Rick Wade, Senior Vice President of Strategic Alliances and Outreach at the U.S. Chamber of Commerce, joined Dr. Vanessa Weaver, CEO of Alignment Strategies, to discuss the state of minority-owned businesses in the United States. He talked in-depth about the effect the COVID-19 pandemic has had on Black- and Latinx-owned businesses and how bolstering these businesses can help close the racial wealth gap. The following is an edited excerpt from their conversation.
Dr. Vanessa Weaver: Tell me about the programs that you’ve implemented in your role at the U.S. Chamber of Commerce.
Rick Wade: We started this journey [supporting minority-owned businesses by] building a partnership with Howard University, now extended to all of the historically Black colleges, called the Next Generation Business Partnership. It’s a real investment in developing the next generation of Black and diverse business leaders, not just through internships, but entrepreneurship.
After the tragic murder of George Floyd, the private sector stood up in incredible ways. At the U.S. Chamber of Commerce, we convened some 7,000 business leaders and stakeholders, not just around a conversation about racial inequality in America, but real solutions. We launched the Equality of Opportunity Initiative. We’re working with members of Congress on legislation to close racial inequality gaps in America, in areas like education and entrepreneurship, criminal justice, health and wealth.
I’m proud of the other initiatives that we’ve announced. For example, a Corporate Board Diversity Accelerator, where we’ve committed to working with the National Association of Corporate Directors to identify, prepare and connect 250 Black executives and others of color on corporate boards. We’re working diligently to build a supplier diversity initiative to connect more Black and Latinx and other businesses to corporate supply chains. We’re taking on tough issues like access to capital, which is paramount. It’s the number one issue facing the growth or lack of growth of Black businesses in America. We got to figure that out.
Weaver: The data shows that there are about 2.6 million Black-owned businesses and approximately four million Latinx-owned companies in the United States. And for those Black companies, they’re generating about $150 billion in revenue, which is really less than 1% of the $2 trillion gross revenues developed nationwide. Latinx businesses generate $455 billion in annual receipts. Even with both of those, it doesn’t even touch the $2.1 trillion in revenue that’s generated by majority businesses. Can we ever catch up because that’s already a big gap in the wealth creation?
Wade: There’s one piece of research that says it’ll take 220 years for us to close these gaps, but we have to be deliberate and strategic in the policies we put forth. The question is, how do we grow that revenue? How do we grow the impact at a time when the pandemic has disproportionately affected Black and Latinx and other businesses? For example, the Institute for Economic Research reports that 41% of Black businesses have already closed. That’s unconscionable.
Weaver: As a result of COVID?
Wade: As a result of the pandemic. Most of our 2.6 million Black-owned businesses are in the professional services industry and they’re depending on consumers. They’re small, one person, quite frankly, or two employees. These companies have been disproportionately impacted. We created, in working with the National Black Chamber of Commerce, Walker’s Legacy, which works with Black women-owned businesses and others—what we call the Coalition of Black Businesses—and is supported by a $10 million grant from American Express. The goal was to get immediate grants, not loans, because we learned from the PPP [Payment Protection Program] funding that those loans, for a number of reasons, did not reach these populations.
Weaver: Where’d the money go if they didn’t reach the populations?
Wade: It went to corporations that were majority. There are a lot of Black businesses that didn’t have the banking relationships. The government could have done a better job on outreach at the beginning of the pandemic. So there are challenges there that we’re trying to solve working with SBA [Small Business Association], Department of Commerce and other agencies.
Weaver: Are there particular barriers that Black and Brown businesses create that make it more challenging for us to be a critical part of this game?
Wade: Whether we create the problem, where the problem exists is a wide knowledge gap. We’ve got to lean in and take advantage of the opportunity to learn business. For example, one of the things that I am a big proponent of is international trade. When I was at the Department of Commerce, I led trade missions around the world, but here’s what I learned: 95% of the world’s consumers are outside of the United States.
We’ve got to go to where the customers are. But we don’t understand international trade as we should. We don’t understand how to do business in India and Africa and how to export and sell our products to those 95% of consumers. That is a big growth opportunity. We got to also understand that you got right here in the United States government an export import bank that is lending to Black and minority businesses so they can sell their products abroad. So there’s a knowledge gap that we have to fill but we got to be willing and be open to learning if we are to be competitive and we are to grow our businesses.
Weaver: We know that people do business with people that they know and that they trust. But as we think about the two-million-plus Black businesses, the majority of them are individuals, so how can they make time to stay connected with their local Chambers and form these relationships when most of them are the only ones that are keeping the doors open.
Wade: It’s one of these things you got to make time [for]. You got to make the investment. Just as we invest in our business and our infrastructure, you got to invest in relationships. And that’s as simple as I can define it. It’s just one of those things that you got to do if you’re going to grow and succeed.
Weaver: It’s sort of like a mindset shift because often we think the relationship piece is the extra part of the business, it’s not really core to the business. What I’m hearing you say is that cultivating these relationships that increase the amount of your connections is critical to really growing your business in a substantial way.
Wade: That’s right. And I’ll say parenthetically, it is building relationships with people who don’t necessarily look like you or who may not even be in your business. I did an interview with a paper one time, and they said, “What’s the importance of building stronger relations with Black businesses?” Well, I already have those. I need stronger relationships with white companies. I need ties with companies in China and Asia and everywhere else. It’s a mindset. We have to view ourselves in these roles in order to be competitive and build a relationship. We got to think outside the box, get out of the boundaries, and get into the mainstream.
Weaver: If you were to tell Black and Brown businesses three things that they need to start doing to enhance their profile or to generate more sales, what would those three things be?
Wade: One thing is an audit of your own business. Are you making money? If not, why? Look at the technology component of your business if you’re not engaged in eCommerce. Everything is either technology driven, or technology enabled. Do an audit on that.
The third thing is re-evaluate your relationships and your associations and coalitions including the Chamber. Included in that, are you getting the knowledge? Are you building the knowledge assets you need to be competitive?
There’s a lot in those three things but that would be some directions I would give folks. The assessment is important because the entire economy has been disrupted by this pandemic and we have to reimagine what the economy in the future is going to look like. So when I say do an assessment, then you really do need to look at the economy and look at the world and see where you fit in this new and emerging economy that’s been impended by this pandemic.
