KANSAS CITY — The impact of the coronavirus (COVID-19) has been particularly devastating for black entrepreneurs in the United States, whose businesses were disproportionately battered by shutdowns and demand shifts related to the pandemic.
The number of active black business owners dropped by 41% to 637,769 in April from 1,079,116 in February, according to research by Robert W. Fairlie, a professor of economics at the University of California, Santa Cruz. Comparatively, the number of white business owners declined 17% to 8,761,531 from 10,553,415, Latino business owners dropped 32% to 1,412,925 from 2,070,896, and Asian business owners fell 26% to 657,896 from 888,528.
The numbers illuminate systemic challenges for communities of color during a historic moment of racial unrest in America following a string of slayings of unarmed black people. The pandemic’s effects compound the disparities in the opportunities and resources available to socially and economically disadvantaged populations.
“We are seeing black and brown businesses going out of business much faster than white businesses in the middle of this pandemic because they were not able to reserve the funds and were not able to get the loans that other businesses have been able to get,” said Ijeoma Oluo, a writer and speaker on race and gender issues. “Entrepreneurs of color who are trying to start their own businesses are finding huge systemic roadblocks where many white people are not.”
“There are many proof points demonstrating that more diverse teams not only drive better decisions, but more profits, more growth and significantly more innovation revenue,” said Lara Dickinson, co-founder of the JEDI Collaborative. “A more diverse natural products industry is vital to solving food and agricultural system challenges we all face and work hard to address every day.”
Advancing racial equality will require a reckoning on tough realities many have had the luxury to ignore.
Emerging initiatives address these inequities and offer solutions. The recently launched JEDI Collaborative promotes justice, equity, diversity and inclusion in the natural products industry. The program provides a framework for embedding the principles within a company’s culture. Businesses with diverse organizations deliver 21% higher financial performance and 27% higher likelihood of long-term value creation, according to the consultancy McKinsey and Co.
Kansas City-based equity2 is an investment firm that launched last year and is dedicated to supporting later-stage businesses in communities lacking significant financial infrastructure and institutional capital.
Emily Lecuyer, managing director of equity2, described several barriers and biases minority-led businesses encounter and the need for “friendly and patient” capital to empower those often overlooked by mainstream financial institutions.
“We’ll only make progress if we leverage the full power of private capital markets,” Ms. Lecuyer said. “We can’t do this based on government interventions and policies or philanthropy. It requires us to think differently about the trillions of dollars sitting on Wall Street being invested in ways that don’t align with the world we want to see. It will require a fundamental shift in how we allocate capital.”
Dismantling structural racism is everyone’s responsibility. Advancing racial equality will require a reckoning on tough realities many have had the luxury to ignore. As individuals and industry, we must challenge longstanding perceptions and commit to conscious action.
This commentary was featured in the June 23 edition of Food Entrepreneur. Read the full issue here.