(Part II of VII) How Community College Entrepreneurship Creates Equity and Prosperity: We will get there, but with your help, we will get there faster.(Part II of VII)
“You don’t have to see the whole staircase, just take the first step” Martin Luther King Jr.
This article is part two of a seven part series about a new book, Impact ED (John Hunt Publishing 2020) that I was fortunate to be a small part of, along with my co-authors, Becky Corbin, President and CEO of the National Association for Community College Entrepreneurship (NACCE), and Beth Kerly, Co-Founder of Hillsborough Community College’s Institute for Interdisciplinary Innovation — The InLab@HCC. If you have not yet read our first article, you can find it here.
Background — racial inequity in small business
Racial inequality in education, income, and wealth are significant, and have been further magnified by the pandemic. Less understood and researched are the large and persistent racial inequities in small business ownership in the United States, which have also been greatly amplified during the COVID-19 crisis.
My co-authors and I wrote this book amid a global pandemic with the thought in mind that by sharing the critical role that community college entrepreneurship education plays in creating greater equity and prosperity, we could provide a roadmap of opportunity to help foster a global reset, post COVID-19. We know this will take time, but one unique advantage we have is several shovel ready projects that have already been developed and tested, that simply just need a slight nudge from policy makers to bring these projects to scalable life. This article, part two of seven, focuses on Chapter 1: Inequality — from Reality to Opportunity
Estimates range between 40–50% of Black owned small businesses in the United States have or will most likely close because of COVID-19. A study conducted several months ago (July 2020) by the University of California, Santa Cruz revealed that 41% of Black owned businesses had closed because of COVID-19 as compared with 17% of white small businesses. Latinx and Asian small business owners were also disproportionately impacted as these business owners also experienced a sharp contraction falling by 32% and 25% respectively. Part of this disparity stems from wealth inequality, disproportionate challenges accessing capital, and coverage gaps in the distribution of federal funding to help small businesses impacted by COVID-19. According to a Federal Reserve Bank study, “forty percent of receipts from Black-owned businesses are concentrated in only 30 (1%) out of over 3,000 counties across the U.S., most of them in metropolitan areas with large Black populations — and of those 30 counties, 19 of them are among the top 50 COVID-affected areas in the nation.”
Beyond the problem of geography is disadvantages that Black owned businesses face in terms of financial management. The financial position of a business headed into any economic downturn can either cushion or compound the effects of an economic shock. Prior to the pandemic, JP Morgan Chase (2019) found that Black owned businesses had significantly lower cash reserves when compared with white owned businesses.
Mckinsey conducted a study (2019) on the state of business ownership in terms of equity (ownership) by race. They found that Black Americans have never had an equal ability to benefit from small business ownership when compared with white people. Three times as many whites have ownership in a business, and among those “the average Black American’s business equity is worth about 50 percent of the average American’s and a third of the average white American’s.”
The Aspen Institute reported that Black owned businesses generated less revenue, and profit, and 32% of black owned businesses experienced a financial loss compared with 19% of white owned small businesses.
One final data point comes from a study conducted by MetLife and the U.S. Chamber of Commerce conducted in August 2020. This study supported other research that indicates that minority owned small businesses have been hit much harder by the pandemic, when compared with white owned businesses. The survey also showed that a larger number of minority owned businesses are concerned about having to close permanently and these businesses reported having a much more difficult time securing a loan to help get through the crisis. All these factors and many more paint a troubled tapestry for the landscape of inequity within the domain of small business ownership and activity. The pandemic has shined a bright light and unavoidable focus on this serious problem, and we believe an opportunity exists for community college to enter the fray and lend a hand of support to help rebuild our small business economy in a more equitable fashion.
A national solution through community colleges
With significant challenges and barriers facing existing minority owned small businesses, coupled with barriers facing nascent entrepreneurs that aspire to start a business, community colleges play a central role in helping solve both problems. Community colleges are extremely diverse and highly inclusive institutions. They also have a proximity advantage being able to reach rural and underserved communities actively, and comprehensively. Community colleges severely lower, and virtually eliminate the myriad barriers of entry to access entrepreneurial education, financial resources to launch a business, and support through intrusive mentoring and guidance.
Community Colleges provide a unique amalgamation that includes an open enrollment process, scholarships, grants, and below market tuition rates, coupled with highly structured, applied, accelerated, and rigorous entrepreneurship education taught by practitioners. In addition, access to capital through NACCE initiatives like the Everyday Entrepreneur Venture Fund, can be a significant difference maker in providing opportunity to all. But it does not end there. Once a student business completes their education, and receives funding, perhaps the most crucial contributor to success begins. A process of intrusive mentoring, guidance, and support to help the novice or struggling entrepreneur to navigate through the many challenges they will face.
We are very optimistic about the future because of our lived experiences as educators and advocates fighting for the everyday entrepreneur that has faced extraordinary inequity throughout their life. When a student from an under resourced community (like Frantz Benjamin who is profiled in chapter one) has the profound realization that they can cross the chasm from where they have grown up to capture their slice of prosperity and flourish as a business owner, that process can not only transform a life, and community, but the nation as a whole.
In our book, Impact ED, there are case examples of students we have cycled through this process, as well as detailed information about other shovel ready projects offered through NACCE and its various Centers of Practice. We call upon you the reader to bring your special gifts and talents and help us co-create a future that levels the playing field of opportunity for all. We will get there eventually, but with your help, we will get their faster.