Why Black-owned businesses are struggling to stay afloat
This article originally ran on CNBC.
There are 30.2 million small businesses in the U.S. But only a fraction of them survive. Twenty percent of small businesses fail by the first year, 30 percent by the second and 50 percent by the fifth, and by the 10th year, a staggering 70 percent of businesses have shut off their lights.
For minorities, the numbers can be even more daunting. Eight out of 10 Black-owned businesses fail within the first 18 months.
Covid-19 has exacerbated some of the issues facing the Black community. African American entrepreneurs have had to close their doors at more than twice the rate of their white counterparts. Black-owned businesses declined by 41 percent from February to April 2020, compared with a 17 percent decline among white-owned businesses.
The death of George Floyd in police custody in May renewed interest in supporting the economic advancement of African Americans. Amid online support, Black businesses saw huge spikes. Google searches for “black-owned businesses near me” reached an all-time high from May 31 to June 10. According to a survey by the Black Chamber of Commerce, around 75 percent of Black-owned small businesses saw upticks in customers in the two months after Floyd’s death.
But after the surge, sales at many Black-owned businesses plummeted back to their pre-Covid-19 rates.
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