Stuck from the Start

The Financial Challenges of Low- and Moderate-Income African-American Entrepreneurs in the South

Black-owned businesses nationally average only $58,000 in annual revenue compared to $546,000 for white-owned businesses. New research conducted in three Southern states by Prosperity Now puts a human face on those numbers, illustrating the very real problems confronting African-American entrepreneurs when they try to start and run their own businesses.

“Kayla” spent a decade working at a local hotel cleaning rooms, doing laundry and serving the continental breakfast. The hours of a housekeeper were long and hard to balance with raising a young family, but she loved the work. Inspired by her kids, Kayla started to dream of owning her own cleaning business serving local businesses and households. She signed up for business classes at a Women’s Business Center and wrote up a business plan through the program. Within a year, she got her first cleaning contract and enrolled in college to build her knowledge and skills. Since leaving the hotel, Kayla became a bona fide businesswoman with a sustained cleaning business and a Bachelor’s degree in Business Administration. Despite all her hard work and sleepless nights, Kayla is still barely making it. She’s only paid herself twice in five years, relying on her husband’s salary for the family’s income. As she doesn’t have the resources to hire employees or take on clients that would offer higher-paying contracts, Kayla is hoping to get a business loan to expand. Without strong profits and a thin credit history, she is stuck in an entrepreneur’s catch-22.

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