By Julian B. Waddel

efore reading any further, know that this article is not about that, but there is a correlation between phrases like “Black-on- Black crime…”, “All Lives Matter,” and “That is why I do not shop with black businesses,” that require a deep exploration. For now, let us just explore the myths surrounding black businesses.

You’ve heard some of these before:

1. They are too expensive!
2. Their customer service is horrendous.
3. Their storefront looks homespun.
4. Their quality is subpar.
5. They are inconsistent.

I could go on, but you get my point. Before I begin debunking these myths, you must know that this conversation goes deeper than the “not all black businesses” narrative, as well as the “we are not monolithic” point. Black-owned businesses seem to get the short end of the business stick. In order to see the full picture while avoiding the pitfalls that accompany trying to explain fallacies associated with the black community, we must start at the macro level.

When starting a business, the most important element that leads to success is a strong foundation. Ever heard of the Bible story about building on the rock vs. on the sand? We should all be able to agree that a rock foundation is ideal, but what if you only have access to sand? This reality is more common than you think, and it is not racially exclusive.

According to the U.S. Bureau of Labor Statistics, about 20 percent of U.S. small businesses fail within the first year. Four years later, nearly 50 percent of that number have waned. Finally, 10 years later, about 33 percent of businesses have stayed afloat. These sobering stats do not contemplate the probability for weathering a global pandemic and other external factors.

Now for a moment, let’s consider what may have caused so many small businesses to fail. Also consider, how many of these small business owners either completely relied on their business for personal survival, or had to take on a job just to keep the business afloat. LendingClub.com asked more than 2,500 current and aspiring entrepreneurs about their most common problems. The results are interesting:

1. Access to Capital/Limited Cashflow
2. Marketing/ Advertising
3. Time Management
4. Performing Administrative Work
5. Hiring and Retaining Top Talent
6. Providing and Managing Benefits
7. Navigating State/Federal/Government Regulations

Lets address the first item, which affects all the others. Without access to capital, along with limited cashflow, the small business owner has significantly fewer options, and that makes it a pain to successfully address all the other problems. The consensus has been that “new startups usually have limited customers and many competitors.” This means that there is a high risk that the start-up may fail. If that happens, the startup might not be able to repay the investment.

Viewing Access to Capital Through A Racial Lens

Now, let’s explore access to resources through a racial lens. Historically, black-owned businesses have struggled to access traditional bank financing. Black business owners have had to resort to launching their ventures with help from their own savings, friends and family, or personal credit cards. Only 29 percent of loans sought by black small business owners were approved compared to a 60 percent approval rating for white small business owners. This alarming data was compiled in a 2020 Brookings Institution report, which cites its data from a small business credit survey conducted by twelve Federal Reserve Banks.

Did you catch that? The data was pulled from a small business credit survey. That means that creditworthiness was not only a major factor in loan approval rates, but may even be the primary measuring tool used by banks for access to capital.

“Black-on-Black Crime”

Ok, maybe it sounds like the evidence justifies the myths surrounding black businesses instead of debunking them. No, that is not the case. Earlier, I brought up black-on-black crime and here’s why:

Black-on-black crime implies that intra-racial crime is exclusive to the black community however, studies show that most crime is intra-racial due to proximity. I recently read that “82.4 percent of white people are killed by white people,” yet there’s no such thing as “white on white crime.”

In the same way that intra-racial crime is more prevalent in white communities; the black-owned small business myths listed previously are actually more applicable to small businesses with limited access to capital, regardless of race. As a consumer, you will sometimes compare your small business experiences and their available resources to those had when shopping at massive corporations. This doesn’t mean that I’m negating your personal experiences, but I am saying that attributes such as poor customer service or high prices, are not exclusive to black-owned businesses.

Unfortunately, the perpetuation of these myths makes the odds much harder for black-owned businesses to succeed. Combine that with the obstacles I mentioned above, and you have created a perfect storm of stumbling blocks. But still, we rise.

In the Greenwood District of Tulsa, Oklahoma, the community of black businesses flourished. The success found within Black Wall Street was due to continuous community support, not just through patronage, but through access to support systems and mentorship that enhanced the ecosystem.

Although segregation and Jim Crow laws were meant to have a negative impact on the community, those barriers contributed to the enhancement of Greenwood’s already strong infrastructure.

Make informed choices and think critically about where you spend. Next time you shop, consider whether your belief, or negative experience, is exclusive to black-owned businesses; or do these issues plague small businesses, in general.

Julian Waddell, is a business professor and Entrepreunurial Laboratory Director at Oakwood University and author of the recent book Tales From the Greenwood District: A Peek into Black Wall Street Before the Massacre.