be the key to fueling new business.
Minority entrepreneurs make up a critical part of local and national economies. Sustaining these ventures can be advanced by financial institutions and policies, but strengthening their customer base and revenue growth starts in the community and on a personal level. Learn more about the importance of these businesses and how consumers, other small business owners, and municipalities can help.
1 “How to Get Certified as a Minority-Owned Business,” Inc.com
2 “Why the future success of our economy depends on the expansion of U.S. minority-owned business”, Minority Business Development Agency
3 “Building supportive ecosystems for Black-owned US businesses,” McKinsey & Company, 29 October 2020