In a recent survey, African-American small business owners reported five consistent factors responsible for their overall success. Not surprisingly, they were somewhat different than the responses from the general population. However, most business owners could easily agree with many of their insights. Among these factors:
- Finding adequate financing
- Being able to reach out of their immediate location and/or reach non-black customers
- Creating a product or service that was not too minority-oriented
- Getting paid in a reasonable or business-like manner and timetable
- Identifying and keeping good employees
- Maintaining focus despite personal needs or family commitments
More than 300 minority-owned responded to a questionnaire asking what factors they thought were most influential in their success. Their answers were compared with those in the general, non-minority population. From these findings, a pattern of success was drawn that showed some of the differences from non-minority business owners and managers.
Finding Financing Is Difficult
Like most business owners, African-American respondents reported a significant reliance on adequate finance to achieve success. Almost all respondents said finding initial seed money and then financing growth was the most difficult part of their business process. At the same time, they noted the availability of funding sources aimed at minority businesses but lamented on the poor quality of help in filling out the forms and navigating the process. Coupled with a higher than normal focus on collection programs, managing cashflow appears to be a significant factor in creating a successful venture. Many reported a feeling that as a minority, they were the last to be paid. The survey seems to bear this out with average collection running to 121 days versus 92 days for non-minority businesses.
Going Outside The Community
Another factor in the success of respondents was their ability to reach beyond the community into non-minority sectors. Whether in the retail, service, professional or educational sectors, African-American owned companies that had strong success all reported a marked ability to reach out to whites and other ethic groups. Interestingly, managers of manufacturing companies said they were having the most difficulty reaching and selling to non-minority clients.
Product or Service For All Groups
With the possible exception of entertainment and fashion offerings, African-American small business owners said they succeeded only by creating products that were more universal rather than heavily ethnic. Many reported that they actually had to reformulate or change products to expand sales. Many said they had even changed the names of their companies in order to mask their ownership. In some cases, sales within their immediate community went down but eventually that trade rebounded and new clients from outside groups increased overall revenue.
Identifying Good Employees
Like all small businesses, finding good workers was a key to success. Managers reported their businesses soared with the addition of qualified, dedicated employees. Many said the loss of a key employee at critical times severely impacted their efforts. At the same time, rewarding employees became a problem as it caused morale concerns among other employees. This factor and their need to turn this into a positive avenue was highlighted to statistically significantly greater degree by African-American managers than by owners in the general grouping. To a higher extent than the general grouping, drugs and other problems were also a concern to these managers. Health benefits, or lack of them, were also of grave concern to workers and managers alike. On average, minority owned businesses reported that they contributed less to their employees' healthcare than their general population counterparts.
Personal Problems
Learning to effectively juggle personal and professional lives both for managers and employees was of great concern to African-American owners. Many reported they had found it difficult to build a business and maintain a positive home life. More than their non-minority counterparts, they felt business demands put an undue burden on their lives. Many also said their employees were often impacted by non-business factors such as family responsibilities, drug and alcohol problems and financial woes. Happily, many managers also reported their success in developing strategies to handle these distractions and to help their employees work through them as well. Clearly, owners and managers of small businesses face many of the same problems. The difference comes in the emphasis each group places on finding solutions and creating successful enterprises.