Pandemics sure can put a damper on the normalcy or any society, businesses are the most susceptible economic victims.
Due to the restrictions put in place because of the Covid-19 virus, most businesses, especially the small ventures, had little or no patronage, hence some businesses had to come to a temporary or complete halt. How did this affect Black-owned businesses? How did the business of other minority groups fare? Where do we go from here? In other words, What is the prospective fate of such businesses, moving forward?
Black-owned businesses vs. Covid-19
A great proportion of black-owned businesses in the United States are in the hospitality sector, services such as restaurants, retail food stores, hotels, laundry services, event catering and planning and a host of others fall under this sector. The life of these businesses involves physical contract with customers, unfortunately, the social distancing protocol restricts physical contact.
Before the pandemic, Richard Anderson, owner of kinford Brassband and music group, a highly sought after music band in New Orleans, was hit by the virus, it took a month to recover and get his lungs fit and ready to play. His business was hit hard from a weekend performance of 20 gigs to zero during the early months of the pandemic, this was especially hard because some of his team members depended solely on those gigs as their main income stream.
Another small Black-owned business sole proprietor, Monique Greenwood, was optimistic about the business year, as she just celebrated 25 years of her SME Akwaaba Bed and Breakfast Inns, business was great, she had an occupancy projected rate of 80%. Then came Covid, and swept her expectations from 80% to zero, resulting in her laying off 15 of her staff and remaining without income for 3 months.
Monique and Richard are just two of the 440,000 (41%) Black-owned businesses, wrecked by the Covid-19 virus, according to the report of the National Bureau of Economic Research.
Why are black-owned businesses mostly hit by the effect of covid-19? Firstly, the great wealth disparity between White and Blacks. In a study conducted by the Hamilton Project in 2019, the wealth held in White homes stood at $188,200 which is 7.8 times greater that Black homes. This perpetual economic gap smites black communities and black-owned businesses.
Secondly, the negation of financial development for Black people hampers the growth of Black fortune. The Institute of Policy Studies reports that it could require over 200 years for black families to achieve the same wealth as their white counterparts, and this is due to discriminatory policies and structural racism present in the U.S alone.
Thirdly, Black-owned businesses are prone to commencing with way less capital, than White-owned businesses. A study conducted by the Stanford Institute for Economic Research shows that in their first year of business 7 percent of white-owned businesses are granted bank loans, while 1 percent of black-owned businesses are granted access to loans. The onset of Covid-19 has made obtaining credit worse as seen from Mckinsey’s small business pulse survey.
Covid-19 vs Other minority-owned businesses.
Like the Black-owned businesses, other minority groups have also been hit hard by the pandemic.
- Hispanics: Before the outbreak, the Latino community had a bountiful business year. There was a 4% decrease in the credit applications by Hispanic business owners leading to a credit score increase of 588 to 618. After the pandemic there was a 42% decline in revenue, leading to a negative cash flow (they spend extra money than they generate).
- Asians: Pre-covid research shows that only 9% of Asian owned businesses were financially perturbed in contrast to the 19% and 16% of Black and Hispanic owned businesses respectively. Sadly there was a post-pandemic revenue loss of 90% among Asian-owned businesses, which is greater that the 85% for Blacks and 81% for Hispanics. The surge in Asian numbers can be attributed to an increase in hate crimes against Asians as they were blamed for the coronavirus.
From the reports and studies conducted, every business was hit hard by the pandemic, some more that others as the numbers have shown. But is there relief? Can effect be suppressed, moving forward?
Help for minority-owned businesses in the US
- Make the best use of funding platforms: To support the minority groups there are grants available to businesses who are struggling to keep their business afloat or even fighting to reopen. Take advantage of these platforms.
- Certify your business: The Minority Business Enterprise (MBE) certification opens access to lots of advantages, such as access to corporate agents, loans, education training and lots more. Get certificate through the National Minority Supplier Development Council and leverage these opportunities.
- Innovation: Innovation is a key component of any business in these recent times, what new services can your business offer? How can you make adjustment in your business to accommodate the recent trends of events and make a profit?
- Partnership: There is unity in numbers, yes? Work with other small businesses, team up to form stronger businesses, network with other small business owners in your community, not only does it boost business but you can learn a few things on how they steer through challenges.
- Assistance from sturdy companies and benefactors: Major companies could assist SMEs by providing financial support. Benefactors and major companies have swooned to action, Beyonce Knowles-Carter is donating income from her new single to black-owned businesses. Google, Facebook, Netflix and host of other sturdy companies are creating avenues to support and strengthen minority-owned businesses.
Finally, The pandemic has caused huge losses and created enormous challenges for minority-owned businesses. At this point, we can only go up from here, business would not only survive but blossom and emerge firmer, with greater profits in the coming business year.