August is recognized nationally as Black Business Month. We have an opportunity to encourage all consumers to support Black-owned businesses and spur on new growth.
How are Black-owned businesses doing in the Chattanooga area and are there improvements that need to be addressed to cultivate a more thriving environment for Black business owners?
Black-owned businesses in Chattanooga appear to be growing in visibility, support and institutional infrastructure, but they remain underrepresented among businesses large enough to employ people and generate substantial revenue.
Why is that distinction important?
Chattanooga has made progress in helping entrepreneurs start businesses; the harder challenge is helping those businesses scale up and remain sustainable beyond five years.
The clearest local benchmark comes from research summarized by the Benwood Foundation and Urban League of Greater Chattanooga. Although Black residents comprise a significant share of Chattanooga’s population, Black-owned employer firms historically represented only 2.2% of the city’s more than 5,000 employer firms. Those firms accounted for just 0.6% of employment, 0.2% of sales and 0.4% of profits among employer businesses.
For Black entrepreneurs, access to capital remains a particularly important issue. Federal Reserve research continues to show differences in financing experiences among business owners by race, including differences in financing approval and the ability to obtain all the funding requested.
That matters because hiring often requires spending money before additional revenue arrives–purchasing equipment, expanding inventory, leasing space or carrying payroll while the business grows.
But capital is only part of the equation. Chattanooga and Hamilton County collectively spend hundreds of millions of dollars purchasing goods, construction and professional services. Becoming qualified to compete for government contracts or serving as a subcontractor on larger publicly supported projects can provide a small business with something equally valuable: a dependable customer.
Strategic work with local African American officials, community leaders, and the Urban League of Chattanooga can play an important role in moving entrepreneurs beyond startup assistance toward what might be called scale-up assistance: financing preparation, procurement certification, accounting systems, workforce development, technology adoption, and relationships with larger employers.
Black Business Month provides a reason to celebrate entrepreneurship. Chattanooga has the opportunity to measure something more consequential than the number of businesses opened.
How many Black-owned businesses survive five years? How many obtain significant contracts? How many purchase property for operations? How many hire 1-10 employees in expansion?
A startup creates opportunity for an entrepreneur. But a growing company has potential to create generational wealth and economic stability for more families. Celebrate Black Business month through purchases in August and beyond!