Black business owners say they are on track for growth despite lack of funding and guidance, Shopify data shows
- 81% of Black entrepreneurs say they have to ignore background noise of racism and stigma to succeed
- 61% say finding funding is a big challenge
- 83% say it’s time for them to shine despite systemic barriers
At Shopify, we know that a world with more voice in commerce is better for businesses and consumers alike. Still, business today is not fair to everyone. Imagine if everyone capable of running a successful business could do so without hindrance. How much generational wealth can be created if a business has the resources it needs to thrive? How many lives can be changed?
Raising awareness about 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 more than 500 ambitious and established Black entrepreneurs in North America tell their stories*.
Here’s what we learned:
Access to capital on better terms is crucial
Over the past three years, racial and social justice movements have boosted public support for Black businesses. This has led to commitments of investments and loans from banks, investment firms and technology companies alike. Still, it fails to address one of the core problems facing Black-owned businesses. Nearly two-thirds (61%) of entrepreneurs say getting funding is a big challenge. For nearly 60 percent of Black entrepreneurs, even accessing grants for Black businesses is challenging. Many said they turned to unfavorable forms of financing — personal savings, expensive credit cards and hard-to-get grants — to make ends meet.
When asked what would help their businesses succeed, the answer was clear: Easier access to financing and better capital terms topped the list.
Inequality costs the economy billions
More money and mentorship in the hands of Black entrepreneurs will open up sales opportunities and fuel the economic engine – to the tune of $190 billion**. According to Shopify, more than three-quarters (78%) of Black business owners say finding non-Black customers is a challenge. Giving them access to digital platforms and service providers will give them more avenues to increase advertising.We work with nonprofits hope action Create 1 million new Black-owned businesses (1MBB) by 2030.
Black entrepreneurs work harder and smarter to succeed
More than half (56%) of the Black entrepreneurs we surveyed said they knew they were playing on an uneven playing field.For them, it means working harder and Be smarter to succeed. The majority of entrepreneurs we surveyed (81%) agreed that the background noise of racism and stigma must be ignored or their businesses would never get off the ground. Still, they don’t let these hurdles stop them: 83% say it’s time for them to shine, and 68% are optimistic about their business’ growth potential.
“Black entrepreneurs are optimistic that increased public awareness of social justice movements like Black Lives Matter has led to more tangible support for Black businesses,” Brandon Davenport, head of fair commerce at Shopify. “For all the dreamers who sat on an idea and waited for the right moment, that moment is now.”
At Shopify, we believe in making entrepreneurship more inclusive for everyone and injecting billions of dollars into the economy while starting a business. Our research shows that more than half (59%) of entrepreneurs would rather take control of their own business than seek outside help. The other 41% said they would like to seek advice from an expert. Over the next decade, our Fair Commerce initiative will power the service ecosystem: access to capital, expert mentors, unique sales opportunities. We’re using four pillars – community, advocacy, research and education – to empower and support entrepreneurs in areas that mean the most to them. You can read more about how we plan to do this here. follow this spaceand download our study below for more information.
*Using a two-pronged approach, we analyzed the sentiment and behavior of more than 500 aspiring and established Black business owners in the US and Canada between February 2022 and March 2022. Phase 1 included qualitative discovery, where we interviewed Black entrepreneurs and aspiring Black entrepreneurs to uncover key decision-making factors, community impacts, and key issues they faced. Phase 2 was quantitative validation, where we surveyed 402 aspiring entrepreneurs and 109 established entrepreneurs to test our hypothesis and quantify findings across the market.
**Data from McKinsey & Company Institute for Black Economic Mobility Used to support Shopify Research.