BlackEconomics.org®
22 Reasons Why Black Businesses Fail
A Report Brief
August 1, 2014
Dr. Brooks B. Robinson
©BlackEconomics.org
P.O. Box 8848
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Introduction
You find yourself reading this Report Brief
because you have failed at business or you
have an abiding interest in being an
entrepreneur. As you know, businesses fail
for many reasons. Each business failure has
its own unique causes. You probably know
that business failure rates are quite high. Eric
Wagner reports in Forbes Magazine that
eight out of 10 (80%) entrepreneurs fail
within the first 18 months.1 So it is not
anomalous to hear frequent discussions
concerning business failures. However, the
characteristics of Black businesses are quite
different from the average US business.
For example, based on 2007 data from the US
Census Bureau’s Survey of Business Owners,
there is one Black-owned business for about
every 20 Black Americans, while there is one
business for about every 11 Americans.2 In
2007, less than 6% of Black-owned
businesses were large enough to have
employees; while about 21% of American
businesses were large enough to have
employees. Average gross receipts for Black
businesses were only about $71,000, while
1 The Forbes Magazine article is here:
http://www.forbes.com/sites/ericwagner/2013/09/12/f
ive-reasons-8-out-of-10-businesses-fail/. Wagner
attributes the failure statistic to Bloomberg Press
(www.bloomberg.com).
2 We present data for 2007, because they are the most
recently available. Data from the 2012 Survey of
Business Ownership will be available in 2015. The
2007 data are here:
https://www.census.gov/econ/sbo/07menu.html.
gross receipts were about $1.1 million for the
average American business. Importantly,
Black businesses fail at a higher rate than do
White, Asian, or Hispanic businesses.3 Our
question, and the reason for this Report Brief,
is “Why?”
Google the Internet concerning “Why Black
businesses fail,” and you will incur numerous
hits. Each explanation is driven by the
unique nature of the explainer’s relationship
with Black business. However, we were
unable to identify a comprehensive list of
reasons why Black businesses fail. Hence, in
the spirit of the famous economist Alan
Blinder, who catalogued the reasons why and
when firms raise prices, we made an attempt
to catalogue as many critical reasons as
possible why Black-owned businesses fail.4
Through our analysis, we identified 11
structural, 6 cultural, and 5 psychological
reasons why Black businesses fail. Take a
moment now to consider the following list of
reasons and their accompanying
explanations.
3For a relatively recent and clear analysis of business
survival rates across ethnicities, see Ying Lowrey’s
February 2005 work entitled Dynamics of Minority-
Owned Employer Establishments, 1997-2001 that
was published by the US Small Business
Administration.
4See Alan S. Blinder, “On Sticky Prices: Academic
Theories Meet the Real World,” in N. G. Mankiw,
ed., Monetary Policy (Chicago: University of
Chicago Press, 1994), pp. 117-154.
Structural Reasons
1. Incompatible mentality and lifestyle.—
Black businesses fail often because
entrepreneurs who initiate businesses don’t
have mentalities and lifestyles that
accommodate business operations.
Entrepreneurs may have fantabulous notions
concerning what it means to own their own
business: e.g., high income from profits,
increased leisure time, status that comes with
recognition in the community, etc. What they
fail to imagine is the reality of business
ownership—being “owned” by the business.
Once new business owners recognize the
persistent grind and the total emersion that
business requires, they tire easily of the
process. Afterwards, they begin to attempt to
superimpose their mindset and lifestyle on
the business. The entrepreneur and the
business are incompatible. In this case, it is
just a matter of time before non-committed
entrepreneurs begins to make bad business
decisions either because: (1) They are not
well informed about business operations due
to their absence from the business to meet
their lifestyle requirements; or (2) they leave
important decisions to others because they
have reduced their personal involvement in
the business. These conditions comprise the
slippery slope that leads to business failure.
2. Lack of knowledge about business (the
business).—This reason for failure is not
unique to Black Americans. As just
discussed above, some prospective
entrepreneurs initiate a business as a result of
their romantic image of serving as a business
operator. On the other hand, they may seek
to start a business just to prove that they are
capable of being an entrepreneur. However,
before undertaking their mission to establish
their own business, they fail to study not only
the science of business in general, but the
science of business that is specifically related
to the type of business that they intend to
embark upon. The consequence of starting a
new business is surely not a case where
“What you don’t know won’t hurt you.” It
takes resources to start a new business, and
one is well warranted in studying the science
of business before setting out to achieve this
goal. We all know that “knowledge is
power”; and one will need all of the power
that one can muster to be successful in
business.
3. A poor “Business Plan.”—This reason
for failure has many implications; several of
which we will explore below. Notably, this
reason for failure is also not restricted to
Black Americans. The reality is that it is
critical that one has developed an excellent
business plan if one wants to be successful in
starting a business. In fact, a search for
financing for a new business is usually one
method for ensuring that a business plan is
“tight.” Most financial institutions will comb
through a business plan with a fine-toothed
comb before making a decision to finance a
new business. Therefore, one would think
that most business plans that result in
financing to start a business are well
developed. Unfortunately, this is not always
the case—as we will see. Suffice it to say that
if a business is going to be developed
according to a business plan, and the business
plan is inadequate in some way, then the
business is likely to fail. Hopefully, our
further elaborations on this topic will assist
prospective entrepreneurs in developing
more adequate business plans, which will
improve prospects for business success.
One aspect of a sound business plan that is
often overlooked, but that we will highlight
here, is the requirement for a strong
communications plan. Specifically, it is
important for new entrepreneurs to have a
solid sense of the unique value that their
business represents, and that they have
designed a well-defined method for
conveying a clear message about the value of
their business to the public. On the front- and
back-side of this business plan requirement is
the need to have communicated well with
prospective patrons regarding the needs that
the new business will fulfill. In addition, the
business plan should include provisions for a
continuous dialogue with customers after the
business is initiated in order to ascertain
ongoing changes in needs and new needs that
can be fulfilled by the business.
4. Insufficient financial capital to support
the firm until it can begin to generate
sufficient revenue.—This reason for
business failure is often related to the “poor
business plan” case. That is, a business plan
can be based on an inaccurate market study,
the plan can overstate the potential market
share that the new business might garner over
the course of time, or a business plan’s
proposal for price setting can be inconsistent
with reality. In any event, the business plan
leads the entrepreneur to believe that the
financing required to initiate and sustain the
business is less than what will actually be
required. Consequently, after the business is
underway, the available financing and the
revenues generated are not sufficient to
sustain the business. Belly-up it goes.
On the other hand, an entrepreneur can
ignore, at the margin, the financing required
to develop the business to a point of selfsustainability
as dictated by a good business
plan. In his/her eagerness to start their own
business, they charge ahead knowing that
they have insufficient financing—hoping for
a miracle or that some other turn-of-events
will prove the business plan wrong. In many
cases, the business plan is proven correct, and
the entrepreneur finds that he/she must close
the business down because they have
insufficient financial capital to develop the
business to the point of self-sustainability.
5. Absence of welcoming (Black-owned)
financial institutions in the community.—
Sometimes, it turns out that a business
reaches the point of self-sustainability, and
operates for a while without difficulty. Then
the business, for whatever reason, encounters
a rough patch. At that time, new financing
may be required, and it is critical that
welcoming financial institutions exist in the
community that are open to extending new
loans to existing businesses. Too often, such
institutions (we define them as Black-owned)
do not exist. When the Black entrepreneur
reaches out to an unwelcoming financial
institution, the managers of that institution
may be unwilling to extend financing. The
financial institution may have other plans for
the business; i.e., wait for it to fail, then to
resurrect it under different ownership—
especially knowing that the business’
troubles are only temporary. Of course, this
scenario paints a picture of racial
discrimination. Unfortunately, this can be
the world that Black entrepreneurs live in.
6. Initiating a business at an inappropriate
point in the business cycle.—While one
might say that this reason for failure is not
caused by a “poor business plan,” it is related.
In this case, the entrepreneur develops a
business plan that is quite accurate and
adequate, but it is based on an economic and
business history that is about to change. For
example, in 2007, an entrepreneur plans to
open a residential real estate business based
on data from 1996-2006. Of course the
history reflects a picture of ever-increasing
home prices with no end in sight. However,
as we all now know, that history changed in
2007, and the real estate industry saw no end
to trouble for the next five years. The moral
of this story is that one must take care to
monitor the business cycle as part of a
decision to start a new business. Specifically,
one must ensure that the data used in
developing a business plan are not devoid of
business cycle effects. One must also be able
to read the tea leaves and confirm that a
business cycle downturn is not just over the
horizon before starting a new business—
unless one has sufficient financial capital to
weather the economic storm.
7. Poor business location.—This reason for
failure is another one that is tied to a “poor
business plan.” Everyone knows that, in
business, its “location, location, location.”
So why do businesses locate in the wrong
places? There are at least three reasons for
this outcome. First, it could occur that an
entrepreneur develops a sound business plan.
However, the plan is based on a community
that, due to desegregation or gentrification,
changes just as the business gets started. In
this case, the business plan developer did not
do his/her homework in order to uncover the
changing demographics that were about to
ensue in and around the location of the new
business.
Second, it could turn out that a business plan
is inappropriate because, in the absence of
data about the specific community in which
the new business is to be established, the
entrepreneur constructs the business plan
using data from a community with similar
demographics. Like humans, no two
communities are identical. Therefore, there
is no certainty that outcomes will be identical
across demographically similar communities.
In this case, and on a cost-benefit analysis
basis, the entrepreneur is warranted in
collecting data about the community in which
a new business will be located. This is the
only way to ensure that the business plan
analysis will produce the right go/no-go
decision when it comes to starting a new
business.
Third, as noted above, sometimes
entrepreneurs ignore their business plans. In
this case, an entrepreneur is guided by the
business plan to an appropriate location.
However, the cost of capturing that location
may exceed what the entrepreneur is willing
to pay. Consequently, the entrepreneur
identifies another location, again hoping that
a miracle or some other turn-of-events will
prove his business plan wrong.
Unfortunately, as we noted above, many
times it turns out that business performance
in a less than optimal location will prove the
business plan correct. Failure again.
8. Too much competition and too little
cooperation (vertical integration).—A
common pitfall for many, including Black,
entrepreneurs is that they will see thriving
businesses of a certain variety, say barber
shops, and assume that they can carve out a
niche in that same business in the same
general location. In fact, when researching
the business plan, they may seem to uncover
reasons why their new business will be
successful; namely, that there is sufficient
demand based on the area’s population.
Unfortunately, there are certain intangibles
that can’t be measured. It often turns out that
the existing, thriving businesses possess
certain intangibles that are difficult to
replicate. Therefore, when the new
entrepreneur starts a business in competition
with existing businesses, the former finds out
that the competition is too stiff—that the new
business cannot survive. This is a case of too
much competition.
What the new entrepreneur might have
examined was the structure of the industry in
which the thriving businesses operated.
While it may not be a good idea to compete
directly with the thriving businesses, it may
be a good idea to develop a business that is
ancillary or auxiliary to the thriving
businesses.
For example, in the case of barber shops, the
new entrepreneur might find that the existing
businesses would gladly support a Black
barber supplier in lieu of their current White
supplier. Therefore, by establishing a
supplier business, the new entrepreneur can
be successful. This is a case of finding a
niche in the vertical structure of the industry
in which existing thriving businesses are
already operating; i.e., a type of Black
vertical integration. In this way, Blacks
assume control of a new layer in the structure
of barbering business; moving from control
of just barber shops to control of the barber
shop supplies business.
At some point, if enough barber shops and
suppliers can be brought in line, a new Black
entrepreneur can come along and fill in a
further upstream niche in the barbering
business by actually manufacturing barber
supplies. In this way, Black entrepreneurs
can control the entire vertical structure of the
barbering business.
9. Poor product: The quality of the
goods/services produced are of insufficient
quality.—This is a transparent outcome. No
customer wants to feel that the value of what
he/she receives in goods/services is less than
what he/she pays for the goods/services. This
can happen for a variety of reasons. For
example, in an effort to reduce cost, an
entrepreneur may source from a
manufacturer that produces poor quality
goods. On the other hand, the entrepreneur
could simply charge a relatively high price
for the goods/services that are sold. In
addition, with respect to services, an
entrepreneur can skimp on staff training,
which results in poor quality services being
delivered. Or, again, the business could
charge a relatively high price for the services
that are delivered, which could be of high
quality. In any event, customers will
complain, and if appropriate action is not
taken to right the situation, customers will go
away, and the business will fail. The only,
and the important, lesson here is that
entrepreneurs should provide their customers
with value in goods/services that is
comparable to the prices charged.
10. Poor business presentation.—There is
an old adage: “It takes money to make
money.” Another, related, adage is: “If you
look successful, then you will be successful.”
These two adages spell out the reality of most
businesses. If an entrepreneur wants to be
successful, then he/she must be very
professional and must look successful. If you
require advice from an investment adviser,
you want to talk to someone who has had
personal success investing. One way for a
successful investor to reflect his success is to
reflect some degree of ostentation. When
new entrepreneurs initiate a new business and
don’t take sufficient care to make it, and
themselves, look successful, then potential
customers will doubt their ability to perform,
and will go in a different direction.
Consequently, we can agree that with
business it is always “location, location,
location.” But it is also “presentation,
presentation, presentation.”
11. Natural disasters.—As entrepreneurs,
some events are beyond our control. Natural
disasters are among those uncontrollable
phenomena. It is fruitless to seek to control
natural disasters. All we can do is to be
prepared when they hit. Mainly, this means
having sufficient disaster insurance.
Therefore, it is ridiculous to have a business
plan that excludes an entry for the cost of
natural disaster insurance. Unfortunately, too
many entrepreneurs fail to give sufficient
attention to natural disasters and they have no
natural disaster insurance, or the insurance
that they purchase is insufficient to help them
restore their business in rapid fashion after a
natural disaster strikes. This is a guaranteed
path to business failure. Quite often,
customers experience their greatest need
following natural disasters. If your business
is not open immediately following the
disaster or shortly thereafter, customers lose
confidence in the business—something that
is very difficult to restore. The longer the
delay in resuming full operations following
the disaster, the greater the chance that
customers will tire of waiting and move to
other businesses to meet their needs. This
can push new businesses onto the slope that
leads to failure.
Cultural Reasons
12. Racial discrimination by non-
Blacks.—Black businesses can fail when
non-Blacks engage in racial discrimination in
the form of refusing to become customers of
the business, refusing to supply or contract
with the business, engaging in extreme anticompetitive
behavior that is motivated by
race, and deciding against extending
financing to the business. Actually, such
discrimination is logical on the part of non-
Blacks when one considers that their interests
lie in supporting non-Black businesses. Most
logical persons will agree that individuals
generally feel most comfortable with those
who look, think, and act like them.
Therefore, it should be no surprise when
Black businesses experience racial
discrimination. It is true that discrimination
is against the law of the land; however,
enforcement is very weak. In fact, Black
businesses should consider themselves
extremely lucky when they find that they
don’t encounter racial discrimination. They
should expect racial discrimination from non-
Blacks, and should build their business
strategy with this potential reality in mind.
13. Discrimination by Blacks; i.e.,
“someone else’s ice is colder.”—
Unfortunately, Black businesses may also
find that Black Americans can be a source of
racial discrimination. Black Americans who
discriminate against Black businesses suffer
from self-hatred. Remember the “Black
Dolls” study that was first conducted by Drs.
Kenneth and Mamie Clark in the 1950s.
They found that the psychological
conditioning of many children that were
tested caused those children to prefer White
dolls over Black dolls. While there is much
in today’s world that can combat the kind of
psychological conditioning that can cause
Blacks to prefer all things White, many of the
conditions that existed during the 1950s
remain today. Therefore, some Black
Americans have an aversion to patronizing
Black businesses because they are under the
misperception that “someone else’s ice is
colder”; i.e., that products offered by White
entrepreneurs represent better values than the
products offered by Black entrepreneurs.
On the other hand, some potential Black
customers will avoid patronizing a Black
business because they have had negative
experiences with Black businesses in the
past; essentially, they had the type of
experiences that we referred to above under
“poor product.” As a result of those
experiences, these potential Black customers
turn toward non-Black businesses for the
goods/services that they consume.
It is very difficult for a Black business to gain
the patronage of potential Black customers
who are bent psychologically on patronizing
non-Black businesses. However, it may be
possible to secure the patronage of potential
Black customers who have had a “Poor
product” experience. In the latter case,
Black businesses must simply ensure that
they always provide “high-quality products.”
If Black businesses provide high-quality
goods/services, then they can win and retain
these customers.
14. Insufficient cultural capital.—Black
businesses can fail because the entrepreneurs
that run those businesses don’t have
sufficient “cultural capital.” Here, cultural
capital means the practical knowledge and
intangible qualities that accrue to individuals
who are embedded in the households and
communities where entrepreneurship is part
and parcel of everyday living. In other
words, entrepreneurship is an intrinsic
component of the culture. If an individual
has never participated in the entrepreneurial
process, it is hard to imagine just what it takes
to be an entrepreneur. Therefore, when such
individuals embark on an entrepreneurial
journey, they may not be able to navigate the
route successfully.
Ivan Light and Steven Gold are among
experts who highlight the importance of
cultural capital in successful
entrepreneurship (see their 2000 book Ethnic
Economies). Jorge Borjas’ Heaven’s Door
(1999) is another book that discusses cultural
capital. The fact that this topic has received
considerable attention signals its importance
in achieving success as an entrepreneur.
Therefore, if you are contemplating
entrepreneurship, but have no cultural capital
in this area, then you might reconsider. On
the other hand, if you are about to start a
business and have some cultural capital, you
should evaluate whether your cultural capital
is of the high-quality variety; i.e., whether
your life experiences with business involves
successful ventures.
15. Too much Black love.—How can too
much Black love cause Black businesses to
fail? It’s simple. Since Martin Luther King,
Jr. and the Civil Rights Era, too many Blacks
identify themselves as lovers and pacifists.
They love everybody and they want everyone
to love them. They are willing to open their
communities and their homes to anyone who
flashes a friendly smile and presents a
semblance of caring. What these Blacks fail
to realize is that, in the US, business is a form
of combat. It can be economic warfare.
Therefore, one must protect one’s territory at
all cost.
If Black businesses are to be successful, they
must, at a minimum, thrive in their own
community. This means repelling outsiders
who want to benefit from operating in the
Black community. In essence, it is a zero
sum gain. If outsiders are benefitting, then
insiders are losing. When potential patrons
of Black businesses show their “love” by
patronizing non-Black businesses in the
community, they reduce the chances that
Black businesses will succeed.
Therefore, in order to be successful, Black
businesses may have to conduct an
information campaign in the Black
community that emphasizes the need to abide
by the first law of nature: “preserving and
loving your own to the exclusion of others.”
It may also be beneficial to inform the Black
community that one should not seek to help
others before ensuring that one can help one’s
self. These Black businesses should help
“free-loving” Black Americans come to
know the history of how non-Blacks have
focused their concern on themselves, to the
exclusion of concern about Black Americans.
Only when they stand to benefit do non-
Black businesses wink and smile in the Black
community, showing a façade of caring,
while taking all that they can get. Black
Americans must recognize that this taking
causes Black businesses to fail.
16. Insufficient cooperation and exclusiveness.—
There is no need to belabor the point
here. In the above entry (number 8) on “Too
much competition…,” we discussed the
potential benefits of Black businesses
cooperating and facilitating the vertical
integration of an industry. Here, we simply
want to re-emphasize the fact that such
vertical integration can only occur when
downstream Black businesses agree to
cooperate with upstream Black businesses.
When this cooperative arrangement breaks
down, then upstream Black businesses can
fail. Consequently, it is important for
upstream Black businesses to maintain close
communications with the downstream Black
businesses to ensure that this cooperation is
maintained. Further, it is through such close
cooperation and communications that
separate Black businesses that are organized
in a vertically integrated arrangement can
intensify their exclusive arrangement,
exclude non-Black businesses, and create
conditions where all of the Black businesses
involved can succeed.
17. Risk hating behavior.—In the world of
risk, there are three choices: Be a risk lover,
be risk neutral, or hate risk. If you are in
business, but find that you are indifferent to
risk (risk neutral) or that you hate risk, then
you are probably in the wrong business.
Business is all about taking risks. If you find
that you are always taking actions to avoid
risk, then maybe you are not made for
business. Business is a high-wire act with no
net; it is living on the edge. If your business
is to succeed and grow, risk will always be an
integral part of the equation. Hence, if you
hate risk, you are likely to make decisions
that cause your business to suffer and fail. If
you are a risk hater, your best bet is to get out
of business before business puts you out.
Psychological Reasons
18. Insufficient confidence.—Essentially,
confidence is faith. “But without faith it is
impossible to please him…” (Hebrew 11:6).
If an entrepreneur doesn’t believe that he/she
will be successful, that lack of confidence
will spill over and affect their actions and the
actions of those around them. It was faith that
transformed a drug-addicted and uneducated
Malcolm Little into El-Hajj Malik El-
Shabazz, one of the most important Black
Nationalist leaders of the second half of the
20th century who possessed one of the keenest
minds the world has ever known. An
entrepreneur needs that kind of faith to be
successful. The entrepreneur must have faith
that he/she will succeed against all odds, and
that faith must be unyielding.
We believe that Black businesses fail because
Black entrepreneurs don’t have that faith.
One reason they don’t have that faith is
because too many have been reared in a
Christian tradition that features a White God.
Accordingly, they develop a consciousness
that says to them: This White God is likely
to address the needs of Whites first because
he is White before he is likely to address my
needs because I am Black. The worship of a
God who is not always present reduces one’s
faith, and makes the believer impotent to
produce and create positive outcomes under
dire circumstances. Consequently, when
times become dark, many Black
entrepreneurs lose hope and give in to failure.
To be successful, Black entrepreneurs must
fashion an internal source of strength and
hope that will be ever-present and ready to
support the entrepreneur in times of need.
With such a belief system in place, the
entrepreneur will be able to act as God
commanded Adam; i.e., to have dominion
over all of the earth (Genesis 1:26), but
especially all things related to his/her
business.
19. Fear of success.—Many Black
entrepreneurs are first-generation. In fact,
these entrepreneurs come to entrepreneurship
with the hope of “making it big in business.”
However, coming from a poor or meager
background, they fear their own potential
success. They ask: “If I make it big, how do
I handle the success? Will I squander the
wealth like so many formerly famous athletes
and entertainment stars? Will I rise only to
fall? What will my friends and associates say
when I fall? Clearly, these worries only
matter if the entrepreneurial endeavor is
successful. But even before they get to that
point, they begin to fear. This fear permeates
their being and affects all that they do.
Consequently, unwittingly, they make
business decisions and exhibit business
behaviors that are inconsistent with success.
Success flees from these Black entrepreneurs
and their businesses fail.
20. Lack of “killer instinct.”—Christianity
is in the DNA of most Black entrepreneurs.
We are taught to love; particularly Jesus, who
is depicted as White. Therefore, when we
engage in business on a competitive basis
with White or non-Black entrepreneurs, it is
in our psyche to love them and to not
outcompete them. When we are faced with a
decision to beat the competition, on a
subliminal level our minds will tell us that we
don’t really want to take action that will put
the competition out of business. Remember,
they too have families with mouths to feed.
This thinking is diametrically opposed to
capitalism. In the dog-eat-dog world of
capitalism, the object of the game is to
destroy the competition and to create a
monopoly. But given our makeup and
background, we find it difficult to play the
game effectively. In our world, the media
programs Black Americans to kill Black
Americans. We have no compunction about
destroying Black life. But when it comes to
non-Black lives, we cannot bear to pull the
trigger. This lack of a killer instinct when it
comes to the mainly non-Black competition,
causes Black entrepreneurs to not take action
that will position their business for greater
success. A continuous display of this type of
behavior increases the probability that Black
businesses will fail.
21. Fear of harm if successful.—US history
is replete with cases of harm coming to
Blacks with successful entrepreneurship
experiences. Harm was inflicted on entire
Black communities that experienced
entrepreneurial success; viz., the massive
riots that struck Wilmington, North Carolina
in 1898, Tulsa, Oklahoma in 1921; and
Rosewood, Florida in 1923. Moreover, the
historical record includes innumerable cases
of efforts to harm or impose terror on Black
entrepreneurs who were more successful than
their White or non-Black counterparts. This
history is known and is embedded deeply in
the psyche of Black entrepreneurs who
develop an innate fear of success. They know
that their success can create hatred in the
hearts and minds of their White and non-
Black competitors, which can be
operationalized by harmful acts on the part of
the former with respect to the latter. As a
result, this fear of harm may cause Black
entrepreneurs to aim for a low point on the
success pole. But in doing so, they may fail
to even reach that point. Their business may,
in fact, fail.
22. Immediate gratification syndrome.—
When individuals are denied materialistic
pleasures of life for an extended period, and
then those pleasures are made available, it is
difficult for the individuals to refuse to
partake of those pleasures. Couple that
scenario with the fact that the media
perpetually bombards us with the idea of
immediate gratification of created desires.
This deadly combination characterizes the
situation that potential Black entrepreneurs
face. As noted, many Black entrepreneurs
are first-generation with meager beginnings,
who are exposed to the nation’s powerful
media. They are ripe for exhibiting
immediate gratification behavior. Therefore,
when their business begins to experience
some profitability, they may be motivated to
use their monetary success to gratify
immediately their perceived desires. This
can be detrimental to a strategy of reinvesting
profits to stimulate business growth. As we
all know, a lack of investment at critical
junctures in a businesses’ development can
cause the business to fail.
Conclusion
We have considered quickly 22 reasons why
Black businesses fail. Whether you are
embarking on a new entrepreneurial
adventure or commiserating over a recent
business failure, you are likely to find
relevant thoughts among the reasons. Of
course, the purpose of this analysis is to bring
to the surface clearly the reasons why Black
businesses fail so that entrepreneurs can
develop strategies for avoiding failure. We
hope that our explanations are descriptive
enough so that Black entrepreneurs can use
them to develop countervailing structural,
cultural, and psychological reasons for why
Black businesses succeed. While we would
like to think that many Black businesses will
benefit from this Report Brief, the truth of the
matter is that, if just one Black business
avoids failure and succeeds, then the Report
Brief would have been worthwhile. Let us all
act to turn the reasons for Black business
failure into ashes in the mouths of naysayers,
and to construct mountains of Black business
success!
Electronic copy available at: http://ssrn.com/abstract=2474944
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