As part of an ongoing sponsored series on Black financial health, we are exploring the racial wealth gap, its impact on our community, and what’s being done to address it. In today’s column, we focus our conversation on access to entrepreneurship. We welcome your ideas and questions to be covered in this series, and encourage you to email those questions and ideas to firstname.lastname@example.org.
At the start of 2020, we saw 40 percent of Black-owned businesses close their doors due to the COVID pandemic, according to the Federal Reserve Bank of New York. That’s one of the reasons why JPMorgan Chase is working to increase access to capital, provide technical assistance and offer mentorship to help create and grow more Black and Brown-owned businesses.
As part of its $30 billion commitment to advance racial equality, the firm has launched a new program to support minority entrepreneurs and small business owners. The program first became available in Chicago, with plans to support 1,500 Black and Brown-owned small businesses with 1:1 mentorship and digital education.
This builds on the firm’s history of supporting small businesses, including through the Entrepreneurs of Color Fund, which helps boost small businesses on the South and West sides.
Even before the pandemic, Black- and Latinx-owned businesses faced challenges of lower revenues, slim profit margins, and decreased cash liquidity. For instance, the JPMorgan Chase Institute found that Black-owned firms earned a median $39,000 in revenues during their first year, 59 percent less than the $94,000 in first-year revenues posted by typical white-owned firms.
We sat down with program leader Mikal Quarles at Chase and program mentee Stephanie Hart of Brown Sugar Bakery in the Grand Crossing neighborhood. Hart is one of our favorite bakery owners and she appeared on the Food Network show Holiday Baking Championship a few years back. Quarles gave us details about the program, while Hart told us what Black entrepreneurs are up against today and offered valuable advice for other small business owners.
Chicago Crusader: Can you tell us a little more about this new program that JPMorgan Chase launched to support minority entrepreneurs? Why now?
Mikal Quarles: The ‘why’ is simple. New businesses create more jobs. But largely because of historic, systemic inequities, Black and Brown entrepreneurs face a specific set of challenges that other new business owners may not. That’s why this program is so important.
Together with Mayor Lightfoot last month, we announced new ways to support Black and Brown-owned small businesses, including a new program we created to help entrepreneurs in historically underserved areas access coaching, technical assistance and capital. We know this is important, as 70 percent of small businesses that have good mentorship are still in operations 5 years later.
Through this program, we expect to help more than 1,500 Black- and Latinx-owned businesses in Chicago start and grow their business, and that helps us all.
What are the biggest challenges you have faced as a Black business owner and how have you overcome those challenges?
Stephanie Hart: Black businesses face challenges — all business owners do. However, Black entrepreneurs have definitely been underserved by financial institutions. One notable COVID-19 outcome is it finally made the disparity that we’ve been experiencing obvious. I think Black businesses will be able to catch up, if you will, if financial institutions own up and create programs like this one to address the needs within the Black community.
A lot of businesses decided the risks they faced in the global pandemic were too great to overcome. You chose to double-down in this period and invest more in your business. Were you frightened about doing that in the pandemic? And how did you make it happen?
SH: I am a serial entrepreneur. I also feel that those folks who have supported me through their efforts and loyalty deserved to stay employed. My team is made up mostly of at-risk folks — people who may find it difficult to find employment. So my employees motivated me to make the changes necessary to weather the storm.
Access to capital is a big hurdle for Black entrepreneurs, but it’s not the only hurdle. What else do you think needs to be done to strengthen access to entrepreneurship for people of color?
MQ: Access to capital is a big one, but it’s not the only one. Greater financial education is the foundation for any small business. It can give businesses the tools and resources they need to start or scale their business, and maximize their money. Attracting and retaining talented employees can be also an issue, which is why business networks help companies like mine build a customer base and can be a place to go for advice and support.
What advice do you have to aspiring entrepreneurs as they think about whether to turn their idea into a business?
SH: First, if you want to be an entrepreneur then learn all you can about where you are currently employed. If you work eight hours per day/five days per week, put in another four hours per day to educate yourself about the business you want to create. Take a basic accounting course and read tons of books on business, sales, and human nature. This ride is fun if you keep learning.
And here’s the most important question: What special items can we expect at Brown Sugar Bakery this holiday season?
SH: This holiday, you will see pairings of cake and candy, as well as cake and ice cream. In 2021, you will see our famous caramel cake available nationwide via shipping. And here’s some really big news: we will be launching our own Brown Sugar cake mix with caramel frosting so you can make it at home. I think it actually tastes better than the recipe!