One of the best physical representations of financial literacy is entrepreneurial efforts. Whether opening a brick-and-mortar business or launching a digital venture, creating your own income is the ultimate step to financial freedom. Unfortunately, obtaining the necessary resources to be successful in entrepreneurship can be a hassle for some, especially Black business owners.
For centuries, systematic racism, exploitation and discriminatory practices have been components of the economic gap that has plagued Black communities. Black entrepreneurs are often denied loans, building leases and even marketing space.
“Women of color receive less than 0.2% of venture-capital funding. Black women also encounter similar barriers in accessing capital, with about 61% self-funding their business and exhibiting a higher level of debt. It’s important to acknowledge that access to capital remains a challenge for [Black women-owned] businesses,” said Michael Martino, head of Diverse Customer Segments Consumer, Small and Business Banking at Wells Fargo.
Martino referenced statistics from a Harvard Business Review report on the investments of women-led startups to support his claim. McKinsey & Company put this into dollar amounts, stating Black entrepreneurs receive “$35,000, on average, compared with $107,000 for white entrepreneurs.” Despite the documented setbacks, Black businesses are making it happen.
“[Black] women are one of the fastest growing demographics of entrepreneurs in America and are key to driving small business growth,” Martino told Blavity. “According to the Wells Fargo 2024 Impact of Women-Owned Businesses Report, between 2019 and 2023, [Black] women-owned businesses saw average revenues increase 32.7%, compared to 12.1% for all women-owned businesses.”
One key to the success of Black women-led or Black-owned businesses is embracing the power of the Black dollar. Circulating money within our communities is more than just patronizing a business; it’s doing your part to combat financial disparities and create generational wealth. The businesses are the cornerstone of the Black community’s economic empowerment and resilience. They build community morale, foster relationships and contribute to the diminishing Black unemployment rate.
“We can challenge ourselves and those in our inner circles to be intentional and put aside a set amount of money in our budgets to support Black-owned businesses each month,” Martino said. “Make Black-owned businesses part of our daily routines when we get coffee, need car repairs or head to brunch after church. If you have a favorite barber or Black-owned skincare line, recommend them to your family and friends and encourage them to support them also.”
If you’re not in the space to financially support a Black-owned business, Martino insists there are several ways you can spread the word without breaking the bank.
“If you’ve been a customer of a Black-owned business and loved it, leave them a great review, spotlight businesses on social media, join your local Black Chamber of Commerce or offer mentorship and share helpful resources where possible,” he said.
Supporting Black-owned businesses and investing in your own financial literacy is a crucial act of service that strengthens not only our community but also our economic future. Whether you’re looking to open your own business or learn the best way to save for you and your family, Martino suggests seeking education from credible financial advisors and workshops such as Wells Fargo’s Operation HOPE to help you along the way.
“Financial education and guidance and an individual’s sense of inclusion and trust are all important factors when we think about community,” he said. “That’s
what it’s all about, working with like-minded organizations to find solutions to help make stronger communities. Managing finances empowers individuals to make informed decisions, which contributes to the overall economic well-being of the community.”