“Over the course of 2009,” the report states, “the Andersons made 513 purchases and spent approximately $48,943.” That total actually represented what you might consider spending money. If you include our mutual fund investments and other money we transferred to Black fund managers and financial institutions and deposits, we ended up “spending” about $94,000 that year in African American businesses that we otherwise wouldn’t have.
It was especially interesting to see the pie chart (see appendix 2) indicating how we spent our money day to day at Black-owned businesses or elsewhere when we could not find a Black option. Our biggest expense, 37 percent, was child care. Automotive came in next at 18 percent, followed by restaurants at 11 percent. Almost as telling was the list of products and services that Black-owned businesses didn’t offer—things like car seats, appliances, lawn treatment services, basketball shoes, cell phone service, utilities, bed sheets, hair clippers, a treadmill, and vitamins. Seeing this in black and white made it all the more clear how barren the landscape is of African American businesses.
Calling business awareness “a significant hurdle,” the researchers encourage Black-owned businesses to “leverage on-line Black business search engines and ensure that their business websites clearly highlight Black ownership,” something with which Karriem might take issue. Word-of-mouth referrals are also important. In addition, the report urges Black-owned businesses to “maintain high levels of quality and service in order to capture and maintain” consumer awareness, determine service and product needs in predominantly African American communities, and establish neighborhood businesses to fill those needs. Black businesses should target “industries where there is severe Black owner underrepresentation,” which would offer entrepreneurs a unique advantage and a potentially lucrative opportunity, especially where their diversity can be seen as valuable and appealing.
That was pretty logical stuff, but my favorite part of the study is a little blue-shaded box buried in the back of the report (see appendix 2) where the researchers calculated the impact of all fifteen million Black households in the United States spending 2, 5, 10, and up to 68 percent of their after-tax income on Black-owned businesses. As discussed in chapter 5, a few pennies here and there can create tens, maybe hundreds of billions of dollars in economic empowerment for folks who could use it in productive ways.
“The Empowerment Experiment has laid the foundation for leveraging the economic power of the Black American consumer,” the report notes. “Although the breadth and depth of the experiment were limited, it reinforces key issues and opportunities within this large consumer base that have direct implications for the growth of Black entrepreneurs and ultimately for ‘self-help’ economics.”
“Ultimately,” the report concludes, “successful execution of The Empowerment Experiment on a larger scale, consistently, throughout the nation will create generations of financial stability and wealth in the Black population that have yet to be achieved.”
The report brings up a key factor in empowering Black businesses: the importance of capital. Our friend Steven Rogers and others are aware of this problem and discuss it in public forums. According to Rogers, few people know of the successful fund management companies dedicated to providing money to minority entrepreneurs and that those companies are profitable, safe places to put money to work. There is even a consortium of the most credible of these funds and equity investors, the National Association of Investment Companies, which includes Yucaipa Johnson, owned by business magnates Magic Johnson and Ron Burkle; John Rogers’s Ariel Investments; and Goldman Sachs’s Urban Investment Group Companies. For Black entrepreneurs and emergent businesses it is a network (and gold mine) of funding sources and venture capital firms specifically focused on creating and growing Black businesses. NAIC has successfully invested funds in Essence magazine, Black Entertainment Television, and TV and Radio One.
As proof of the consortium’s performance, consider the 2003 report by the Ewing Marion Kauffman Foundation, which analyzed funds operated by NAIC and found that “investments in minority business enterprises resulted in healthy returns equal to, if not slightly higher than, traditional investments by mainstream venture capitalists.”
“We have to educate the White community,” Rogers told me, “the ones who are the holders of capital, that this is good business.... Look at investing in minority-owned businesses as a competitive advantage. Do it with the expectations of market rate returns, and one of the benefits will be social benefits. Don’t do it from a philanthropic kind of mind-set. Every argument has to be an economic argument that says this is good for business.”
I couldn’t agree more. It’s supporting the Farmers Bests of the world versus the J’s Fresh Meats. We want to support only those businesses that make the grade, which brings up another important point: training. As Rogers and other experts note, research shows that a lack of training—sometimes more often than a lack of capital—is a critical factor in why entrepreneurs fail. Entrepreneurial training for Black businesspeople can be achieved through partnerships, not charitable handouts. These partnerships—with universities or other institutions—can teach small businesses and entrepreneurs how to grow.
Based on what we’ve learned through The Empowerment Experiment, the best way to get started is by creating more Black-owned franchises of major consumer brands, including food and clothing stores, hotels, and household and professional services. We need to offer consumers convenient ways to make the small changes in their lives that result in economic empowerment for underserved neighborhoods. Sure, we want to establish Black-owned grocery stores, hotels, retailers, banks, and law and accounting firms, but let’s begin with what already exists. Consider McDonald’s, KFC, Foot Locker, and Jiffy Lube. The franchise model enables Black entrepreneurs to enter a market with a known commodity, consumer demand, and quality products.
Unfortunately, at the moment too few Black-owned franchises exist. The biggest hurdle is the initial investment required to acquire the franchise. But franchisors can help with that. At McDonald’s, the most successful franchise in the world, I worked on this very issue, researching and presenting a report to senior management on the importance of franchisee diversity. That report offered strategies on recruiting, retaining, and establishing parity between the Black consumer base and the restaurant owners.
In fact, programs like this exist now and they work, but not enough companies have them, not enough money is being invested in them, and not enough attention is being paid to them. One fantastic example is Marriott’s Franchise Diversity Initiative, in which the chain partners with the National Association of Black Hotel Owners, Operators and Developers (NABHOOD). Through it, in July 2011 Marriott had 586 women- and minority-owned hotels nationwide, including 126 owned by African Americans. That number surpassed the goal of the program, set in 2005, to have 500 women- and minority-owned hotels by 2010. The objective was part of a larger diversity agenda that included a pledge to spend $1 billion with minority suppliers, a goal Marriott has surpassed by $1.3 billion.
Another worthy program is New York Life’s $50 billion Empowerment Plan that seeks to persuade two hundred thousand African American families to purchase at least $250,000 of life insurance. Yes, it’s a savvy sales strategy, but that doesn’t detract from its broader value. The idea, as New York Life states, is to show African Americans “how other cultures use life insurance to protect income and to build multigenerational wealth.” The company wants to challenge Blacks “to be wealth creators, instead of wealth spenders.” However, the wealth creators are not just the consumers who are able to create and transfer wealth with life insurance and annuities; the $50 billion Empowerment Plan also calls for targeting Black entrepreneurs as agents and brokers: “New York Life’s 900+ African American agents have pledged to help empower the communities they serve.” Eugene Mitchell, SVP of the African American Market Unit, describes these reps as “quasi business owners,” something akin to being a New York Life franchisee.
In effect, the Black entrepreneurs, their families, and their neighborhoods reap the same benefits that occur when major franchisers recruit, train, and support Black franchisees. As an advocate for African American economic empowerment, I like that concept—a lot.
If other corporations, like Pepsico’s KFC and Pizza Hut, Procter & Gamble, Toyota, Home Depot, Kmart, and The Athlete’s Foot, were to allocate one-tenth of the money they spend on advertising to Black consumers on advertising to Black entrepreneurs, they would attract some of the most talented, driven, and hardworking franchisees, suppliers, and vendors on the planet. The money they would invest in training the new franchisees—which is what the companies would invest in any potential franchisee—along with offering financing, extended repayment periods, and that critical help with start-up costs—would get the attention of Black consumers, who would support those stores in big numbers. The same would happen if these firms were to put more money into finding Black suppliers and vendors or enabling quality Black companies that may not be big enough to serve as subcontractors or suppliers to their partners or their own suppliers. Progressive organizations engage in Tier 2 supplier diversity by requiring that their main suppliers meet certain levels of spending with minority suppliers.
I don’t think you need an MBA to understand that those companies that market their franchisee support with a little savvy would earn extremely robust returns. So many of these companies already have commercials showing Black managers and employees in their stores, and they show off their high-ranking Black officers in Black Enterprise and Ebony magazines.
Imagine what an impact they could make by showing off their Black owners. Consider the example of stores Magic Johnson owns. I’m pretty sure Starbucks never considered pushing its overpriced coffee in the Black community, and Black people always had to go to the suburbs or downtown to enjoy T.G.I. Fridays. Then Magic Johnson opened Starbucks and Friday’s outlets in underserved Black areas, and they are some of the most successful stores in their corporations. That’s because Black consumers love to say, “I’m going to Magic’s Starbucks” or “I’m going to the Magic Johnson Friday’s.” Lots of Black folks patronize those businesses, even when they cannot find a Magic Johnson–owned outlet, because they know those companies have made an investment in the Black community. It’s called customer loyalty, and it is invaluable. Starbucks is a great example. The coffee company started a partnership with Magic’s Johnson Development Corp. (JDC) in 1998 and has opened more than one hundred of what Starbucks calls “Urban Coffee Opportunities” locations in underserved neighborhoods from Los Angeles, San Francisco, and Seattle to Denver, Chicago, Detroit, Atlanta, Washington, DC, and New York City. Those stores have helped jump-start economic development and strengthened the sense of community in neighborhood after neighborhood.
What else did we learn in our yearlong odyssey? Despite some of the ugly stuff we encountered, we learned that we had lots of supporters, the great majority of whom are Black, which I guess should come as no surprise.
Between April and December I spoke at six conferences, five universities, three churches, and was honored on six different occasions. We also organized six of our own events, like the wine-tasting fund-raiser at Tracye Dee’s WineStyles and the holiday celebration at Mell Monroe’s Welcome Inn Manor. That’s twenty-six speaking engagements, not to mention dozens of media interviews that gave us broad exposure and got people thinking about the issues, even if a fair number of folks got angry. Because of how we positioned our experiment, because of the viral nature of our interviews and stories, because the centerpiece of our movement was the website, and because most of EE’s exposure came from mainstream media coverage, our supporters were people who spend a lot of time online, watch the major news networks, or read the papers and who were accustomed to social networking. There are about fourteen thousand now between the Facebook fans and the more than eight thousand folks registered on our website, and at least half are business owners and professionals. Our Facebook group is larger than that of the National Urban League and the Rainbow PUSH Coalition, two established organizations with millions in their coffers, chapters all over the world, and dozens of major corporate sponsorships and celebrity endorsements. I think that’s an indication of how serious people were about our effort.
Thanks to The Empowerment Experiment, our network has multiplied, and we’ve connected with many visionaries, activists, and business and community leaders. Between April and August of 2010 I spoke at twenty events, including giving keynote addresses at events hosted by a couple of prominent business groups—the FraserNet PowerNetworking Conference in Atlanta and the National Alliance of Market Developers annual conference in Baltimore. As for 2011, I racked up more than eighteen speaking engagements in the first seven months, including major addresses at the National Urban League’s national conference, the National Association of Black Accountants’ national conference and expo, FraserNet again, and the US Black Chamber’s annual conference. I’d have hit a few more, but I had this little story to write, and I promised to avoid being away from the family every week. I still find time to visit my father twice a month in Atlanta.
In addition to the speeches I’ve been serving on panels and speaking for the community as an expert on economics, entrepreneurship, and business. In the summer of 2011 I represented EE at the inaugural White House Briefing to Community Leaders, where the president—my old law school prof—offered his support to community activists like me. Michael Blake, the director of the White House Office of Public Engagement and President Obama’s liaison to the African American community and minority business, invited me. Donald Cravins, the chief of staff and chief counsel for the Senate Committee on Small Business and Entrepreneurship, has asked me to testify to the Senate on behalf of Black businesses and economically distressed Black neighborhoods that need more local businesses investing in the community. In addition, the chief diversity officer at Office Max asked me to deliver a keynote address to their minority suppliers and the company’s senior management during a swanky all-day event the company put on specifically to recruit high-quality minority prospects and create a forum to enhance the value of the supplier diversity program. They could have asked a celebrity to do it, but they asked me, and it was the first event of its kind. I shared our journey and delivered a business case for supplier diversity that explained how substantive supplier diversity can increase sales. I received a standing ovation after closing my speech with these words, “Do Good. Make Good. Make Good Money.” Office Max received letters from Hispanic, Asian, and White women business owners praising the company for partnering with The Empowerment Experiment and supporting EE’s vision of conscious consumerism. Kraft’s Supplier Diversity Lead was there. She has decided to have a similar event for their suppliers, and guess who will be delivering a speech urging Kraft’s executives to invest their marketing dollars in supplier diversity? That’s right.
That investing simply isn’t happening fast enough, as the plight of so many Black-owned businesses we came to know painfully demonstrated. My favorite wine store, WineStyles South Loop, run by my dear girlfriend Tracye Dee, closed in August 2010. She just didn’t have the liquidity to keep the store afloat. Jordan’s Closets couldn’t make it either. The same month Tracye closed, Joslyn and Jera converted to an online-only operation. Then, in the spring of 2011, they closed altogether. When she explained, “We just weren’t getting the business we needed,” I felt my heart drop into my stomach.
The same fate struck two of my other favorite Bronzeville establishments: Sensual Steps Shoe Salon, which had survived five years under my beloved Nicole Jones, and Bronzeville Coffee Shop. David and Michelle Powell at God First God Last—God bless ’em—keep plugging away. But the last time I drove by what was Farmers Best, it was a barred-up, hollow shell. I had to turn my head.
There have been uplifting moments too, often in the form of individuals touched by the hope that The Empowerment Experiment can spark. Corey Tabor heard me speak in
February 2011 at the University of Texas at Austin. Tabor, an African American preacher at a multicultural parish and a car sales rep—I love that combination—grew up in Abilene, Texas, in a mixed-race environment. Not until he attended the University of Texas at Austin did he start investigating more deeply his African American heritage. He ended up establishing a ministry for Black students at UT. He told me he’d always wanted to commit to buying Black, and he did patronize the one Black-owned business that all Black men commonly patronize: the barbershop. Doing much more seemed overwhelming and pointless to him.
But something about seeing the stand our family took gave him pause.
“The first thing that caught my attention was how one family could make that big of a difference,” Tabor said. “It was one decision made by two people that began this movement, and I think we often forget that movements start with individuals who are not comfortable with the status quo.”
Two days after hearing my talk Tabor lined up quotes from a Black-owned insurance agency and a Black-owned lawn-care provider. He checked to see whether a Black physician had room for an additional patient and contacted a Black accountant. Corey Tabor is one man making a difference in large part because he believes he can, and so often, that belief is just about all it takes.
I’m also inspired when I help White folks understand that this idea of ours is not racist but rather something that adds to the universal good. For example, when I gave that speech in Austin, almost everyone in the audience of about 250 people was White. Like the talk at Georgia State and another one at Belmont University in Nashville, looking over that audience in Austin was a little unsettling at first. But it went well. Afterward, a couple of White students told me they’d originally come with the intention of publicly declaring that I was a militant Black racist. Instead, they listened to my talk and apologized. Then they asked where they could find businesses to support. I nearly cried.
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