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Community and Economic Development

Community and Economic Development

General

New Approaches to Better Business

RESEARCH SUMMARY 2009
The State of African American Businesses

Minority small businesses are considered one of the primary engines that will drive the growth of the American economy. Minority-owned businesses have made great strides over the last decade. According to the U.S. Census the number of African-American-owned businesses grew by 45% between 1997 and 2002, more than four times the national rate for all businesses1.

In spite of this growth African American businesses have yet to reach economic parity with the national averages. Nationally, African Americans represent 12.5 percent of the U.S. population, but only 3.6 percent of business firms2. Locally, although African Americans own 54,000 businesses in Cook County and nearly 9 percent of businesses in the six county metropolitan area, business receipts for those firms amount to just 1 percent of all gross sales receipts statewide3.

Access to capital is frequently identified as one of the largest barriers to business viability for African American businesses. However, access to capital may be more or less a symptom of several challenges associated with the success of these businesses. Economic analysts, such as Stephen Alexander, economist for the Urban Institute Egan Center, identify a number of barriers and impediments for African American businesses:

  1. Lack of financial capital – due to lower incomes, fewer assets and limited access to business loans
  2. Lack of social capital – limited access to business and family networks that are knowledgeable in business systems.
  3. Lower human capital – lower education, professional and managerial experience and access to professional and business networks
  4. Limited access to more lucrative non-minority consumer markets due in part to residential segregation.

In conclusion, national economic growth cannot be sustained without the inclusion of minority businesses. Without broad-based institutional, policy, and investor participation in minority business communities, continued growth in the American economy is impossible, affecting not just minority businesses but putting the nation's overall economy at risk4. Institutions' roles should be to develop educational programming and resources that focuses on these four identified barriers that affect African American business development.

How to Support African American Businesses through Educational Outreach

Knowing just how to develop and implement educational initiatives is crucial. The approach to teaching African American business owners should include all the basic objectives of adult education with a slightly different emphasis so that learning activities will have increased meaning for African American adults. Curriculum development must pay attention to this audience's knowledge structures, perceptual patterns, and preferred process of learning5 .

Two recent surveys conducted by University of Illinois Extension clearly identify the strengths and challenges facing Chicago-area African American businesses. Their concerns and needs for assistance are typical of African American urban business owners across the country. For example, a survey of businesses in a TIF business district on the south side of Chicago were able to succinctly list the skills that they need to improve their business – marketing, business financing and technology usage6. Also, a focus group survey session conducted at a business center located in the Englewood community, revealed how they would like to receive or learn these skills – timely, accessibility based on their schedules and provide supportive networking as part of learning7.

On the other hand, though not stated in these two surveys, research reports from specialists such as Robert Fairlie8 and Bennie Nunnaly9 discuss the strong need for education in leadership development and traditional 'corporate' management skills; skills that are crucial to the empowerment and success of African American business owners10.

Recommendations:

Based on research, references and studies, recommendations for providing educational support to African American business owners are as follows:

  1. Business owners are very busy (most own, operate and manage their business – with little or no staff support); therefore identify appropriate time schedules and workshop time frames.
  2. Understand their motivation for learning – they want to learn as they need it.
  3. Information needs to be relevant, useful and somehow meaningful; want to select the topic of most interest and give input in developing curriculum
  4. Identify new ways of using technology that would facilitate learning for this audience (i.e., group websites, blogs, self-study modules)
  5. All curriculum should integrate leadership development (communication, presentation, social networking and project management skills)
  6. Create environments that support learning and creative thought – such as learning studios or incubators; provide access to resources, references and comfortable spaces11.
  7. Facilitators must be conscious of their cultural learning styles when developing materials and presentations – considering reading level and allowing discussion time.
  8. Formation of an advisory group that represent the businesses so that they can share responsibilities in the management and implementation of their learning
  9. Develop team-based learning projects to encourage social networking such as 'buddy partnership' (two businesses supporting each other).
  10. Workshop formats should be focused; exploring one or two skills comprehensively over a set time period.
  11. Respect their learning process and transfer their 'street-wise' process of thinking into processes for problem-solving in their business (i.e., use of case studies, modeling and discussion)12.
  12. Celebrate their pride, self-determination, and independence through fairs, displays and awards recognition.
  13. Facilitate from a 'cultural perspective'; meaning sensitivity to cultural cues and differences.
  14. Structure positive award-based learning goals that could counteract the learner's previous unsuccessful or negative learning experiences.
  15. Support marketing and business management skills that will open opportunities for them to reach out to previously untapped customer bases.

This report was developed as part of a research sabbatical 2008.
Rhonda Hardy, Community & Economic Development Educator
University of Illinois Extension
rihardy@illinois.edu

ADDITIONAL RESOURCES

Community and Leadership a website dedicated to community and economic development with various modules such as: diversity and inclusion, economic viability, leadership development, organizational development, planning and public policy http://extension.missouri.edu

The Community Tool Box an on-line resource with information on essential skills for building healthy communities. It offers more than 7,000 pages of practical guidance in creating change and improvement. Learning modules include: community assessments, strategic planning, volunteerism, leadership development, community intervention, program evaluation and much more. http://ctb.ku.edu/tools


1 Office of Advocacy U.S. Small Business Administration, Minorities in Business: A Demographic Review of Minority Business Ownership; 2007.

2 Alexander, Stephen. Analysis of the State of Minority Business enterprises; 2008.

3 Chicago Urban League. The Future of Economic Development for African Americans in the Chicago Metropolitan Area; 2008.

4 The Milliken Institute Report; 2000.

5 Shaw, Margaret. Tips on Teaching African-American Adults; 1993.

6 Hardy, Rhonda. An Assessment of Business Owners in the 87th & Cottage Grove Tax Increment Financing Business District; 2006.

7 The Stewart Business Center Focus Group Forum; 2008.

8 Fairlie, Robert. The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment; 1999.

9 Nunnally, Bennie H. African-Americans in the Chicago Metropolitan Area; 2000.

10 Schachetel, Marsha. Activating Social Networks that will Support the Growth of African American Business; 2007.

11 Frey, Thomas. Creating the Ultimate Information Experience; 2008.

12 Shaw, Margaret