If you ask small business owners what they struggle with or wish they knew more about, many of them will mention finances, but they also might mention mentorship. Tweet This We interviewed minority business owners about their accomplishments, failures and struggles, and discovered that a lack of mentors may be just as harrowing as a lack of capital.
Research shows that minority business owners struggle more than most to obtain the financing they need. To better understand why, we first must understand some of the paramount differences between minority business owners and other entrepreneurs. Minority business owners often lack mentors, gravitate toward business models or industries that make less capital , and may even be held back by preconceived notions about their race or gender. Combine this background with an overall lack of access to capital, and you get a large group of underserved business owners struggling to make ends meet or grow their company.
“Many African Americans – we’re not really taught to be business owners,” said Steven Burton, Founder of Perfect Tux, an ecommerce formal wear site. “We don’t have a lot of mentors that look like us that we can talk to, bounce ideas off of.” As an entrepreneur in the formal wear industry, Burton hopes to show other minority entrepreneurs that they can succeed outside of the industries they usually lean toward.
“My ultimate goal is to create jobs within the African American community and inspire the youth to be owners,” he said. “And also show them you can find wealth and success in other things besides music, sports, and entertainment.”
As the first full-time business owner in his family, Burton can certainly attest to a lack of mentors, which may be more detrimental than previously thought.
“Starting a company without having people who are willing to take a gamble on a new CEO, new idea, or a new business model is impossible,” Jeff Stibel, Vice Chairman of Dun & Bradstreet and successful entrepreneur, said on Forbes. “Having mentors who believe in you is as important as having employees and customers.”
It’s not shocking then to find out a lack of mentors may be just as big a hindrance to minority business owners as a lack of funding. In some instances, the two issues can even be related.
“Financing is about who you know and who knows you, and it takes a ton of hard work to build those relationships from scratch,” said minority business owner Craig Lewis of Visage Payroll. “Less than one percent of venture-backed companies have black founders, and only a hand full are ‘well-funded.’”
Visage Payroll is actually an example of a company that managed to acquire funding from investors, and yet Lewis still admits to worrying about capital: “Our biggest weaknesses are making sure we are properly capitalized to compete at scale and making sure we have the foundational resources to support that scale,” he said.
And how is helping overcome that weakness? With a mentor.
“I’ve paid close attention to Robert Smith, the CEO of Vista Equity Partners. I love how he worked at an industry leading firm, left to start his own company and has grown one of the top private equity companies in the world,” Lewis said. “I plan to work with him and his firm in the near future.”
A mentor can not only help you obtain funding, but can keep you from blowing all the money you do have. There is such a thing as “growing yourself out of business” and Lyneir Richardson, Executive Director at the Center for Urban Entrepreneurship and Economic Development (CUEED) at Rutgers University, and CEO of The Chicago TREND Corporation, knows it all too well.
“In my twenties I started a company, grew it to over $9 million in revenue and hired 26 employees,” Richardson said. “I grew too fast and ran out of cash. I literally had to sell the assets of my company in a fire sale.”
“People say that you are not an entrepreneur until you’ve made payroll. I amend that some and say that you are not a battle-tested entrepreneur until you have missed payroll and had to work to keep your team intact during a business downturn,” he said.
A mentor could have helped Richardson avoid growing himself out of business, but having learned the value of mentorship, he’s giving back to the community tenfold.
“At CUEED, we developed effective programs to assist entrepreneurs in starting and growing new businesses. Our award winning flagship program, the Entrepreneurship Pioneers Initiative (EPI), has helped over 200 small businesses survive past the five-year mark (when most businesses fail), increase their revenues and profits, and create wealth and new jobs in urban communities,” he said.
Lewis is giving back to the community, as well, through Visage Payroll.
“Being a black entrepreneur who’s building a venture-backed technology startup focused on helping small businesses can help bridge the technology and financing gaps that exist in our communities,” Lewis said. “We have the opportunity to impact employment in our communities and hopefully offer inspiration and encouragement to future entrepreneurs. In addition to providing free payroll to 1 million small businesses, we also want to help 100,000 entrepreneurs start new businesses.”
Limited access to capital for minority business owners is a substantial problem to solve, but it’s possible that increasing mentorship in the MBE space could help. While mentorship won’t solve the funding issues most business owners face, it could certainly have an impact.
“Starting a company, making a difference, and leaving your mark in this world are hard tasks,” said Stibel on Forbes. “But those tasks are made easier by mentors who give you a chance despite the deck being stacked against you, and despite the fact that you’ve never done it before.”
Therez Fleetwood, Founder of Luxury Romance Concierge™, is essentially pioneering her industry, and if there was one tool she wishes she had to help her run her business, it wouldn’t be a piece of equipment or bank loan, it would simply be a mentor.
“While the concierge industry has been around for many years, the idea of hiring a ‘romance’ concierge is a new phenomenon,” she said. “I am basically an innovator in this space, and I wish I had a mentor, someone who could have helped guide me through this process.”
There’s something to be said about pioneering in your field, especially if you’re a minority business owner. Michael L. Thompson, CEO of Fair Oaks Farm, which supplies quality meat to some of the world’s best-known restaurant brands and food companies, thinks that establishing and growing a legacy is how you help mentor future business owners.
“Minority business owners should think about how to extend their legacy and keep and grow their business,” he said. “The generations following you will have a leg up that you gave them [by being a successful business owner]. This is how you change the future.”
And if you are out there, pioneering your field, searching for a mentor and struggling to find one, you may need to take on a new perspective, and become your own mentor.
“Find a way or make one,” Erica Warren, Founder of Creation Speak, a story design agency that helps Creators reclaim their story, said. “If you can navigate the dimensions of being a minority in life, you already have the tools to navigate them in your business.”
Whether it be a mentor or a loan, or a combination of the two, minority business owners may have to work harder to get what they need. Dun & Bradstreet proudly supports minority entrepreneurs and their search for funding, contracts and growth. Learn more about how Dun & Bradstreet help entrepreneurs grow their businesses.
Photo Credit: marishkakuroedova, Twenty20