Black business owners say they’re poised for growth despite lack of access to capital and mentorship, Shopify data reveals
- 81% of Black entrepreneurs say they need to ignore the background noise of racism and stigma to succeed
- 61% say finding access to capital is a major challenge
- 83% say that despite systemic barriers now is their time to shine
At Shopify, we know that a world with more voices in commerce is better for both businesses and consumers. Nevertheless, commerce today is not fair to all. Imagine if anyone who had the capacity to run a successful business could do so without barriers. How many generations of wealth could be created if businesses had the resources they needed to thrive? How many lives could be transformed?
Raising awareness of the impact of inequality on entrepreneurship is critical to our pursuit at Shopify. To better understand the barriers that still exist for Black-owned businesses, we recently surveyed and interviewed over 500 aspirant in the established Black entrepreneurs across North America about their experiences*.
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Here’s what we learned:
Access to capital – on better terms – is critical
Racial and social justice movements have catalyzed public support for Black businesses over the past three years. This has led to promises of investments and loans from banks, investment companies, and tech companies, among others. Still, it didn’t solve one of the central problems facing Black-owned businesses. Almost two-thirds (61%) of entrepreneurs say finding access to capital is a major challenge. Even securing grants meant for Black businesses is challenging for nearly 60% of Black entrepreneurs. Many say they are turning to unfavorable forms of finance – personal savings, expensive credit cards and hard-to-access subsidies – to keep the lights on.
When asked what would help their businesses succeed, the answer was clear: easier access to financing, and better conditions on that capital, were at the top of the list.
Injustice costs the economy billions of dollars
More money and mentorship in the hands of Black entrepreneurs would open up sales opportunities and rev up the engine of the economy – up to $190 billion**. According to Shopify data, more than three-quarters (78%) of Black business owners say that finding non-Black customers is a challenge. Empowering them with access to digital platforms and service providers would give them more avenues to increase advertising. We have a partnership with a non-profit organization Operation HOPE 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 Black entrepreneurs we surveyed said they knew they were playing on an uneven playing field. For them, this means working harder in the smarter for success. Most of the entrepreneurs we surveyed (81%) agreed that it was essential to ignore the background noise of racism and stigma, otherwise they would never get their business off the ground. Nevertheless, they do not let these barriers stop them: 83% say that now is their time to shine, and 68% feel optimistic about its growth potential.
“The public’s increased awareness of social justice movements like Black Lives Matter has led to more tangible support for Black businesses, which has Black entrepreneurs optimistic.” said Brandon Davenport, Head of Equitable Commerce for Shopify. “For all my fellow dreamers sitting on an idea and waiting for the right moment, that moment is now.”
At Shopify, we truly believe it’s possible to make entrepreneurship more inclusive for everyone and inject billions into the economy while doing it. Our research shows that more than half (59%) of entrepreneurs would rather take control of their own businesses than seek outside help. The other 41% expressed the desire to call experts for advice. Over the next ten years, our Equitable Commerce initiative will provide an ecosystem of services: access to capital, expert mentors, unique sales opportunities. We use four pillars – community, advocacy, research and education – to support and encourage entrepreneurs in the areas that make the most sense for them. You can find out more about how we plan to do this here. Watch this spaceand download our research study below for more.
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* Using a two-pronged approach, we analyzed feelings and behaviors of over 500 aspiring and established Black business owners across the United States and Canada from February to March 2022. Phase 1 consisted of a qualitative discovery where we interviewed Black entrepreneurs and Black aspirations . Entrepreneurs to explore key decision factors, influence among the community, and critical issues they face. Phase 2 was a quantitative validation where we surveyed 402 aspiring entrepreneurs and 109 established entrepreneurs to validate our hypotheses and quantify the results across the market.
** Data out McKinsey and Company’s Institute for Black Economic Mobility was used to support Shopify research.
