Black business owners say they are prepared for growth despite a lack of capital and mentoring, Shopify data shows.
- 81% of black entrepreneurs say they need to ignore the noise of racism and discrimination in order to succeed
- 61% say that getting capital is a big challenge
- 83% say that despite systemic barriers, now is the time to shine
At Shopify, we know that a world with more voices in business is better for both businesses and consumers. Still, business today is not fair to all. Imagine if anyone with the potential to run a successful business could do so without hindrance. How many generations of wealth could be created if businesses had the resources they needed to grow? How much life can be changed?
Raising awareness about the impact of injustice on entrepreneurship is critical to our efforts at Shopify. To better understand the barriers that still exist for black-owned businesses, we recently surveyed and interviewed more than 500. Excited And established Black entrepreneurs across North America talk about their experiences*.
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Here’s what we learned:
Access to capital – at best – is critical
Racial and social justice movements have galvanized public support for black businesses over the past three years. That leads to investments and loans from banks, investment firms and technology companies, among others. Still, it doesn’t solve one of the central problems black-owned businesses face. Nearly two-thirds (61%) of entrepreneurs say getting capital is a big challenge. Even getting subsidies for black businesses is a challenge for nearly 60% of black entrepreneurs. Many say they turn to less convenient forms of financing — personal savings, expensive credit cards and hard-to-reach grants — to keep the lights on.
When asked what would help their businesses succeed, the answer was clear: easy access to financing and better terms on that capital topped the list.
Inequality costs the economy billions of dollars.
More money and mentorship in the hands of black entrepreneurs opens up sales opportunities and revs up the engine of the economy – up to $190 billion. According to Shopify data, more than three-quarters (78%) of black business owners say it’s challenging to reach non-black customers. Enabling access to digital platforms and service providers gives them more ways to increase advertising. We have partnered with non-profit organizations Operation HOPE In the year To create one million new black-owned businesses (1MBB) by 2030.
Black entrepreneurs work harder and smarter for their success
More than half (56%) of those we surveyed said they know they’re playing on a rough playing field. For them, it means working harder And Smarter to succeed. The majority of entrepreneurs we surveyed (81%) agreed that ignoring the noise of racism and bigotry is essential or they won’t be able to get their business off the ground. Still, they don’t let those obstacles stop them: 83% say it’s their time to shine, and 68% feel optimistic about their business growth.
“Increased public awareness of social justice movements like Black Lives Matter has led to more tangible support for black businesses, which bodes well for black entrepreneurs.” Brandon Davenport, Shopify’s head of fair trade, said. “For all my dreamers who have been sitting on ideas waiting for the right moment, that time is now.”
At Shopify, we believe in making entrepreneurship inclusive for everyone and injecting billions into the economy while doing it. Our research shows that more than half (59%) of entrepreneurs prefer to manage their own business instead of seeking external help. The remaining 41% stated that they are interested in calling experts for advice. Over the next ten years, our fair trade initiative will foster an ecosystem of services: access to capital, expert advisors, exclusive sales opportunities. We are leveraging four pillars – community, advocacy, research and education – to encourage and support entrepreneurs in the areas that mean the most to them. You can learn more about how we plan to do that here. Check this spaceAnd for more download our research study below.
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*Using two dimensions, we analyzed the sentiments and behaviors of more than 500 aspiring and established black business owners across the United States and Canada from February to March 2022. Phase 1 involved qualitative research in which we interviewed Black entrepreneurs and Black entrepreneurs. To identify key decision-making factors, societal influences and critical issues faced by entrepreneurs. Step 2 is quantitative validation where we surveyed 402 entrepreneurs and 109 established entrepreneurs to validate our hypotheses and measure findings on the market.
** Data from McKinsey and Company’s Institute for Black Economic Action Used to support Shopify research.
