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Obstacles for Black Ownership

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Submitted By livein117
Words 1860
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Obstacles for Black Ownership
Darren Whitaker
July 16, 2011
Dr. Gbenedio
Business 5000

Today, African Americans face some challenges when trying to acquire their own businesses. According to the Small Business Administration the number one reason why small businesses fail is due to a lack of experience, (“African American Business Grants”). The Small Business Administration states the number two reason why small businesses fail is due to insufficient capital. What’s more, many black entrepreneurs face racism and discrimination from lenders when applying for financing. An entrepreneur is one who uses their skill to transform their originality into economic goods. The most obvious form of entrepreneurship is the starting of a new business. The start of the new business may involve uncertainty, in regards to creating something new and exposing it to the world. Most commonly, it involves creating a new business market for the retail world. Industry refers to the production of an economic good (either a material or a service) within an economy. Ownership is the exclusive rights and control over property such as an object, or property (Wikipedia). Personal ownership and/or individual ownership states assets and property belong to an individual. Common ownership states that assets and property are held in common by all members of society. In the United States, there were 1.9 million black owned firms in 2007, up sixty three percent from 2002. States with the largest number of black owned businesses were New York (204,093), Georgia (183,876), Florida (181,469), Texas (154,255), and California (137,876). California had the largest gross sales from black owned firms. States with the largest percentage of black owned businesses were located mostly in the southern and eastern portion of the United States. The world is filled with many solid industries. According to the Fortune 500 the world’s largest company is Walmart ("Fortune 500 2011: Fortune 1000 Companies 1-100"). It has been the largest company in the world for the second year in a row. The company revenues are $421,849.00 million. Meanwhile, the profit is $16,389.00 million. The world’s second largest company is Exxon Mobil. It is the most profitable oil company worldwide. The company is investing in alternative energies in order to help prevent pollution. Exxon has revenues of $354,674.00 million. What’s more, the profit is $30,460.00 million. Minority businesses are opening much faster than non-minorities. The minority only represents a small percentage of the business world. Currently, black operated businesses represent 1.9 million (Tozzi). Minority businesses have had little growth due to reliance upon personal debt and family financing over business loans. Also, the minority businesses operate in low income areas. Most commonly minority business owners seek self sufficiency and only set small financial goals. Minority-owned businesses are increasing a lot in today’s society. Over the past two decades the United States has seen a steady growth in the number of businesses owned by minorities of all sorts. Minorities such as African Americans, Hispanic, Asian, and Native American communities have had increases in small business start ups. To qualify as a minority-owned business, the Census Bureau states, fifty one percent or more of the stock or equity of the business must be owned by a person of the minority group being measured (USLegal). There are several small business start up tips. The ten most common mistakes to avoid when starting a small business are the following: skipping the planning phase, not setting goals, undervaluing products or services, avoiding new technology, being afraid of marketing, not knowing who your ideal customer is, overspending, under-spending, handing business alone, and not making a commitment. It is extremely important to develop a plan about the operation of your business. The most important plans to consider include a business plan, a financial plan, and a marketing plan. Setting goals also help give your company direction and allow you to take steps to achieve them. Do not be afraid to offer your products on the market at a price that they are worth. Lack of confidence in your product may cause you to fail and not make a profit. As long as there is a need for your business the products will sell. Small business cannot be afraid to utilize new technology because it may allow production more quickly. Failure to upgrade to new technology could possibly hurt the business in the long term. There are many different marketing styles that could be used to advertise. Some businesses use the word of mouth technique to attempt sales. Businesses have also used traditional advertising such as radio, television commercials, and newspaper ads. Today, businesses rely more on the use of the internet to advertise. Owners can purchase ads online for a fee that will be displayed for a time period. A popular new approach currently, businesses are listing their ads on Twitter. Twitter is a social network that is becoming popular among all age groups. Advertisement is important when trying to sell a product or service but it is also important to use several techniques. When selling a product or service you must determine who you are trying to satisfy with your product. If the business is to fulfill the needs of younger persons it may require a different type of advertising strategy. Find the location that you can advertise your product. Predict how the buyer will react to your advertisement. Doing market research may help to identify who your services will reach. Developing a budget can be beneficial in starting a new business. Starting a new business does not mean that you have to spend excessively. While starting a new business may require an investment don’t overspend. Owners feel that they need to attain the best marketing, equipment, and software. Usually, there are many options available that are less costly. Creating a business budget can help with the prevention of overspending and keep the company out of bankruptcy. Meanwhile, some tend to fail to spend enough funds and severely limit their company’s potential. Allowing others to help can be good when operating a business. Some business owners attempt to be a jack of all trades when operating their business. The business may be able to produce for a larger sector with assistance. If the owner can hire others and effectively delegate the roles and responsibilities it can be beneficial. Also, if the business owner has help they may be able to focus more on their expertise. Acquiring a strong team of employees can create a successful business with success. Becoming a business owner may require endless commitment. Starting a business requires a person(s) who has drive, ambition, and dedication. Small business owners may have to make sacrifices in order to make a profit. Ownership may require putting in overtime to get things done. Facing challenges head on may be another responsibility of the business owner. Thinking carefully and making well informed decisions for the business will prevent mistakes but may prevent the repetition of them. The Better Business Bureau sets and upholds high standards for ethical marketplace behavior. It also gives consumer and business education information and tips and alerts about scams. The first Better Business Bureau was founded in 1912. Today, one hundred BBBs serve communities across the United States, and Canada. They help evaluate more than 3 million local and national businesses and charities. The BBB does not evaluate businesses against one another but it does evaluate them based on ethical standards. Research shows areas in which black business ownership is highest are in the retail trades and social assistance. Of the revenue generated by black owned businesses, fifty four percent was from businesses in the motor vehicle and parts dealer industries. Twenty nine percent of Hispanic-owned businesses operate in construction, repair, and maintenance. Also, the greatest numbers of Asian-owned businesses operate as wholesale trade. Finally, thirty two percent of women-owned businesses operate in health care, social work, and personal services. The most common reason that black owned businesses are not as successful is because of a lack of good customer service. Meanwhile, there may be ways that the business can increase their customer service. Communication between the business and the customer about any problems or delays reduces any inconvenience. The golden rule is that the customer is always right. Making sure that the business is staffed properly in order to meet all customer needs is beneficial. As the owner you set the mood for the business and it will show through all of your help as well. Taking time to chat with customers and making the exchange less formal. Lastly, never be afraid to apologize because your business depends on customer satisfaction. There may be some ways to enhance the growth in minority-owned businesses. First, community support from banks has enabled the expansion. Second, increased networking has provided assistance for those minority business owners to start up. Third, programs from local, state, and federal agencies help support via grants, loans, and their expertise. Finally, urban revitalization has allowed minority business owners to provide assistance in urban areas and perhaps help reverse decline in population of urban areas. In the future it will important for owners of minority businesses to plan for large scale business. As the population increases so should their business opportunities. According to the Census Bureau, minorities will make up forty percent of the United States population by 2050 (Azodi). As well, minority-owned businesses could expand their companies by manipulating company mergers and expanding into fast growing sectors of the economy. Research shows that there has been little development of minority businesses in information technology, financial services, and legal services. There are programs available to minorities that can provide aid when attempting to start business. The National Minority Business Council, Inc. helps small minority and women-owned businesses and this organization provides business assistance, educational opportunities, and seminars ("National Minority Business Council, Inc."). As well, minorities can apply for grants that can help with start up costs for operating a business. Specifically, minority business owners can benefit from the Minority Business Grants. These grants are provided for African Americans, Hispanic Americans, Asian Americans, and Native Americans.

Works Cited Page

"How To Get Government Grants to Start or Expand A Black Owned Business." African American Business Grants. N.p., 01/01/2011. Web. 8 Jul 2011. .

"Fortune 500." Fortune 500 2011:Fortune 1000 Companies 1-100. N.p., 05232011. Web. 7 Jul 2011. .

Tozzi, John. "Minority Businesses Multiply But Still Lag Whites." Bloomberg Businessweek. N.p., 06162011. Web. 8 Jul 2011. .

Saenz, Arlette. "African American Owned Businesses on Rise." ABC News. N.p., 02082011. Web. 7 Jul 2011. .

"Entrepreneurship Bootcamp." The National Minority Business Council, Inc.. N.p., 01012009. Web. 7 Jul 2011. .

"How to Apply for Grants for Minorities Starting a Business." eHow. N.p., 02152011. Web. 7 Jul 2011. .

"Ownership." Wikipedia. N.p., n.d. Web. 7 Jul 2011. .

Azodi, Mina. "Study Sees Obstacles to Minority Business Growth." Inc.. N.p., 07072005. Web. 7 Jul 2011. .

"Minority Owned Businesses Law & Legal Definition." USLegal. N.p., n.d. Web. 7 Jul 2011. .

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