AFRICANGLOBE – Texas has provided a fertile atmosphere these past five years for business prosperity and economic growth. But as researchers who are close to the entrepreneurial process and have owned businesses ourselves, we understand that developing entrepreneurial firms, and the perceptions of their owners, aren’t always in sync with the larger economic picture.
The priorities of entrepreneurs are often more fundamental, the urgency is often greater, and the opportunities differ based on the lens through which a business owner sees the world.
We wondered, specifically, how the Black business community views the Texas business landscape today. To find out, we surveyed Texas Black-owned businesses, including many in the Dallas-Fort Worth area, and asked owners about themselves, their businesses and their perceptions of other firms in their industries.
What became clear is that Black owners perceive significant hurdles in growing their businesses and achieving the profitability levels of their industry peers.
Our survey, sponsored by UT-Austin in cooperation with the Texas Association of African-American Chambers of Commerce, polled 914 Black-owned businesses across Texas.
We found that most Texas Black-owned businesses in our survey are similar to the businesses we have owned: firms that provide a professional service and are owned by an individual with at least a bachelor’s degree who started the business. The vast majority of these Black-owned businesses have no paid employees other than the owner. The median age of the firms among our respondents is 10 years, a healthy number that points to significant longevity in business.
Overwhelmingly, these business owners assess themselves as proficient at a range of professional skills, including analysis and problem-solving, written and oral communications, team building and management, the ability to motivate and the ability to develop relationships.
And yet, despite confidence in their skills as businesspeople and relatively high levels of educational attainment, Black business owners in our survey still perceive significant barriers. More specifically, a majority agreed that Black-owned businesses, in general, have less access than other firms to government decision-makers for the purposes of procurement opportunities and that Black-owned businesses are unfairly excluded from participating in both government and private-sector contracting opportunities.
In addition, when we asked them an open-ended question about their top three training needs and to rank these training needs in order of importance, survey respondents identified accounting-finance topics more often than any other response (16 percent), followed by technology (10 percent) and management-leadership training (10 percent).
Similarly, when we asked survey respondents to list the top three major challenges facing their businesses, the most frequently mentioned topic was funding-cash flow-finance (26 percent). Fully half of the survey respondents had never applied for a business loan.
To overcome these challenges, address these training needs and ensure that entrepreneurial opportunities are shared across the board, policymakers and business leaders should focus on improving access to financial capital and financial training for Black entrepreneurs.
In addition, because research on Black businesses has shown that firms that start with employees are more likely to grow faster and survive longer than those that are sole proprietorships, more should be done to encourage Black entrepreneurs planning new businesses to start with a level of capitalization and scope that allows them to start their businesses with employees if they choose to do so.
By: John Butler and Matt Kerwick
Dr. Claude Anderson – Powernomics