State of Black Business & Entrepreneurs in Canada | 2021
As we welcome more people to the Tribe Network, we want to illuminate why it is important to be among peers. In doing so, we explore 5 recent reports and studies on Black Entrepreneurs and Businesses in Canada published in 2021.
Being part of this larger community allows us to share who we are and what we have to offer while engaging with new people. While our potential for success is infinite, many barriers impede our progression. This blog will highlight recent research reports that explain the barriers concerning Black business in Canada.
1. Impact of COVID-19 on African Nova Scotian (ANS) Business by Black Business Initiative
In light of the ongoing pandemic, BBI released a survey report in April 2021, that in part, served to develop a thorough understanding of post-COVID-19 recovery strategies for ANS businesses. The data obtained from this study demonstrate a better understanding of the challenges faced by Black-owned businesses in Nova Scotia, critical to their survival.
Within this survey, fifty-nine entrepreneurs spanning nine industries participated. The results of this study validate the significant impact of COVID-19 on the business collective with the loss of revenues, temporary and permanent closures, possible permanent shrinkage of customers, and the inability to access financial assistance from the federal government and other programs.
Furthermore, the survey identified five leading factors that are determined as notable barriers to success in business:
- Social attitudes towards Black entrepreneurs reveal a recognized belief that Black entrepreneurs are not as capable as their white counterparts (78.2%)
- The size of their business prevents them from scaling up (76%)
- Lack of equity or intergenerational wealth that prevents access to financing from banks (73%)
- Lack of networking opportunities (58%)
- Difficulty in accessing local and international markets (56%)
To read the full article and report, click here.
2. Inclusive Entrepreneurship: Exploring the Barriers Facing Black Entrepreneurs in Canada by Senate of Canada
The study was commissioned by the African Canadian Senate Group and Senator Colin Deacon, with the support twelve Black-led business organizations across Canada.
Conclusions that Black entrepreneurship in Canada is subject to systemic barriers to growth and success were formed by the responses of more than 300 Black entrepreneurs across the country. The study exhibits that systemic racism, access to capital, and the lack of a business network represent the main barriers to growth and the sustainability of a Black business.
It was noted that 76% of all Black entrepreneurs said that their race makes it harder to succeed. One key determinant of the study included empowered entrepreneurs (44%) versus unempowered entrepreneurs (56%).
Empowered entrepreneurs know how to access support; are more likely to have access to funds to support business and master skills to run business; have confidence in responding to problems effectively. And they have confidence in their ability to recover from obstacles. While unempowered entrepreneurs do not know how to access support for business challenges; have almost no access to funds; are less likely to have mastered skills to run business, and have reduced assurance in responding to problems and recovering from setbacks.
Defining these attributes is to explore entrepreneurs’ ability while also expressing that regardless of their efforts and experience, Black entrepreneurs need tailored solutions to create an inclusive and sustainable business environment.
Read the article here, along with the full report. It will give you a better sense of the methodology and key findings.
Let’s further explore the barriers to Black entrepreneurs by looking at the Personas, Perceptions, and Experiences.
3. Building Black Businesses in Canada: Personas, Perceptions, and Experiences by Canadian Black Chamber of Commerce
This particular report was put forth by the Canadian Black Chamber of Commerce with Pitch Better and the Business Development Bank of Canada (BDC). The purpose of this research is to explore the financial needs of the Black entrepreneurial population.
There were 53 participants in this study to represent Black Canadians pursuing entrepreneurship. Their sample concluded that 57% of respondents are between the ages of 30-40, where 75% of total respondents have been in businesses for less than four years.
As this study is concerned with finances related to business operations, it was found that 71% of respondents sourced their start-up capital utilizing bootstrapping. Bootstrapping refers to building a company from scratch with personal savings and luck. Furthermore, the study expressed that the most critical areas for financial support are advertising and promotion, personal development and mentorship, finding capital, market research, hiring staff, and accessing inventory.
Unfortunately, only 22% of respondents are very familiar with the BDC or Export Development Canada (EDC) and their funding programs.
The key findings from this report reveal the following:
- The majority of programs providing access to capital and funding do not make enough of an effort to address black communities
- Black entrepreneurs do not have positive experiences with financing institutions as a result of past experiences, lack of information, and financial literacy
- Many Black entrepreneurs lack social capital and networks to set up businesses for funding successfully
- A large number of Black entrepreneurs are hitting a glass ceiling with annual revenue of less than $100,000
The demonstrations of this report can also be seen on a micro level when dealing with an even smaller population of Black entrepreneurs: Women.
4. Rise Up: A Study of 700 Black Women Entrepreneurs by Black Business and Professional Association
Rise Up was conducted by the Black Business and Professional Association (BBPA) in partnership with the Casa Foundation for International development and De Sedulous Women Leaders (dSWL) and released in April 2021.
This report highlights the barriers that Black women entrepreneurs face while operating and growing their businesses. While there is minimal data concerning Black entrepreneurs, there is far less data that highlights the experience of Black women in business.
The research demonstrated in this report entails the participation of 700 Black women entrepreneurs across Canada. This study aims to gain insight into the population of Black female entrepreneurs and their experiences.
Barriers that Black women face consist of limited access to financing, cost of borrowing, and access to equity or capital. Barriers to business affected by the impacts of COVID-19 include business slowdowns, disruptions, decrease in services, restricted spending due to uncertainty, order and event cancellation, and increases in their online presence.
Within the report, participants expressed their entrepreneurial needs to achieve their business goals short term. These needs involved general business support & mentorship, funding, and staff and team assistance.
What is interesting about this report is that it discusses qualitative experiences as well as quantitative. Partial motivation for Black women to enter entrepreneurship is that it is a compelling alternative to regular career options that allows them to excel past socioeconomic disadvantages in the labor market, such as lower pay.
To read more about the experience of the women in this report, follow this link. Continue reading for more insight to women entrepreneurs!
5. FoundHers Report by Pitch Better Inc.
The FoundHers report is the largest analysis of more than 1500 Black women in Canadian business, leading and serving charitable, not-for-profit (NPO), and for-profit organizations.
The goal of this report is to determine the significant insights to understand barriers faced by Black women-led organizations as well as a literature review of the market. Furthermore, this study explores the various personas of Black women entrepreneurs to develop a comprehensive image of the Black women-owned business population, their challenges and their needs to correspond to supply sides of the market (such as lawyers, accounting firms, financial institutions, etc.)
The findings in this report outline similar challenges previously discussed associated with being Black in business; access to capital, networks, and skilled advisors.
Black women lack funding and business intelligence despite their advanced education. Black-owned businesses start with three times less than their white counterparts in terms of overall capital. Black entrepreneurs apply for loans less often because they expect to be denied. Regarding loans, a study described within the report by Pope and Sydnor expressed that loans with a Black person in the profile were 25%-35% less likely to receive funding than their white counterpart, yet charged higher interest and default rates if approved. You can explore the literature report here.
Another reason for the application of bootstrapping is to avoid the risk of taking on external repayable financing. For NPOs, only 36% of participants express the ability to accurately evaluate the return on investment (ROI), or cost-effectiveness, of their organizations.
Black women entrepreneurs often lack networks and meaningful connections. The report expresses that despite their ability to create and run great businesses, forming networks results in a lower return. More than 90% of respondents indicated that they rarely participate in ecosystem support and business development programs through accelerators and workshops. Such participation could lead to a creation of a professional network and mentorship.
The most pressing issues for participants include access to finances, community networks, access to growth opportunities and mentorship as the first elements that would ameliorate their entrepreneurial experience.
So what?
The recurring themes from these examinations include the following:
- Lack of network connections
- Inability to access capital
- Lack of general business support
- Systemic racism & negative experiences involving financial institutions
Despite these findings, Black entrepreneurs are optimistic about business, and we are too!
The findings in these reports and study’s tell us the gaps, and what we need to do to support Black businesses thrive throughout Canada’s economic ecosystem in growing our networks and knowledge.
Tribe Network supports BIPOC entrepreneurs and provides access to resource support, advice, and a community of peers when challenges may arise in their business pursuit. With this, we reduce and eliminate the gap between empowered and unempowered entrepreneurs. People of all backgrounds, Black, Indigenous, People of Colour, join the Tribe Network to gain access to information, resources, and opportunities!
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Below are links to the articles. You are also able to download the PDF version of the reports on these pages.
https://www.bbi.ca/news/impact-of-covid-19-on-ans-businesses-report
https://abacusdata.ca/black-entrepreneurs-canada-inclusive-entrepreneurship/
https://www.blackchamber.ca/building-black-business-in-canada/
https://wekh.ca/research/rise-up-a-study-of-700-black-women-entrepreneurs/
https://foundhers.ca
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