3 ways technology can help minority-owned businesses recover
Minority-owned businesses have been particularly hard hit during the COVID-19 pandemic
Vivian Duelli had wanted to open a yoga studio for 18 years. Construction on her dream, Drift Yoga and Juice Bar, started in Seattle in February 2020. It stopped three weeks later due to the pandemic.
“March came and April came, and we couldn’t go back yet to construction,” Duelli says. “I was trying to figure out how I was going to start to have a presence.”One solution was to livestream her classes online. This required a pivot for her business model, but Duelli says it definitely helped her new business attract customers and gain traction.
Duelli, who is Filipino American, was eventually able to open her studio’s doors in October. But overall, losses among minority business owners were severe because of stay-at-home orders at the onset of the pandemic, according to the National Bureau of Economic Research.
These businesses may still need relief more than a year later, and there’s no easy way to speed up their recovery. However, using technology — as Duelli did — may help. Here are three ways how.
1. Embrace e-commerce
The pandemic forced many brick-and-mortar businesses to look toward online sales. Duelli, for example, sells yoga clothing, sweat-proof jewelry and other items through her studio’s website.
But if your business has traditionally obtained customers with tactics like foot traffic or phone calls, you may have yet to make that leap.
“If you’re a barbershop, if you’re a restaurant, you’re getting your customers the old-fashioned way,” says John Hope Bryant, founder, chairman and CEO of Operation Hope, a nonprofit that works to expand economic opportunity for low- and moderate-income individuals.
Bryant says that approach no longer works, as technology is moving the business world at “jet-like speed.” In part to help Black-owned businesses catch up, his organization has partnered with the e-commerce platform Shopify for the 1MBB Initiative.
The program’s goal is to create 1 million new Black-owned businesses over 10 years. Entrepreneurs receive access to law firms, financial coaching and other professional assistance, as well as a free Shopify license to help sell their products online.
Current businesses are also eligible.
“If all we did was go to half of the 2.7 million businesses that exist already in Black America that are under-resourced, under-capitalized and said, ‘Would you like to have an e-commerce twin of your restaurant, your barbershop, your nail salon, whatever your business is?’” Bryant says, “I think that the majority of Black businesses would say, ‘We’d love that.’”
Other organizations are also looking to help minority small-business owners go digital. For example, the Comcast Rise program is offering free computer equipment and internet, voice and cybersecurity services for 12 months to Black, Indigenous and people of color, or BIPOC, owned businesses.
2. Improve your skills
The technology gap minority business owners can face includes not only access to equipment and digital services but also training on how to use it.
“[Businesses] are having to level up on how to use Instagram, how to use Twitter, how to use paid advertising … when everybody has gone virtual,” says Lelani Clark, public relations manager for the Women’s Center for Entrepreneurship, a nonprofit organization that helps women and BIPOC small-business owners.
If you’re unfamiliar with these topics or want to improve your skills, free support is available online. For example, Clark says the WCEC has webinars that cover topics like blogging, search engine optimization and e-commerce.
Clark says minority business owners in need of technological assistance can use online tools to find local help as well.
The U.S. Small Business Administration’s website lets you search for SBA partners in your area. Expert assistance is also available through Minority Business Development Agency business centers, which are located in 19 states and Puerto Rico.
“Do your due diligence and look for resources that are right there in your community,” Clark says.
3. Find funding
It’s unclear how much the Paycheck Protection Program has helped minority-owned businesses. The need for financing won’t go away when that program ends, though.
Since January, more women, Hispanic and Black business owners have been finding funding through online lenders compared with the previous nine months, according to a March 2021 survey from QuickBooks.
Online lenders typically rely on algorithms to evaluate a business’s performance and make lending decisions. This approach may help with some potential financing barriers.
“Tech is the ultimate [equalizer] when it comes to unconscious bias,” says Everett Sands, CEO of Lendistry, a community development financial institution in Los Angeles that offers small-business loans to underserved populations.
Sands says demographic information like race, gender and age is on “everybody’s mind” during the financing process. But he adds that computers don’t think like humans.
A 2019 Federal Reserve report found that white- and Black-owned businesses were likely to be approved by online lenders at almost the same rate. At large banks, the difference between the two groups was more than 36%.
Another potential benefit of online lenders is faster processing and funding, if your business needs financing now. However, that convenience typically comes with a higher interest rate. It’s important to do your research to ensure you’re getting a good deal.
“There’s good guys and bad guys in every field,” Sands says. “Small businesses should always be conscious of that.”
— By Ryan Lane