Unlocking the key to economic empowerment in the black community
Did you know that Black-owned firms account for just 7.1% of all U.S. firms and only 1.8% of companies that employ more than one person? According to a report by the Small Business Administration, Black-owned firms are not necessarily profitable either. The report found that on average, for every dollar that a White-owned firm made, Black-owned businesses made 43 cents. In the face of these grim statics about the state of Black-owned business, also consider the fact that the Nielsen Company, a global information and research firm, projects Black spending power will reach $1.1 trillion by 2015.
This data should be a sounding board for the Black community—especially Black business owners, who will probably forfeit the lion’s share of $1.1 trillion and worse, miss out on an opportunity to reinvest those dollars back into the Black community. But even if Black-owned businesses did seize this opportunity, are there any guarantees they would re-invest those dollars and create jobs, products and services to benefit the Black community? The answer to this question depends on whether these individuals have a small business owner or an entrepreneur mindset and knowing the difference between the two.
Even though people use the terms “business owner” and “entrepreneur” interchangeably, I can tell you from my experience as an entrepreneurship trainer and coach that there are distinct differences in both the mindset and motivations of small business owners and entrepreneurs. Small business owners seem more interested in making a living, having a source of regular income, and controlling their life via self-employment. Entrepreneurs, on the other hand, are driven by the idea that they have the ability to make an impact on people and effectuate change. Instead of a regular income, they seek financial freedom. Entrepreneurs also thrive on providing value, collaboration and growth.
Another distinction between small business owners and entrepreneurs relates to their risk profile. Small business owners crave stability. Entrepreneurs, on the other hand, take calculated risks and are willing to fail. Matters surrounding employment raise another important distinction. Small business owners tend to pay their employees at or below market rate, and typically don’t view employees as business assets. Entrepreneurs, on the other hand, see employees (and customers) as huge assets to their companies and are willing to offer top salaries for their service and loyalty. But, the biggest difference that I have observed in the mindset of small business owners and entrepreneurs is a long-term vision. Entrepreneurs clearly recognize a need for systemizing, growing, and positioning the business to sell for a profit; whereas, small business owners are more likely to focus on day to day management activities, make all the decisions, and seldom have a plan for succession.
An analysis of the mindset of small business owners and entrepreneurs might not seem germane to the issue of economic empowerment for the Black community, but it is. Especially if you consider that many Black communities are inundated with liquor stores, nail salons, fast food joints, hair salons, and barber shops that typically don’t create and sustain a sufficient number of employment opportunities for Black people. This is not to suggest in any way that Black small business owners are “small minded.” There are many powerful examples of small Black business owners who make invaluable contributions to the Black community—and they are the entrepreneurs that will lead us on the road to economic empowerment!