More than a year in, the COVID-19 pandemic has cruelly devastated small business owners everywhere, and forced many of them to close their doors permanently. A national poll conducted by Small Business Majority revealed the drastic set of challenges that small business owners are facing today, especially entrepreneurs of color. They are experiencing systemic barriers to access financing and business resources.
Challenges facing minority businesses aren’t new. These issues have stymied business owners of color for generations. Starting a small business as a minority is not so different from challenges faced by other small business owners, except minorities face more hurdles and obstacles to overcome. Ultimately, the goal of all owners is to engage more customers and give customers more than what they expected.
This article specifies three distinct challenges facing minority entrepreneurs and what solutions you should take into consideration.
Economic Barriers
It’s a common story where the minority-owned business owner gets rejected in the loan application from the bank due to the lack of personal wealth. Therefore, these entrepreneurs tend to raise their capital from the internal investment from family and friends rather than external loans and debts. According to Biz2Credit, 26.9% of big bank loan applications were approved in November 2020.
One survey from the U.S. Census Bureau indicates that nonminorities’ capital is higher eleven to sixteen times than African American and Hispanic businesses. Similarly, women’s wealth is only 36 percent as much as men’s.
Where To Access To Capital
There are many options out there, but it’s not easy as you may not know where to start. Hence, it’s a trial and error process, and business owners can ask for help from different places such as smaller banks, non-profit organizations. Many of them are free and willing to give you loans or financial advice, including Small Business Development Centers (SBA), Minority Business Development Centers (MBDC), U.S. Chamber of Commerce, Community Development Financial Institutions (CDFI), etc.
To qualify for a loan application, most banks and organizations require diverse ownership certification, which is used to verify your business classification. If your business is not certified yet, we highly recommend you to become certified with Enhanced Digital Certification in minutes and at only $25.
Limited Access To Business Networks
No matter the business size, a business network is a critical factor in growing and expanding a business. Networking is a means for small business owners to form relationships with others in related industries, potentially becoming their new customers or partners. More people you meet, the higher chance your business is being heard and remembered.
Unfortunately, these opportunities are pretty limited to minority-owned businesses. The creation rate of minority entrepreneurs is low, which leads to fewer successful businesses led by minorities. This may be because of the disproportionate impact of professional networking involving people from similar backgrounds. Hence, things are more difficult for these groups to seek advice, gain perspective, draw new ideas or funding.
Step Up The Networking Game
If you have decided to prioritize strategic relationships for your business, these groups may be a good place for you to get started:
- Your local chamber of commerce
- Service Corps of Retired Executives (SCORE)
- Entrepreneurs’ Organization, Business Networking International (BNI)
- Young Entrepreneur Council (YEC)
- Rotary Club
- Local or National Conferences
Note: Don’t also forget to utilize the powerful online tool LinkedIn.
Limited Opportunity For Skill Development
In today’s highly competitive market, many business owners find it critical to participate in training and educational opportunities. It may help bridge the entrepreneurship gap and increase small business prosperity and employment opportunities.
The educational level of a business owner is also positively correlated with business success. One study found a 6 percent gap between African Americans and whites, while 30 percent of the gap is between Hispanics and whites.
Given the lack of available resources and lower educational levels needed to run small businesses, new minority entrepreneurs enter the game with a “desperate” – lack of confidence, not tech-savvy and not having such a mentor to turn into when needed.
Master Your Entrepreneurial Skills
To be successful, consistent improvement should be your priority. Things like monitoring cash flow, managing social media, optimizing marketing strategies, or identifying SWOT can help you secure your business.
Along with learning from your past successes and failures, it’s essential to keep yourself updated with the newest technology, trends or skills. There are many paid and unpaid courses in the online learning platforms like Coursera, Skillshare, Masterclass, Udemy, etc.
Ultimately, Your Goal Is To Grow Your Customer Base
Here at SupplierGATEWAY, we offer a robust platform for minority entrepreneurs where you can gain access to new business opportunities and connect with customers of all sizes – from Fortune 500 companies and globally recognized companies to your local health system, manufacturer or business.
Our easy-to-use app will help you stay connected to the opportunities that could make all the difference to your bottom line. Get started today for FREE!