The dollar has a lot of power. Especially the Black dollar. Whether it’s used to invest in education or to support a business with a positive mission, money has the capacity to make a huge difference and shape a better world. With that amount of power comes a huge responsibility for us as consumers to use our funds in a way that supports Black communities. The easiest way to ensure that’s being accomplished is by taking our money straight to the source: Black-owned businesses. For National Black Business Month, here are five reasons to buy Black-owned this month — and every month!
1. Aids in closing the racial wealth gap
In 2019, the median household income differed between white and Black households by more than $160,000 with white households sitting at $189,000 and Black ones being at $24,000. On top of that, more than a quarter of Black households have a net worth of zero or are in the red. This is a startling margin that not only shows a financial disparity between Black and white people in America, but also speaks to disparities in housing, education, etc. However, A Congressional Black Caucus Foundation (CBCF) study found that Black business owners have a median net worth that is more than 10 times more than that of Black non-business owners. This is clear evidence that business ownership for Black people is a way to improve earning potential and help them become more financially equalized in the United States.
2. Boosts local economies
Black-owned businesses tend to be small locally owned ventures. When you support these types of businesses, more of the money you spend is likely to stay within the community than if you were to shop from a national chain. On top of the circulation of money, if local businesses are seen to be thriving, outside community investors will be encouraged to place money into neighborhoods to fund education, healthy outdoor spaces, healthcare, and job growth.
3. Strengthens local communities
Along with the economic strength that comes with supporting Black-owned businesses, these establishments are known for paying this support forward with mutual aid. Programs like Black Girls Code and the For Us By Us Market in New Orleans are spaces in which the founders intended for Black people to grow. These types of environments are vital to the health and strength of the Black community because they provide opportunities for Black people to be made a priority. It is vital that these types of businesses are shown support and are able to keep their doors open because as long as they are operating, the symbiotic relationship between the business and the community will continue to thrive.
In addition, supporting these small Black businesses helps to keep Black communities diverse and unique. Rather than allowing larger conglomerates to enter and erase the flavor and culture that make these places beautiful, keeping Black-owned businesses there allows for these neighborhoods to maintain their personality.
4. Helps more Black entrepreneurs start businesses in the future
According to the Kauffman Group, Black people are more likely to finance their ventures using personal credit than any other group — mostly because of discrimination in the distribution of business loans. Banks are far more likely to give business loans to white potential business owners than Black ones. This type of discrimination is unacceptable. A way to combat this injustice is to demonstrate to banks that Black-owned businesses are profitable. Supporting them does more than just put money into their pockets. By buying Black, you can encourage large institutions like banks to see that there is potential in these businesses. By doing so, aspiring entrepreneurs who have yet to seek bank loans will have a better chance of being approved, encouraging a new generation of thriving Black-owned brands.
This increase in business loans being given to Black people isn’t just advantageous for those trying to start their business. It will also benefit the entire country. The United States economy has lost out on $13 trillion of revenue by denying Black entrepreneurs access to bank loans to start businesses. That amount of money is certainly not trivial and goes to show just how necessary it is to give Black business owners a chance.
5. Larger companies will take notice
Every dollar you spend is a vote for what you want the world to look like. When you spend money supporting Black-owned businesses, larger establishments take note. If a large department store sees that a particular Black-owned clothing brand is particularly popular, there is a good chance that the department store will look to stock that brand’s clothing. Or for example, if a Black-owned haircare line is in high demand, large convenience stores will look to sell those products in their stores. These are lucrative opportunities for Black business owners that can only be made possible if there are people supporting their ventures in their infancy. In addition, larger companies will be forced to compete with the Black-owned businesses.
By applying this pressure to businesses, they will look to create more opportunities for Black employees within their organization, sell products that are geared toward a more diverse market, and boost representation of Black people in their marketing. In 2018, the makeup brand Tarte was called out for a lack of shade range in their top selling concealer. This controversy happened alongside the rise of Black-owned makeup brands like Fenty Beauty and Pat McGrath, which served the demand for a more diverse range of shades.
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