We’re currently in the midst of one of the greatest transformations the world of work has ever seen, where professionals are rethinking not just how we work, but why we work. This new world of work has led to a wave of new entrepreneurs, including talent exploring an intrapreneurial track within their organization, expanding a side hustle, or entirely venturing out on their own.
In particular, we’ve seen Black professionals turn toward entrepreneurship at unprecedented rates, with the number of African American business owners in operation surging to almost 1.5 million in August 2021–up 38% from February 2020.
LinkedIn surveyed over 1,000 Black entrepreneurs to uncover why professionals are starting their own businesses, the factors prompting professionals to leave the corporate workforce, and the challenges Black professionals often face when launching a business. This is what we learned about their experiences.
Black entrepreneurship on the rise
Entrepreneurship in the Black community isn’t a new phenomenon. From trailblazers like Madam C.J. Walker to Reginald Lewis to countless others, Black people have shown a history of innovation, creativity, and resiliency when it comes to entrepreneurship.
The pandemic—which disproportionately affected Black professionals at a rate between two and three times greater than white professionals—served as a catalyst, inspiring many to start their own businesses for financial support (48%), flexibility (46%), and to counteract lack of fulfillment at work (30%).
Amidst the Great Reshuffle, we’ve seen a change in how people define professionalism—daring to bring their whole and authentic selves to work with them every day. This has also helped spark a rise in entrepreneurship as people look to monetize their passions, hobbies, and skills.
Systemic barriers for Black-owned businesses
Black entrepreneurs are purpose-driven community builders; however, the journey has not always been easy, especially when it comes to gaining access to funding and resources.
There is a lack of financial service institutions run by Black executives, and longstanding inequities have created a funding gap, where Black business owners are often shut out from accessing capital, with LinkedIn’s new research finding:
- 37% of Black entrepreneurs feel like they have to have someone white on their leadership team/executive board in order to get funding
- 36% of Black business owners have a hard time securing financing
- 35% of Black entrepreneurs have been discriminated against when applying for funding
- 64% of black entrepreneurs rely solely on personal savings to fund their businesses
Additional research shows that 58% of Black-owned businesses were at risk of financial distress before the pandemic, compared with about 27% of white-owned companies, and according to the Federal Reserve, 80.2% of white business owners receive at least a percentage of the funding they request from a bank, compared to 66.4% of Black business owners.
In addition to funding, Black business owners may lack access to the networks that could help connect them to economic opportunities. LinkedIn research found that 58% of Black business owners believe they would be more successful if they had a “stronger” network.
When I think through what could be defined as a strong network, I think about the social capital and connections leaders encompass that could ultimately help others propel forward. As a leader, mentor, or sponsor, a letter of recommendation, connection to another industry leader, and even a shout-out are some tangible ways to leverage your network and lift up others. Finally, the best networks are diverse and include people from all walks of life with multifaceted life experiences and skills to bring to the table.
What companies can do to support Black entrepreneurs
Companies must understand the pivotal role Black entrepreneurs play in the world of work and as business leaders; we all have a role to play in developing ecosystems that support the development of Black businesses.
The pandemic and the flexibility that comes with remote work may have been the catalyst many Black professionals needed to start their own company, but these outside business ventures aren’t always encouraged by employers. In fact, one in three (37%) Black entrepreneurs haven’t told their company that they have a side hustle. As more companies seek to attract and retain talent amidst the Great Reshuffle in order to be competitive, employers can create spaces to help professionals with their own entrepreneurial pursuits to thrive inside and outside of the workforce.
Here’s what Black entrepreneurs say they need to feel supported in the workplace:
- Career Mobility: Black entrepreneurs would consider staying at their corporate job if they had more transparency in decisions that impact their career (i.e., promotion, pay, performance management) (40%)
- Equitable Benefits: Black entrepreneurs would consider staying at their corporate job if they had a more equitable salary/bonus (50%), more competitive benefits (i.e., health insurance, tuition reimbursement, 401k) (32%), and more professional development opportunities (29%)
As a leader, it’s important to elevate the voices of Black intrapreneurs and entrepreneurs and to encourage employees to pursue their interests and talents in and outside of work. I’ve witnessed employees at LinkedIn thrive through experiences that enable growth and readiness to assume fulfilling career opportunities. In doing so, I’ve seen innovation come to life, such as LinkedIn’s TransformHer conference, founded by an employee who had a desire to uplift Black women in tech and beyond. And at companies like Intuit, for example, the company gives employees access to financial training and their product suite to champion intrapreneurial innovation. These are just a couple of examples to show your employees the many paths one can take with a career.
We all can play a role in developing ecosystems that support the development of Black businesses. As a global platform that seeks to create economic opportunity for every member of the global workforce, we feel it’s our responsibility to help address equity in the workplace. To further elevate, amplify, and support Black businesses and entrepreneurs, we’ve announced a new, $500,000 grant to support programs and organizations that advance and accelerate Black entrepreneurship, and are unlocking LinkedIn Learning courses to help educate and propel entrepreneurs forward. We hope these research insights, resources, and recommendations are sparking necessary and valuable conversations during this time.
Rosanna Durruthy is LinkedIn’s vice president of Global Diversity, Inclusion, and Belonging.