Ways to Increase the Success of Black Women Owned Businesses
In the last post, I talked about African American Women Business Owners on the Rise. In spite of the increase in ownership, many amongst this demographics struggle to be financially successful. So today, I’m going to share tips and resources to increase the success of Black Women Owned Businesses.
Obtaining certifications specific to your demographics as a Black Businesswoman can open quite a few opportunities for you, particularly in government contracting. Often times when my clients talk about business being slow, I’ll ask them if they’ve considered government procurement (contracting). The thing is, the government needs all of the same resources as other businesses.
Think of the government as its own little city. When you consider the needs of your city, those will be the same needs of the government. Often times, obtaining certification can bump you up notch in government contracting. In addition, the government realizes that small businesses can’t usually compete financially with large corporations, so may even allow a financial allowance that let’s you slight increase your bid to remain competitive.
So! Types of certifications you might consider as a Black Businesswoman.
Certified Woman Owned Small Business (WOSB)
WOSB is a government program under the Small Business Administration (SBA). It’s available to small businesses which are at least 51% woman owned. The SBA has some very specific rules of what is considered 51% owned, so be sure you check out their guidelines. There’s also a subcategory for Economically Disadvantaged Women Owned Businesses (EDWOSB). Be sure to check the SBA guidelines to see if you fit into this subcategory. Of special note, the government has a subgoal of awarding 5% of its government contracts to WOSB.
Small Disadvantaged Businesses
Again, this is an SBA program which pertains to businesses which are 51% owned by an individual in socially or economically disadvantaged program. Social demographic groups classified under this category are: Identified groups include: African Americans, Asian Pacific Americans, Hispanic Americans, Native Americans and Subcontinent Asian Americans. So, if you’re a Black American, you’re in regardless of sex. Again, the government has a subgoal of awarding 5% of its government contracts to Small Disadvantaged Businesses. You’ll find more information about this program here at the SBA.
8(a) Business Development Program
This is a program I absolutely love! In order to participate, you need to be designated as a Small Disadvantage Business, as stated above. It’s also an SBA program. The 8(a) Business Development is a 9 year program that pretty much hand holds a business through its growth process. If you’re really looking for a leg-up, this is a great program. There may be some requirements for the length of time you’ve been in business prior to being able to participate, as the program isn’t looking for fly-by-night businesses.
Some states and localities may also have special certifications for Black Businesswomen, so be sure to investigate.
Many states have federal programs for WOB. For example, you’ll often find a SBA WOB center in each state. Even if you don’t certify, I highly recommend you reach out to these resource centers. Often times they provide classes and other tools to help you start, grow, and run your business. Though it may be designated as a WOB center, the business doesn’t necessarily have to be 51% woman owned in order to utilize its resources.
Chamber of Commerce
I’m a big fan of joining the local Chamber of Commerce. If you take advantage of the resources provided by the Chamber, you might find it’s a cost effective way to market. For example, some Chambers might include you in their welcome newsletter, do a ribbon cutting ceremony, list you in their members directory (equals 24/7/365 advertising), and even help you write a news release amongst the many possible benefits.
Local Organization Chapters
Quite a few organizations exist specifically for the benefit of Black Business Owners and/or Businesswomen. Do a bit of research and see if any of the organizations have values, missions, and/or visions that align with yours. Many of the larger organizations have local chapters in the bigger cities. Don’t forget to do a local search for organizations. Groups pop up from time to time that can act as a support and networking system. If your city doesn’t have an organization or group, you might consider starting your own.
I often hear reports about black business owners having little access to capital. As a form business advisor who worked for a business development center, I wonder why that is. From my experience, there is a wealth of programs available for small business owners, which is not based upon race or gender. However, if you don’t know where to find those programs, aren’t prepared, and don’t pursue them, they will be out of reach.
Let’s start with your obligation. Personal equity refers to the portion you’re required to put into the business in order to receive any funding assistance. For my clients, I say at least 10% of a project. Organizations which provide capital want to know you have something at risk also. They don’t want to be the only one with money on the line. Otherwise, you may not have an incentive to do your all.
Often when people think of finding capital to start their business, the bank comes to mind. Banks are a great place to start, as they often will provide the bulk of the capital needed to start or expand a business. For a viable business project, a bank will often loan 50-75% of the needed capital.
So I mentioned, your personal equity being at least 10%, but the bank only being willing to lend 50-75%. That still leaves 15-40% of an unfunded project. That’s where gap funding can come into play. It may be in the form of a loan or grant, depending on the program. Most states have local and regional programs, which will provide gap funding opportunities for the right project. You also have a better chance of qualifying for local grants than going down the rabbit hole of the general grants you might see advertised.
Sometimes commercial lenders may be hesitant to provide funding for a risky project. That doesn’t mean it’s time to throw in the towel. The SBA and sometimes other regional programs have guarantee programs available. With a loan guarantee, the organization will pay back a portion of the commercial loan, if you were to default. This reduces some of the risk a commercial lender might have in lending you funds, if your project is considered risky.
Small Business Incentives
Some areas may have special incentives for small businesses. For example, the state tax office may provide a variety tax credits or tax incentives. You might find interest buy down programs for loans. There are so many hidden gems available, but if you don’t know where to look, you’ll find yourself amongst the many Black Business Owners who say they have no access to capital.
One of the key aspects of obtaining capital is being prepared for the ask. Walking into an organization and saying, “I want, I want,” does little good if you don’t have the necessary information they want before helping you. Not only will you likely get a no, you increase your chances of not being taken seriously. So! How do you prepare?
The business plan is your roadmap to success. I’ve talked about the business plan so often, I’m not going to recap it here. Instead, I encourage you to read my business plan article.
For many funding organizations, it’s about the bottom line. They want to see the cash flow. Are the numbers going to work. The most basic financial projections are going to include a Profit & Loss Statement, Cash Flow Statement, Source & Use of Funds, and a Balance Sheet. Again, I’ll refer you to another article, rather than repeating myself here.
Above all, realize you don’t have to go it alone. The United States is full of resources specific to Black Businesswomen, Black Business Owners, and Small Business Owners. It’s up to you to look into these great resources, or you can contact me to do the research for you.