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More Black and Hispanic Entrepreneurs Are Open for Business

WIRED
David Tobenkin

Dec. 20, 2021

A new report finds more people, particularly those in minority groups, are starting new ventures amid the pandemic.

Stephon Sanders is a soft-spoken 16-year-old Black student in Tampa, Florida who loves playing basketball and video games like Fortnite and Apex Legends and can often be found wearing an athletic jacket and basketball shorts.

He’s also the founder and chief executive officer of a mobile entertainment business, Street Gamez, that can amp up any party with a 32-foot, $55,000 trailer full of video game consoles for up to 28 players. He plans to add a $45,000 mobile gaming bus, staffed by a second crew, and move beyond the Tampa area to serve North and South Carolina.

Sanders’ single mother, Tiffany-Autumn Bell, 35, cashed out much of her savings and gave up nearly all of her already scarce free time to support her then-13-year-old son’s dream of launching a mobile entertainment video business.

To Bell, an Army veteran who served in Afghanistan and has her own full-time job as an IT project manager, helping Sanders become an entrepreneur was about making sure his life and career options were not limited by his race.

“I don’t want my son going into the world thinking he can’t do things,” said Bell, who is Street Gamez’s chief operating officer and handles booking and billing.

To help her son, Bell took an eight-week certificate program in entrepreneurship and innovation at Tampa-based Hillsborough Community College and enrolled in the school’s associate degree in business program, from which she will graduate next year.

Increasing numbers of Black and Hispanic Americans are starting their own businesses to serve their communities and avoid working for someone else.

“When we ask random students on campus what their career ambitions are, I would say 70% to 80% of them are telling us it is to be entrepreneurs,” said Thaddeus McEwen, a professor of entrepreneurship at historically Black North Carolina Agricultural & Technical State University.

Entrepreneurship, in general, is up since the start of the pandemic. Nationally, in 2020 an average of 380 out of every 100,000 adults started new businesses in a given month, according to the Ewing Marion Kauffman Foundation. That’s up from 310 per 100,000 in 2019 and is by far the highest level of new entrepreneurship in the 25 years the foundation has tracked this data.

The rate was highest among Hispanic Americans—520 per 100,000. But the rate of entrepreneurship rose most sharply among Black Americans last year to match the overall national rate of 380 per 100,000, nearly double the rate of 1996, the first year the Kauffman Foundation tracked ethnicity data. Immigrants start businesses at higher rates than nonimmigrants, contributing to the higher figure for Hispanic Americans.

Many are entrepreneurs out of necessity, the foundation says, forced to start their own businesses because they were laid off or due to other reasons beyond their control. Black and Hispanic Americans make up a disproportionate share of workers in many of the sectors most affected by the pandemic, such as the retail, restaurant, construction, and service industries.

For many, Covid-19 has also been a wake-up call that life is fleeting and inherently risky, which has encouraged them to launch businesses aligned with their passions.

Just as more people are starting businesses, more are also enrolling in entrepreneurship courses, particularly Black and Hispanic Americans. While the number of white graduates of entrepreneurship and small business programs grew 16% from 2018 to 2020, the number who are Black increased nearly 72% and the number who are Hispanic rose 40%, according to data from the US Department of Education.

These programs are particularly widespread at community and technical colleges like Hillsborough. Community colleges serve the majority of students from underrepresented groups, said Martha Parham, senior vice president at the American Association of Community Colleges.

Historically Black Bowie State University, for example, opened a $42 million entrepreneurship academy in August that includes space for student businesses and a residence hall for more than 500 students.

Some entrepreneurship educators say higher education institutions should focus on helping existing Hispanic businesses expand rather than encouraging new businesses. Jerry Porras, a Stanford University emeritus professor of organizational behavior and change, coordinates the Stanford Latino Entrepreneurial Initiative, which helps established Hispanic businesses with revenues of at least $1 million expand. It offers a seven-week program on how to scale a business and provides mentors, connections to potential investors (though no guarantees of loans or investments), and connections to a network of Hispanic-owned businesses.

The businesses owned by nearly 800 alumni of the Stanford Latino Entrepreneurial Initiative have combined annual revenues of about $5 billion, more than 39,000 employees, and operations in 31 states, Porras said.

Even seasoned entrepreneurs face long odds that do not necessarily improve with time. Roughly one-third of new businesses fail within two years, half within five years, and two-thirds within 10 years, according to a US Small Business Administration analysis of new business survival rates from 1994 to 2018.

Minority entrepreneurs face additional challenges; on average, they have less household wealth and less access to mainstream grants, loans, and equity investors, and they often serve less affluent communities than white-owned businesses.

Entrepreneurship programs can help them get loans, grants, and investments. Eighty-two percent of Hispanic alumni of the Stanford program got SBA-backed Paycheck Protection Program loans in the midst of the pandemic, for example, while overall just 28% of white-owned and 18% of Hispanic-owned businesses of a similar size got the loans, Stanford research shows.

The Hillsborough entrepreneurship program Tiffany Bell attended has mentored and provided seed funding for Bell and 25 other entrepreneurs over the past two years, including five Hispanic students, seven Black students, and 14 female students, said Hillsborough professor Beth Kerly.

These entrepreneurs share one attribute: They’re all still in the game. Despite launching just before or during the pandemic, 25 of the startup businesses are up and running, and one has been sold, according to Andy Gold, another Hillsborough professor and a former Wall Street investor who co-leads the program with Kerly.

He credited “ridiculously intrusive mentoring” as the key to this success.

Gold, Kerly, and a collection of volunteer mentors check in with their students after graduation. “Before we talk about all your good news for your company, you’d have to tell me what your monthly revenues are and how that compares to last month, year over year, plus answer a whole bunch of other financial questions,” Gold said.

Family tradition leads some Black and Hispanic Americans to start their own businesses. Dewayne Kimble, 52, graduated from an entrepreneurship training program offered through Syracuse University’s Institute for Veterans and Military Families in partnership with Hillsborough Community College. After retiring from the Department of Veterans Affairs, Kimble, who is Black, launched a veterans benefits consulting business that now has almost 150 clients, he said.

Many of Kimble’s great aunts and uncles from southeast Missouri were entrepreneurs. “One of those siblings bought a bus,” he said, “fixed it up and began offering bus services … Then he started buying old cars, fixing them up and selling them. And then my grandmother had two other brothers who owned land and farmed it. And another sibling, an older sister, had a boutique selling women’s clothing on the South Side of Chicago.”

Black and Hispanic entrepreneurs also start businesses aimed at giving back to their communities. David Favela left his job as a global business manager at Hewlett Packard in 2018 to work full-time at the sideline business he started in 2013, Border X Brewing in San Diego. Border X brews and serves Mexican-themed beverages such as Blood Saison, a bright red, tart beer inspired by a Mexican hibiscus tea, in three taprooms in working-class Hispanic neighborhoods in Southern California.

“This work is incredibly meaningful to me,” said Favela, whose company participated in the Stanford program. “It isn’t just about making great beer, which is obviously our passion. But it’s also about serving and building our community.”

Favela said he’s on target to generate $3 million in revenue this year, up from $1.8 million in the pre-pandemic year of 2019. Favela said his business plan forecasts $10 million in sales by 2024, driven by an expansion from the existing three taprooms to six.

Back in Tampa, Tiffany Bell is now reducing son Stephon’s role running day-to-day operations at Street Gamez and helping him focus on developing the future of the business and building his own brand. Bell said that will position Street Gamez to survive while he goes to college, which she said is non-negotiable.

“His success has demonstrated to his peers that entrepreneurship is possible at any age, that you can have a career that involves a passion you love, that hard work can bring success, and that this is a career option open to kids who look like him.”

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