While economic crises aren’t easy on anyone, they can be disproportionately harmful to communities already affected by systemic disadvantage.
Among these communities, minority-owned businesses are typically one of the worst-hit mainly for various reasons. First, there’s a huge digital divide that leaves minority business owners lagging behind because of technological challenges.
While some of them may not be as tech-savvy as their counterparts, some may simply not have access to the same technology. A Google-commissioned study even found that 65% of diverse small businesses either find online marketing/advertising too complicated or don’t know how to do it.
Lack of financial literacy is another reason, with research showing that minorities have lower financial literacy scores. So minority small business owners may not have the knowledge to make sound financial decisions for their business to thrive. In addition, McKinsey & Co. found that minority-owned small businesses are more concentrated in sectors that the pandemic is most immediately affecting.
On top of all this, there’s the challenge with funding as minority small business owners are less likely to get approved. Even the Paycheck Protection Program, although designed to ease the financial strain on businesses, doesn’t necessarily benefit most minority-owned businesses. In fact, a study by the Small Business Administration found that minorities may not have received PPP loans as intended.
So now the question isn’t about whether COVID-19 will threaten minority-owned small businesses, but rather about what you can do to survive now and thrive into the future.
Tackling the Biggest Challenge Minority-Owned Businesses Face
For small businesses, problems with cash flow are likely among the biggest challenges during this crisis. Lockdown regulations and social distancing have compelled many businesses to shut down – either fully or partially. This automatically translates to loss of revenue, while business owners still have to pay rent and other expenses.
So tackling the capital and cash flow problem should be able to solve most of the other issues that small businesses face. But with many minority business owners being overlooked for federal funding programs, access to funding is a challenge all on its own.
That’s where dedicated loans and grants for minority-owned businesses enter the picture. PayPal, for instance, has set aside $530 million to support black- and minority-owned businesses. Out of this $10 million will go toward funding black-owned businesses facing problems due to civil unrest or COVID-19. And Facebook has committed $100 million in grants specifically to support Black-owned small businesses and nonprofits.
You can find several other organizations and companies that provide funding for minority-owned businesses. These options improve your chances of getting approved for funding because you are competing with fewer businesses. You might even want to look for more niche funding options such as industry-specific grants as it narrows down the applicant pool even further.
Considering an Online Approach
With the need for social distancing, many minority small business owners have had to stall or limit their operations. Some, like Junie Bee Nails, a skin and laser clinic in Harlem, have had to shut their doors permanently.
But for some, it might be possible to look for online solutions and take a digital approach wherever possible. For instance, you could set up a website or app where customers can place orders or seek assistance. NiLu, a lifestyle store in Harlem, became more focused on making products available through its website and continues to connect with customers through social media.
Of course, it’s true that many sectors won’t have the option to move to a fully digital format. For example, grocery stores and pharmacies will still have to find a cost-effective way to get the products in the hands of their customers. But applying digital solutions where possible could help you continue your operations with minimal safety risks. A few examples we’ve seen include:
- Bay Grape Wine Shop (Wine Shop – Oakland, CA) – Offering curbside pickup
- Homage (Restaurant – Martinez, CA) – Offering home delivery
- Tomatero Organic Farm (Farm – Watsonville, CA) – Setting up pop-ups inside of other businesses for customers to pick up their orders during the week
For services that don’t need employees’ physical presence, remote work and telecommuting can help in resuming operations. Sectors like consulting, education, marketing and advertising, sales, account management, etc. will benefit the most from this approach.
If you haven’t taken your business online before, you’re obviously going to need some help. Many groups and organizations are coming forward with free or discounted tools and consultations. Entrepreneur.com put together an extensive list of free tools and resources to help your business through the pandemic. A number of these options can help you make a smooth transition to digital.
Making Use of Free Resources
Besides financial assistance, minority small business owners will need guidance in several other aspects of business management. This could be in tackling challenges specific to their community or industry or even due to the age of their business. You can find plenty of community-specific resources to help minority small business owners navigate through this crisis.
Hello Alice, for instance, has two dedicated resource centers for Black-owned businesses and Hispanic-owned businesses. These resource centers will help you find community-specific information on how to apply for an emergency grant, start/grow your business, and more.
The Hispanic Federation also has a dedicated COVID-19 resource center, where you can find valuable information for your business. This includes resources for mental health services (which might be useful to you and your employees), telecommuting, emergency planning, etc.
Seeking Help from Experts
Emergency grants and resources will have a significant impact on many minority-owned small businesses, but they could have some limitations as well. Businesses that were already struggling before the pandemic, for instance, might have a hard time getting back on track even with some funding.
For minority business owners who are facing immediate risk, it might help to work with experts who can provide actionable solutions. Look for consultants who have experience in helping small business owners in your community and therefore, understand the unique challenges you have to face. You can often find reliable help by way of CDFI’s (Community Development Financial Institutions). Search for such organizations in your region and ask trusted colleagues for suggestions.
In addition, take full advantage of your current memberships, whether it be with your local Chamber of Commerce, a trade association, or other groups. They may be offering access to resources or experts that you don’t realize are available to you.
Stay the Course
Although the current crises have created difficult challenges for all of us as minority-owned businesses, we still find success by:
- Supporting each other. Share resources. Be a “sounding board” for another entrepreneur to help them think through their ideas. Offer words of encouragement at every opportunity.
- Buying from each other. We are still buying products and services for our home and our business. Be intentional about investing those dollars in another minority-owned business.
- Taking consistent action. Simplify your daily task list to only what’s essential and focus on taking consistent action each day towards meeting your goals.
- Asking for help when needed. The weight of the current crisis is taxing—physically, mentally, and emotionally. There’s no shame in asking for help. Reach out and ask for support as you need it.
- Continuing to look for opportunities. Given how quickly the marketplace is changing, you may find new opportunities to generate revenue pop up in the least expected places. Don’t be so focused on what’s not working that you miss opportunities to grow.
Yes, you’ve heard it before, but it’s still true. We’re in this together.