The doors will not be closed on Black entrepreneurs
While the share of new Black entrepreneurs has steadily increased, the pandemic has dealt Black business owners, specifically, a blow that only magnifies the inequities built into the American economy. Black business owners in Kansas City, like entrepreneurs across the country, are managing the reality of now – and the history that got us here.
Since the onset of the COVID-19 pandemic, upward of 41% of all Black-owned businesses in America have closed their doors for good.
This comes at a time when the share of new Black entrepreneurs was increasing, despite the fact that for the past 20 years, the rate of new entrepreneurs overall has essentially been flat.
Now, America’s entrepreneurs are at the frontlines in the battle to preserve and restore our economy. New and small businesses are at extreme risk in this COVID-19 crisis. Nearly half don’t have the financial reserves to last more than a few weeks. More than a quarter are unprofitable.
Before the crisis took hold, the playing field was far from level. The increase in Black-owned businesses was achieved despite significant barriers to start up – especially in regard to access to capital. Kauffman’s Capital Access Report outlines that Black entrepreneurs are three times less likely to have their loan request approved than their white counterparts. The disparity in the median net worth between white families ($171K) and Black families ($17,600) illustrates a wealth gap that greatly inhibits the ability to start up and the creation of generational wealth.
Now, under the pressure of a pandemic, these inequities are magnified. In our hometown of Kansas City, Black entrepreneurs are doing their part to keep our economy going; to adapt, to innovate; to keep their doors open and folks employed; and to continue growing.
Here, we share the perspectives of six entrepreneurs whose stories extend beyond their own personal success to positive change for their community – despite challenges, pandemic or not. Because our goal shouldn’t be just to restore the economy, but to rebuild it better by ensuring all Americans – especially those who have been historically marginalized – have an equitable opportunity to be a part of it.
Ajamu Webster: Would you rather own a Volkswagen or chauffeur someone else’s limousine?
Just before the 1979 economic crisis, the job market for engineers was hot, and Ajamu Webster asked his mentor why he wasn’t working for one of the big companies. His answer has stuck in Webster’s mind: “He said, ‘Son, I’d rather own my own Volkswagen than to chauffeur someone else’s limousine.’ And that’s all he had to say on that subject.”
During and after college at Southern University, Black engineer, professor, and entrepreneur Morgan Watson, mentored Webster. Watson owned Minority Engineers of Louisiana, or MEL Incorporated, in Baton Rouge.
“He was the one that taught me the importance of being an entrepreneur and also being an entrepreneur in engineering,” Webster says.
His mentor gave him the confidence and knowledge to move to Kansas City and found DuBois Consultants, a civil and structural engineering firm, in 1988. His firm mainly focuses on water infrastructure. And, so far, he says the business has effectively weathered 2020. Though the challenges of a pandemic were new, for Webster, creatively facing adversity is not.
While his mentor’s wisdom and experience was a type of wealth that transferred to Webster seamlessly enough, other types of wealth transfer remain extremely difficult in the Black community.
“There are structural systems of racism that are built in and baked into the American apple pie; and unpeeling all of that and examining that is a very hard conversation to have with people,” Webster says.
Being an African-American owned business and in minority business programming, the program itself, Webster says, can set up a business so that it functions as what he calls a junior player. “It’s very unfortunate. I don’t think that was the intent, but when you put out ideas and strategies, they fall into a social construct. And if the social construct has delegated a role for African Americans, then even the programs that are coming up will fall in that construct,” he explains.
For instance, if he wanted to sell his business right now – as a designated minority-owned business – it would be far more difficult, and he’d be left with far less, than a white-owned business owner would. Webster says the transfer of wealth, and the ability to transfer wealth in a way that allows another to build on it, is next to impossible under the current system.
“Right now, the wealth limit is $1.6 million,” Webster says. “So, if anyone has a net worth of $1.6 million, they couldn’t buy this company, even if they’re African American because that’s too wealthy to be in a program.” The only person he could transfer it to would be another minority without enough net worth go out and get the financing necessary to buy him out and sustain the business.
Webster says that local, state, and federal policy has ensured since the 1860s that the wealth gap between Black and white won’t close. “So that’s why you needed a Civil Rights movement; that’s why you needed amendments to the Constitution,” he says.
Even with a successful, high-skill, employer business, he can’t help but feel concerned about what he’ll be able to pass along to his children. He says that if folks really look at the history of systemic racism, there is only one conclusion: “We’ve got to be more intentional of how we correct that imbalance.”
Dre Taylor: Wealth is health
Dre Taylor is an entrepreneur who isn’t exactly out to make money. His business ventures are about feeding, nurturing, and bolstering the good in his community – changing it from within.
Taylor started Nile Valley Aquaponics in 2015 and the Kansas City Urban Farm Co-op at Swope Park in 2016 with the goal of providing fresh fruits and vegetables to people in Kansas City’s food deserts. Within the next 20 years, his goal is to have grown and distributed a million pounds of produce.
This is only one of his contributions to generational wealth in the urban core.
Kansas City Urban Farm Orchard
“I don’t think wealth is always in the form of money,” Taylor says. “Wealth is in the form of information. Wealth is health. So, teaching about how to live a healthy lifestyle … It doesn’t do anybody any good to have a million dollars if you’re not healthy.”
He’s also volunteered to mentor area youth since 2007, first through Big Brothers Big Sisters, and for the past eight years, through Males to Men.
“Our mission is to raise strong, conscious, productive, young men, and re-establish accountable and productive leadership in the community,” Taylor says.
He says he and other mentors have worked with 150 young men from the urban core, teaching them how to navigate society, what it means to be a man, financial literacy, and providing any kind of support for any industry they plan on entering in the near future.
“We’re basically planting seeds in these young men to help grow, and they can help plant more seeds and continue to grow in that form or fashion,” Taylor says.
In a way, like the young men, the farming co-op is still in its investment phase – no returns until the fruit trees mature. And Nile Valley is mid-revamp; Taylor is working toward raising $912,000 in capital to rework the entire set up based on a plan by HOK architecture and engineering firm.
Once it’s up and running, Nile Valley’s model will act as a prototype of a system that Taylor hopes other cities around the world will use to feed people without easy access to fresh food.
The pandemic has slowed fundraising for that, Taylor says, because everyone with an idea is competing for the same funds, which are depleted this year. He’s not terribly off-schedule and says while he doesn’t personally feel that he’s run into too many obstacles as a Black entrepreneur, he knows that’s generally not the case for others in his community.
“I don’t see myself as an individual, I always see myself as a collective, so just because I’m able to do something, I don’t think it’s because of me individually,” Taylor explains. “Access to capital has always been racial.”
He wants to see traditional lending systems dismantled and reassembled with equity in mind. He sees lenders recognizing past injustices toward people of color and working to broaden access to capital, but he doesn’t think that’s creating change quickly enough.
“The same practices can’t take place over and over again just because you give some individuals funds which you benefit from,” he says.
Taylor says he understands that we, as a society, must start somewhere. “You have to start with systemic issues and do more things of substance.” And even in a challenging year, Taylor will keep after the changes he wants to see.
La’Nesha Frazier: Black and female
La’Nesha Frazier and La’Nae Robinson are sisters who love to read books and drink wine. They were certain that others felt the same, so they opened Bliss Books & Wine in May of 2019 – turns out they were right.
Frazier lives in Missouri and Robinson lives in Virginia. So far, they’ve kept their day jobs as a physical therapist and IT specialist, respectively. They try to divide duties evenly, with Frazier acting more as the public face of the company, and Robinson acting as webmaster and social media manager.
Before the pandemic, Frazier says they’d been doing pop-ups at various locations around Kansas City to host author spotlights, wine tastings, and book sales, which Robinson would fly in to help facilitate. They started the business with their own savings and broke even after the second of those events.
However, Frazier says that because they are not a winery, they’re not allowed to sell or ship wine from their website. So, to keep the wine component in play, they’ve partnered with a few local wineries that look at Bliss’ book of the month and suggest wine pairings; and the wineries sell directly to Bliss clientele.
Fraizer says that setup is working fairly well. “We’re staying afloat because we don’t have a brick and mortar to pay for. We don’t have that overhead cost at the moment.”
Book club-type events are free of charge, but Bliss does charge for virtual events like a recent “paint and sip” that Frazier created and shipped kits for.
“We can reach any and everywhere,” Frazier says. They’ve shipped as far away as Hawaii and seen customers attend events from six states.
The sisters say they have had good family role models for the entrepreneurial endeavor. Aunts and cousins operate various types of businesses, and it’s something the family talks about. However, she feels that this can be a bit atypical.
“It’s not that prevalent in the Black community to say, ‘Hey, look, you could be a business owner,’ Frazier says. “But we can.”
She hopes that the hard work and creativity they’re modelling will show their children exactly that. In fact, she hopes that Bliss will do so well that they’ll be able to pass the business to their children one day.
But she knows that’s just her family. The rest of the Black community isn’t necessarily having that experience, and she’d like to see the playing field leveled in education, finances, and job opportunities, as well as entrepreneurial training.
As they continue their search for a physical location for Bliss, Frazier understands that they’ll have to also search for funding – the sisters’ savings won’t be enough to lease a building. She says the idea of walking into a bank is intimidating enough that they’re exploring every other possible option first, even crowdfunding.
She doesn’t look forward to pitching her business to a bank where she’s guessing she’ll have to deal with a team of white men.
According to Kauffman’s Capital Access Report, at least 83% of entrepreneurs don’t receive either venture capital or a bank loan and are not well-served by the capital markets. Barriers are especially significant for Black women founders. Of all VC funding raised by startups between 2009-2017, .0006% went to firms started by Black women.
“That is a bit intimidating being a female and then being a Black female, knowing that you don’t get the same opportunities others would get. I’m a woman, and I’m a Black woman, so I have two strikes against me already,” Frazier says.
However, she adds, if a traditional lender is their only option, she’ll brave it, because she’s also aware that she’s modeling for her children. She says, “Every step of the way, my kids see the struggle of entrepreneurship; they see the joys of entrepreneurship.”