The pandemic has affected everyone in one way or another, but its impacts have been especially brutal for Black businesses.
An October Main Street Alliance/Color of Change poll showed that just 40% of Black business owners expected to keep their doors open in the next six months, compared to 55% of white respondents. In the first round of the Paycheck Protection Program (PPP), Black businesses were denied funding more frequently than other minority-owned businesses. And this is in addition to the usual disadvantages Black businesses face – 8 out of 10 Black-owned businesses fail within the first 18 months. That’s a staggering rate of failure.
Further compounding the misfortune, many Black business owners hail from or currently live in communities that have been ravaged by COVID-19.
As dire as the situation has been, however, some Black entrepreneurs have survived, even thrived, during the pandemic.
In separate conversations with PJ McGuire, inventor of Wrapperoo®, and Tonie Guajardo, Founder and Principal of talent management firm Diversity Forward, both business owners stressed the importance of pivoting.
McGuire’s patented invention, Wrapperoo®, is a t-shirt hair towel that transforms into a water- and heat-resistant styling cape. But in response to a PPE crisis in her immediate community, she began making face masks.
“I was furious that healthcare workers were risking their health to take care of people but didn’t have the protection they needed to safely do their jobs,” she said.
She donated hundreds of masks to nurses at University of Chicago and Northwestern Hospitals, and several news outlets picked up the story. At the same time that word was spreading, masks were hard to come by for the general public, and there were numerous requests for her to start selling her masks in addition to her donations.
She pivoted quickly, pulling a 16-hour day to design and launch her website and coordinate with her manufacturing staff. After the first night of business, she woke up to 1,000 orders. To date, she’s sold over 65,000 face masks and donated almost 10,000.
For Guajardo, her company’s pivot was the result of a changing business climate. Before the pandemic, she worked with global organizations to help them form and sustain inclusive hiring practices. But early on in the crisis, she lost three clients and had to cut staff. She pivoted to working with smaller organizations that have less experience with enacting diversity initiatives.
Guajardo made this move because her business was in survival mode. Though the federal government passed stimulus and issued PPP loans, this funding wasn’t a viable alternative for her.
“We tried at the onset and were locked out,” she said. “We never tried again.”
Thus, she reimagined her client profile to drum up new business.
Before she began producing face masks, McGuire, too, had found herself worrying about the financial stability of her business. She wasn’t sure how she’d be able to pay her employees or her own bills. And though face masks had helped bring in additional revenue, her sales dropped as masks became more widely available.
She knew she needed emergency funding, but she also knew the PPP application process would be daunting – she’d heard stories from other business owners who’d failed to access funds (similar to Guajardo’s experience). To increase her odds of success, she worked with her business banker to complete the appropriate forms and navigate the nuances of the PPP website. She was approved for both a PPP loan and an Economic Injury Disaster Loan (EIDL), which helped her find security during a period of extreme uncertainty.
“I knew my business would survive the rest of the year,” McGuire said. “Financial stress and worry were then lifted, which gave me the extra bandwidth to focus on strategy and sales.”
She used part of the funds to shore up supplies for Wrapperoo®. Though her products are made in the U.S., many of the materials are sourced from Asia. Fearing that supply chain interruptions could hurt her company further, she took a risk and bought 10,000 yards of fabric – enough to produce a year’s worth of Wrapperoos.
As the pandemic continues on for a second year, both Guajardo and McGuire remain flexible and ready to make decisions that will keep them in business.
For Guajardo, that means navigating many of her industry’s pre-pandemic problems, which have only gotten worse in the last year. She says companies recognize a need to diversify their ranks, but they’re unwilling to do the legwork or spend the capital.
“Organizations still want DEI specialists that they won’t compensate,” she said. “They fall back to talent acquisition instead of auditing their processes.”
But she’s heartened by the companies that have stepped up to do more in the wake of last summer’s racial reckoning.
“Organizations are coming to us excited about being decent humans, because they get that their internal employees need to be cared for as much as their external clients,” she added.
McGuire hopes that 2021 affords her the time and space to get back to her core business. But whatever the year brings, the lessons learned last year prepped her for the best and the worst.
“In the midst of a global pandemic, a rocky economy, political and civil unrest, and record small busines closures, I was able to grow my business,” she said. “My plan is to stay fluid, flexible and take full advantage of any opportunities that come my way.”
And for those business owners looking to duplicate her success, she credits “resilience, resourcefulness, and innovation” as her secret weapons. But when it comes to securing funding, her advice is far more practical.
“Contact your business banker for assistance,” she said. “Get the help you need to keep your business afloat.”