Minority entrepreneurs contribute about $1.1 trillion to the U.S. economy every year. Yet when it comes to accessing capital, the juice that gets every business up and running, there’s a deep-seated divide at the race/ethnicity level.
Black entrepreneurs are three times more likely than white entrepreneurs to see their business profits undercut because of a lack of access to cash flow. They’re also two times more likely to see profitability hurt because of how much it costs to access the little capital that’s within reach — like high-interest credit cards, for example — compared to white entrepreneurs.
It’s something that Shareef Abdul-Malik, founder of WeBuyBlack.com, has seen keep potential entrepreneurs at bay. Even when it comes to the relative low cost of running an internet business, which his website does for more than 2,000 independent black vendors.
“It’s hard for them to get loans, it’s hard for them to reach people because of a lack of resources,” says Abdul-Malik. “There are a lot of reasons why black businesses may actually fail, and I think a big part of that is the [lack of] community support.”
He started his online store as a “social experiment” to reverse that trend. WeBuyBlack.com, to him, wants to replenish the capital drought black entrepreneurs face in their communities by expanding that community to a global level.
According to a survey of 290,000 businesses with employees, 63.9 percent relied on personal savings or family contributions to get up and running. When studied by race, black entrepreneurs were more likely to depend on credit card debt than any other form of initial capital.
As black entrepreneurs move their products online, they may be carrying that disadvantage with them. A recent report by the Pew Research Center shows that while 20 percent of white adults made money by selling items online in the past year, only 11 percent of black adults used online platforms to sell. Nationwide, 18 percent of all adults were an online vendor in the same period, on average.
Abdul-Malik is optimistic that percentage will start to increase. “Blacks are about three times more likely than any other ethnic group to start a business, and I think everyone is sort of converting and moving over to an online platform,” he says. But the fear of failure is real, and that’s where he sees a website like WeBuyBlack.com, and apps like BuyBlack by Angie Coleman, come in. Now an artist from a small town in the United Kingdom can sell her paintings of Ugandan heritage to communities in Atlanta, Nairobi or Los Angeles. That’s a real-world connection that Abdul-Malik made happen, when the painter reached out to him over Instagram.
“She had a very hard time getting her work out there even though she felt like it’s very good work,” he says. “So I told her to join WeBuyBlack.com. All you need to do is set up a shop, add your information so you can get paid, and she agreed.”
As he regularly does with new entrepreneurs, he posted some of her pieces to WeBuyBlack.com’s Facebook and Instagram pages, reaching a combined 200,000 followers. “She received a sale within the first hour, and it was like for $375. She was blown away,” he says.
“When they know there’s a community in place, somewhere to buy from where you already fit in, and you can just upload your product and know you’re going to receive visitors — I think that sort of gives them an incentive to join,” he says.
The market for his website is growing. Black entrepreneurs are some of the fastest growing in the country, jumping from a percentage total of 7.1 percent of U.S. companies in 2007 to 9.4 percent in 2012. Black women are taking on business leader roles at a rate faster than any demographic, spiking 322 percent between 1997 and 2015 among all entrepreneurs.
But if they want to keep that momentum going, says Abdul-Malik, they’ll need to start building the communities they came from into active consumers. Online marketplaces catering to black vendors are a good place to start.
“We have all of these social ills, many, many many social ills, and here is an opportunity for us to possibly fix that [through entrepreneurship],” he says. “I think that’s one of those proposals on the table that actually makes sense.”