YOUNGSTOWN, Ohio – Last year looks like an inflection point for entrepreneurs of color, both here and across the country. Several storylines of 2020 – the coronavirus pandemic, discussions about racial equity and new efforts to support small businesses – converged to create an environment that led to greater attention on minority-owned businesses and what help they need to succeed.
“We all had to sit at home. We spent those first 30 days unsure of what was going to happen next. A lot of people, especially in the minority community, ran to what skills and hobbies they had and monetized it,” says Ra’Cole Taltoan, owner of Rockbrook Business Services.
That’s what happened to Sheri Bodo, owner of Common Goods Studio. She had some business experience having previously started a vintage clothing store with her sister. But after losing her full-time job because of the pandemic, she turned all her attention to launching the coffee shop and artisan market in Cornersburg, which opened in February.
“I needed to find something that gave me purpose and that made me happy,” Bodo says. “I did some soul searching and realized that opening something like Common Goods not only would benefit the community, but also what I want to do in my career.”
Last summer was one of the busiest Vern Richberg has ever seen at the local office of the Minority Business Assistance Center, housed at the Youngstown Business Incubator.
It was something that Richberg describes as “the year of re’s” – reimagining, re-energizing, revisiting. As entrepreneurs weathered the pandemic, which disproportionately affected people of color in terms of both health outcomes and job losses, they began to look at how they could earn extra money at a time of economic insecurity.
“That drove an uptick in engagement and time investment with our counselors,” he says. “We see a lot of dreamer types with a vision. They’re in the early stages of a big idea. … Coupled with that, we see a lot of people who are committed business-builders.”
Rockbrook Business Solutions and the MBAC guide companies through their startups. At Rockbrook, that can mean fixing personal credit to the point where an entrepreneur can get a business loan, while at the Minority Business Assistance Center, it can be developing an idea and ensuring that the business owner has all the necessary documents.
“You either have a hustle or a full, running business. There are people we see that have a hustle and they can run that to make enough money for whatever it is they want to do,” says Tanisha Wheeler, director of curriculum development at the YBI and leader of its Youth Entrepreneurship program.
“They’re not in a position where they have bank statements or a history of their business,” Wheeler says. “We’ve had people tell us they’ve operated for four years and aren’t registered [with the state as a business]. That’s a long way to go back to where they should have started and that all comes back to education.”
Those missing pieces, says Farmers National Bank vice president and community development manager Juan Santiago, are common when first-time entrepreneurs come in seeking financing for their business. In such scenarios, Santiago and Farmers’ lending staff will direct entrepreneurs to agencies like the MBAC, the Small Business Development Center at Youngstown State University, Oak Hill Collaborative or Valley Economic Development Partners.
“The biggest challenge they encounter is where to go for their next step,” Santiago says. “They may have a great product, a great idea, a service that’s needed in the community, whether it’s a minority-owned business or otherwise. But the question is, ‘Where do I go from here?’ It’s the technical side of things like putting together a business plan or projections or cost estimates.”
Having just received its designation as a community development financial institution, Valley Economic Development Partners will soon begin a search to fill a new position, a technical assistant. This staff member would work to bridge the gap on the technical side of business development and get startups one step closer to full operations, says Terry Louk, the agency’s director of SBA lending.
“One of the things we see among both minority-owned businesses and nonminority-owned businesses is that people go into business because they make a widget well,” he says. “All the additional items that lead into a successful business are sometimes lacking – HR, marketing, financials. There can be a disconnect between the small-business owner and the operations aspect of a business.”
But beyond technical assistance and education about how to start a business, systemic barriers remain for entrepreneurs of color, particularly those who are Black. There’s a credit gap between Black Americans – for whom the average FICO and Experian score is 677, the lowest of all racial and ethnic groups in the country – and White Americans, for whom the average is 774. In turn, that leads to higher interest rates on loans.
“The relationship between personal financial well-being and credit and business success are tied at the hip,” says Frank Hierro, Mahoning Valley regional president for Premier Bank. “It’s much harder to grow a business with business credit when their personal credit isn’t in order.”
For those seeking business loans, a report by the Federal Reserve shows that just 66.4% of minority-owned businesses get at least part of their funding from banks, compared to 80.2% of their White counterparts. When minority-owned companies do get funding, the amounts are, on average, about $30,000 less than comparable White-owned businesses with interest rates about 1.4% higher.
People of color are also less connected to the banking system and are historically either unbanked or underbanked. A 2019 report by McKinsey & Co. noted that there tend to be fewer bank branches in low-income communities and that increasing access to basic services like checking and savings accounts could mean up to an additional $40,000 over a person’s life.
At a personal level, not having relationships with a bank can hamper business, says Premier Bank vice president and community development officer Lee Fields.
“Once you start talking to people about their issues – whether it’s financial education or anything else – you start to realize how many people don’t have checking accounts or saving accounts,” he says. “It’s a matter of trust. Once you start to build that, it helps with long-term success.”
And, as business owner HaSheen Wilson notes, there’s a societal tendency to brand Black-owned businesses as only for Black people.
“Black people participate at White-owned establishments but not so often vice versa. That’s something that has to be addressed,” says Wilson, the owner of Youngstown Event Center, Crawling to Destiny Learning Center and New Visions Behavioral Health. “Don’t overthink it,” he continues. “Be intentional. That can be done by reaching out. … If there’s the intentionality of ‘I have to be better,’ that’s where it starts. It doesn’t have to be a grand thing but it needs to be something that moves in that direction.”
Beyond the effect that individuals can have on minority-owned businesses, Rockbrook Business Services’ Taltoan says she’s often frustrated with the lack of support from larger institutions like local governments and business organizations.
“We gave the Chill-Can factory $1.5 million. Imagine if we’d given 150 people $10,000 to help start their business. What would the difference be?” she asks. “We get no help from the Youngstown/Warren Regional Chamber. I want to see that change. They’re a huge piece of this business puzzle. … Once [minority-owned businesses] are included in something, they’ll be invested in it. People don’t feel invested in the business aspects of this city because they’re not included.”
There has been encouragement from many corners to get people shopping at minority-owned businesses and while that effort is worthwhile, those interviewed for this story agree: The long-term success of such businesses needs to be sustained as well. It isn’t enough to have a year of effort before falling back into old routines.
“There are real challenges to be solved and real work to be done to help these businesses overcome hurdles, but there’s also work to be done in getting people to understand how important it is that we seize this moment. It’s about social justice. But it’s not only about that,” says Barb Ewing, CEO of the YBI.
“There’s another component: supply chains. We all saw them start to fray and there need to be local supply chains. We as a community should take advantage of the fact that we can rebuild our local economy better by shopping locally and inclusively,” Ewing says.
For the programs at YBI – such as the Minority Business Assistance Center, Women in Entrepreneurship and Youth Entrepreneurship – part of the focus is ensuring business owners have a sustainable business idea that can build a wide customer base. Among Black entrepreneurs, the YBI’s Wheeler observes, there’s often an idea built around serving Black customers with things like beauty products and shirts with Black slogans.
“It’s important to be pro-Black and embrace that. But there are people in the community who aren’t Black who want to shop Black and won’t identify with a shirt that says, ‘I wear shea butter and cornrows,’ ” she says. “We want people to respect Black businesses just like they shop at Target. I don’t want you buying from me out of pity or just because I’m Black. I want you to buy from me because I have a product you like and because I can provide the education on that product.”
To diversify the range of business sectors and support minority-owned businesses, there must be a concerted effort from the anchor institutions in the region – “our industry, our government agencies, our universities and anyone with a pocketbook doing significant purchasing,” Ewing says. And there needs to be diversification in the types of businesses people of color are starting, she adds.
“If we’re going to be meeting the needs of a hospital or university system, there need to be different kinds of businesses. It’s difficult to sell T-shirts to any government. We want businesses to meet the demands of institutions, which aren’t always going to look like customers you get at Youngstown Flea or pop-up markets,” Ewing says.
Still, all agree, the surge around minority-owned businesses – both those looking to start and the customers who want to spend money with them – is an encouraging sign and one that needs to be sustained and supported.
Taltoan points to a Women in Business vendor event hosted by Lorri Franklin that featured more than 100 businesses, most of them recent startups.
“If we help them grow, imagine what that could look like in five years if we get them to each hire five people?” Taltoan says. “That’s a lot of jobs that are local and they’re likely to keep people because it feels like family. The more we can invest in entrepreneurs, the better off we’ll be.”
Pictured at top: Ra’Cole Taltoan, owner of Rockbrook Business Services