Research from 2015 suggests that 7.2% of businesses within the United States are owned by African American entrepreneurs (SBA, 2015). Wagner (2013) reported that eight out of every 10 new businesses opened are likely to fail. Moreover, those companies owned by African American face increased barriers to business that make success even harder to attain (U.S. Census Bureau, 2011). Therefore, it is necessary to develop effective strategies that can assist these companies, especially those owned by African American entrepreneurs, to have greater opportunities for success.
Background of the Problem
During 2007, African American owned businesses contributed approximately $44 billion to the economy of North Carolina (SBA, 2007). Furthermore, according to one study by researchers from the University of North Carolina at Charlotte and Pride Magazine determined that African American owned businesses have grown by 30% within the past decade, providing over 85,000 jobs throughout North Carolina (Charlotte Chamber, 2011.) Therefore, North Carolina has been instrumental in promoting employment opportunities, as well as contributing to the economy. Durham is the fifth largest city in North Carolina and is known for many historical events and for being the birthplace of numerous historical figures (Richardson, 1990). The city has established a rich African American history of Black enterprise and innovative leaders (Richardson, 1990).
There are numerous failures of African American businesses in Durham (SBA, 2015). African American business failures are caused by different barriers, such as racial inequality, fewer opportunities for obtaining debt and lack of equity capital (Robb, 2013). Therefore, the characteristics leading to success for African American companies differ from those of non-minority owned companies (Gai & Minniti, 2015). As a result, survival rates differ dependent upon the race of the owner and the specific opportunities afforded the company (Gai & Minniti, 2015).
The number of African American companies has increased by 60.5% between 2007 and 2011, resulting in 1.9 million firms (U.S. Department of Commerce, 2013). Furthermore, the influx of African American companies has increased the number of jobs by 22%, which is higher than non-minority businesses (U.S. Department of Commerce, 2013). Therefore, if these companies fail, there is a significant adverse effect on the economy (U.S. Department of Commerce, 2013).
Problem Statement
Robinson (2014) claimed that 80% of entrepreneurs fail within the first 18 months, and African American entrepreneurs fail at the higher rate of 18% than non-minority owned businesses. The general problem is the disparity in the characteristics and survival rates of African American owned businesses compared to non-minority owned firms. The specific problem is that African American entrepreneurs do not have the necessary strategies due to limited access to available capital to ensure business continuity the preservation of African American companies.
Purpose Statement
The purpose of this correlational quantitative study is to explore what strategies successful African American entrepreneurs have used to increase opportunities for business continuity. The target population will consist of African American small business owners located in the Research Triangle Park (RTP) area of Durham, North Carolina because it will provide an adequate sample size that will enable me to address the research problem effectively. The results of the proposed study may assist emerging and existing African American entrepreneurs to utilize established strategies to increase racial diversity acceptance and business continuity.
Nature of the Study
A qualitative multiple-case study is ideal for determining what strategies successfully used by other entrepreneurs are necessary for successful African American owned business continuity. Through qualitative analysis, summaries are derived from participating businesses that is influential in enhancing business continuity (Williams, 2007). Quantitative analysis is not appropriate for this study because it is based on numerical values, which renders it incompatible to determining mechanisms for business continuity. As a result, mixed-method analysis is also not appropriate because this study would be more effective through the use of case studies, analyzing multiple companies in order to determine strategies for business continuity.
The case study design is more appropriate because the purpose of the study is to what strategies have been most effective in increasing business continuity of Black-owned businesses (Williams, 2007). As a result, the successfulness of the strategies used by entrepreneurs can be measured in order to determine business continuity. This is the most effective option because it allows a more relaxed framework in which to measure strategies, rather than predetermined conditions.
- Charlotte Chamber. (2011). Ethnic Minority Owned and Women Owned Businesses in the Greater Charlotte Region. Retrieved from Charlotte Chamber website: http://charlottechamber.com/clientuploads/Diversity/Minority_project_2012.pdf
- Gai, Y., & Minniti, M. (2015). External Financing and the Survival of Black-Owned Start-Ups in the US. Eastern Economic Journal. (41)3. pp. 387-410.
- Richardson, L. (1990). The Bull City – A Short History of Dunham, North Carolina. Retrieved from the Dunham County Library North Carolina Collection website: http://durhamcountylibrary.org/wp-content/uploads/2013/09/The-Bull-City%E2%80%94A-Short-History-of-Durham.pdf
- Robinson, B. B. (2014). 22 Reasons Why Black Businesses Fail. Retrieved from
BlackEconomics website: http://www.blackeconomics.org/BELit/22REASONS.pdf - Small Business Bureau (2007). Small business profiles for the states and territories. Retrieved from the SBA website: https://www.sba.gov/sites/default/files/allprofiles12.pdf
- Small Business Bureau (2015). Small business profiles for the states and territories. Retrieved from the SBA website: https://www.sba.gov/sites/default/files/advocacy/SB%20Profiles%202014-15_0.pdf
- U.S. Census Bureau (2011). Census Bureau Reports the number of Black-owned businesses increased at triple the national ratete. Retrieved from U.S. Census Bureau website: https://www.census.gov/newsroom/releases/archives/business_ownership/cb11-24.html
- U.S. Census Bureau (2012). Profile American facts for features. Retrieved from U.S. Census Bureau website: https://www.census.gov
- U.S. Department of Commerce. (2013). Black-Owned Businesses Outpace Growth of Non-Minority-Owned Businesses. Retrieved from U.S. Department of Commerce website: http://2010-2014.commerce.gov/blog/2011/02/08/black-owned-businesses-outpace-growth-non-minority-owned-businesses
- Wagner, E.T. (2013). Five Reasons 8 Out of 10 Businesses Fail. Retrieved from Forbes website: http://www.forbes.com/sites/ericwagner/2013/09/12/five-reasons-8-out-of-10-businesses-fail/
