Black Businesses Surviving in the Middle of a Pandemic

(News4usonline) – By the numbers, Black Americans have taken an economic hit during the age of COVID-19. This reality comes from a personal view as well as an entrepreneurial perspective. According to the Urban Institute, Black businesses have absorbed a tremendous toll felt under the weight of the pandemic.

In 2020, Black-owned businesses experienced a 85 percent drop in revenue, the Urban Institute unveiled in a study that was released in June. That number is even more troubling when examining what those numbers looked like in 2019. Two years ago, Black business owners only suffered a 27 percent dip in the revenue pool.

This is an interesting dynamic considering that Black Americans make up just two percent of all business owners, according to a report put out by the Pew Research Center.

Drawing an immediate contrast to the number of Blacks running their own company, whites own 80 percent of all businesses in the United States, the Pew Research Center highlighted in a April 2020 report.

The dilemma that Black business owners have had to endure for the past 17 months is also a direct tie-in to how the pandemic has affected employees or workers. Black people represent 11 percent of the U.S. workforce, according to that same study by the Pew Research Center.

Feeling the Weight of the Pandemic

COVID-19 has been a dumping ground of financial blowback for Black workers with 44 percent managing to save less money than they were doing pre-pandemic. That’s just one more hurdle that Black Americans have had to climb over during the economic topsy-turvy, roller-coaster ride in nearly two years.

This would include being added to the unemployment line and seeing a reduction in pay, another daunting statistic. The number of Blacks who either lost their jobs or experienced a pay cut during the pandemic was put at 41 percent, according to a January 2021 Pew Research Center study.

Dr. Anthony Asadullah Samad, executive director of the Mervyn Dymally African American Political & Economic Institute at Cal State University Dominguez Hills, said that Covid-19 has “impacted Black businesses disproportionally.” Courtesy photo

To better put this information into proper perspective, Black Americans only account for 12.7 percent of the of the general population. Dr. Anthony Asadullah Samad, executive director of the Mervyn Dymally African American Political & Economic Institute at Cal State University Dominguez Hills, said Covid-19 has had an immeasurable effect on Black companies.      

“The Pandemic has impacted Black Businesses disproportionately to other businesses simply because Black businesses have less surplus capital and many operate on daily cashflow that was disrupted with the mandated shutdown and imposed operating restrictions,” Samad said.

“The Dymally Institute is currently engaged in several research studies; on the impact of recreational cannabis policy, on anti-racism in the academy, a collaboration with UCLA, USC, CSULA and CSUN on the State of Black Los Angeles, and a racial retrogression study…all speak to the disproportional impact global contagion has had on the Black community—which includes Black economics,” Samad added.

Despite the staggering economic burden that COVID-19 has placed on Black businesses, particularly small businesses, some companies have benefited from the broad financial outreach of major corporations trying to do their part in giving back. The Ford Motor Company Fund is one of those companies. Last July, the Ford Motor Company Fund announced that it had partnered with the Urban League to provide Black businesses with $600,000 in grants.

The grants were divided and given to Black business owners in Los Angeles, Detroit, New Orleans, Atlanta, Chicago, and New York.      

“Small businesses are a cornerstone of the African American community and play a vital role in their economic success,” Pamela Alexander, director of Community Development, Ford Motor Company Fund, said in a released statement. “The impact of the COVID pandemic has created economic uncertainty that necessitates immediate action. Our long-term partnership with the National Urban League allows us to quickly mobilize an initiative such as the Emergency Capital Access Program to get immediate assistance to those businesses in need.”

Factoring in George Floyd

The light to assist Black-owned small businesses seemed to catch fire after weeks of social unrest following the murder of George Floyd, who was killed by former Minneapolis, Minnesota police officer Derek Chauvin.

Demonstrators line the streets in downtown Los Angeles to protest the killing of George Floyd, a 46-year-old Black man who died at the hands of police. Floyd’s murder on May 25, 2020, set off weeks of massive protests across the country as well as internationally. The death of Floyd galvanized many large corporations to donate or gift Black or minority-owned businesses. Photo credit: Dennis J. Freeman/News4usonline

Chauvin was caught on a cellphone video kneeling unrepentant on Floyd’s neck for 9 minutes, 29 seconds as the 46-year-old Black man gasped for his last breaths on a Minnesota street. The killing of Floyd on May 25, 2020, sparked a fury of social activism in this country as well as abroad not seen for decades.  

The angry, the dismayed, and the revolutionary voice collectively came together to spark a movement that called on America to do what’s right. Be it socially or economically, the moment called for intermediate intervention.

The business world responded. Apple dropped $100 million for its Racial Equity and Justice Initiative. Part of Apple’s commitment is putting together an Apple Developer Academy for students and fronting capital funding for aspiring Black and Hispanic business owners. 

“We are all accountable to the urgent work of building a more just, more equitable world — and these new projects send a clear signal of Apple’s enduring commitment,” said Tim Cook, Apple’s CEO.

Nike pledged $40 million to fight social injustice. Target made a $2 billion (until 2025) commitment to helping Black businesses. In a released statement put out this past April, Target Executive Vice President and Chief Growth Officer Christina Hennington presented an olive branch offer to the Black community.   

“We have a rich history of working with diverse businesses, but there’s more we can do to spark change across the retail industry, support the Black community and ensure Black guests feel welcomed and represented when they shop at Target,” Hennington said. “The bold actions we’re announcing today reflect Target’s ongoing commitment to advance racial equity for the Black community. They also represent significant economic opportunity for hundreds of new Black-owned companies, who we look forward to doing business with for years to come.”       

The commitment by these large corporations in support of Black-owned businesses appeared to come with rapid-fire soon after the Floyd killing and the momentous reaction to all of the social justice activism fueled by generations of police brutality, housing inequities, poverty, homelessness, and general apathy.

Paypal hitched onto the movement early, coming out in June 2020 to announce that the company was making a $535 million commitment to Black businesses.

James Fugate, co-owner of Eso Won Books, speaks with California Gov. Gavin Newsom and Los Angeles Supervisor Mark Ridley-Thomas while touring businesses in Leimert Park in Los Angeles on Wednesday, June 3, 2020. (Genaro Molina/Los Angeles Times via AP, Pool)

“For far too long, Black people in America have faced deep-seated injustice and systemic economic inequality. Black lives matter and we need to drive transformative change. We must take decisive action to close the racial wealth gap that sustains this profound inequity,” said Dan Schulman, president and CEO, PayPal. “PayPal is uniquely positioned to help in this area, and we are committed to doing our part to address the unacceptable racial divide by advancing a more just economy and society.”   

So what does all this goodwill towards Black-owned businesses mean? It means stepping back from all of these feel-good moments to look at the bigger picture of the conditions in which these charitable gifts were offered, Samad said. 

“Philanthropic reactions to injustice must be looked at in the context in which they occurred,” Samad said. “They can be viewed as a sincere attempt to address economic inequity…or, they can be viewed as an attempt to pacify the angry masses in an attempt to publicize their goodwill. Would they have given the money had not the George Floyd murder not been videotaped? The likely answer is, no.

“Is this “white guilt” behavior as a hedge against future property damage or public criticism around systemic and institutional racism?” Samad continued. “The likely answer is, yes. It is an attempt to separate themselves from the racist systems in which they have very complicit involvements (if not direct involvements). They are benefitting from good publicity in the short run, but whether these philanthropic actions have caused real institutional change has yet to be seen, and won’t be seen for years to come.”

LA Black Businesses Do Things Their Way

James Fugate and Tom Hamilton don’t have time to wait for the philanthropic arm of major corporations to reach their bookstore. The co-founders of Eso Won Books are too busy filling out online orders and trying to satisfy  their many in-person customers.

Doing business online has kept Eso Won Books afloat during the pandemic. For a while, like other businesses, Fugate and Hamilton were temporarily forced to close their doors to customers when Covid-19 initially began its surge.

While the co-owners had their doors closed to the public, they kept things running with online purchases from customers. Still, it was a time of uncertainty for Fugate, Hamilton and their South Los Angeles literary treasure trove.

The murder of George Floyd changed everything for the Black-owned bookstore. As demands of racial justice and social accountability spiked up after the videotaped killing of Floyd, so did the requests for these types of books.

That translated into a tremendous uptick in business, Fugate said.    

 “It was very challenging because it got real busy after George Floyd’s murder,” Fugate remarked. “It was really hard because we don’t have a big staff. But it’s always been the same with us in many ways. You know, whatever the work is you just have to do it. I heard other bookstores say the same thing, that they were staying late, and all kinds of stuff like that. Styling late or coming in early, so it was very busy in that regards for us. It picked up a lot after George Floyd.”  

Eso Won has been around since 1990. The bookstore is seated within the cultural boundaries of Leimert Park where Black, Afrocentric and multi-cultural businesses have a heavy presence.

While bookstore sales surged shortly after the death of Floyd in the midst many other high-profile police brutality cases, including the shootings of Breonna Taylor and Jacob Blake, Eso Won also benefited from some free publicity from the likes of actress Issa Rae (Insecure).   

Keeping the business moving, however, came down to a couple of simple things, Fugate said.

“We were better prepared,” Fugate commented. “We were sort of like, you know when they said that we’re going to shut down, we did not have the outstanding bills and stuff. That helped a lot. There was one company…our main distributor…I knew that once we got through that first month, we’d be okay the next month because they wanted their money that first month. It was pretty high, but it certainly dropped that next month. At the end of the day, we more than made up for it.”

Brian McMillan, owner and founder of The Kobbler King, a dessert eatery located in Los Angeles, California. McMillan founded the dessert eatery in the mid-1990s. The Kobbler King have managed to stay afloat through the Covid-19 pandemic largely on the strength of McMillan formulating distribution partnerships with grocery chains locally as well as nationally. Photo credit: Dennis J. Freeman/News4usonline

The intake of walk-in customers is something that The Kobbler King founder Brian McMillan has never had to base the success of his company on. That’s because his method for a thriving business has never been dependent on one layer of way in doing things.

In the middle of the Covid-19 pandemic, this formula has served McMillan and The Kobbler King, well. In a normal year, The Kobbler King, based in Los Angeles, would be able to generate a great deal of income for McMillan at local concerts and food and music festivals.

These are not normal times.

“We have a truck in the back, and that truck has been sitting there for a year because there’s nowhere to go,” McMillan said. “Right now, things are opening up. It’s been difficult as far as the events and concerts,” McMillan said. “It’s slowly starting to happen again. That truck is a major income source. We took a pretty huge hit because I use the festivals to grow the business. We had to focus more on other things that work and other things that haven’t been working.” 

What has been proven for McMillan is his distribution list of local and national grocery chains that house his desserts. Distribution deals with Vons, Albertsons and Pavilions have greatly assisted in The Kobbler King staying afloat, McMillan said.   

“I’ve always done things differently,” McMillan said. “I’ve never depended on one source of income. It [Covid-19] affected us, but only as far as the events are concerned, like the festivals, the concerts, and all that kind of stuff, that’s how it really has affected us. We’ve been opened every day since then because I cannot afford not to be open. Our business doesn’t strictly depend only on retail. It’s always been more wholesale than retail. With us delivering to the grocery stores, it make it [The Kobbler King] an essential business.” 

Featured Image Caption: James Fugate, co-owner of Eso Won bookstore poses next to black poetry books inside the store in the Leimert Park Village section of Los Angeles, April, 6, 2007. Book-signings there by former President Bill Clinton and NFL player Jerry Rice drew scores to the village from throughout the city who shopped at nearby boutiques and ate at local eateries.(AP Photo/Kevork Djansezian) 

Editor’s note: This is the first of a four-part series on Covid-19 and its impact on the Black community.