Before the global pandemic, in 2019 the Tax Policy Center released disturbing data about Black and Hispanic households. Black households in America have a median net worth of $17,000 or 10% of white household wealth and Hispanics are at $20,720 or 12% of white household wealth. Nor was the pandemic kind to Black and Brown business owners. A McKinsey analysis found that “4% of businesses run by black Americans are still in business after 3.5 years compared with the national average of 55.5%.” Now consider that more people started businesses in 2021 than ever before, a full 5.4 million applications, and people of color are starting their own businesses more than their white counterparts, but systematically struggle to access capital. These trends of inequity in small business ownership and success are illustrated further in our advocacy toolkit “An Equitable Small Business Recovery”.
Responding to COVID-19, most state and federal efforts have been focused on relief with an eye toward recovery. As we move deeper into the recovery phase, we must understand that some businesses, including many of the socially and economically disadvantaged businesses remain in the relief phase, and that businesses are starting at higher rates than ever before and these business owners are people of color. Small businesses are facing new challenges – inflation, staffing issues, supply chain issues, population shifts, and more. If the state and country are going to weather this crisis properly and reimagine what an equitable recovery is, investing in small businesses is a priority; and investing in BIPOC businesses and their owners is an imperative. We must do better.
What Relief/Recovery Looks Like from a State Policy Perspective
For our small businesses to recover and thrive, we need to support our local entrepreneurial resources with what these small businesses really need – a strong entrepreneurial ecosystem with business training and management skills, small amounts of capital, access to markets, an environment in which to thrive, and policies that encourage entrepreneurship on all levels of government. When the pieces are in place – Coaching (all training), Capital, Connections (to markets and networks), Climate (policy), and Culture – our small businesses can move toward recovery and finally resiliency which in turn spill upward to our communities and our state.
If we want to “build back better,” and if this recovery is to be more equitable than past ones, then we need to meet our underserved communities where they are. Our member organizations need tools and capacity building to deliver a significant, measurable growth of services to more low- to moderate-income micro business owners.
One of the silver linings of the pandemic is that it strengthened the California network of nonprofit, mission-driven business service providers that make up the CAMEO network of 400+ business service organizations and microlenders. We strengthened connections. We added capacity. We became very good at cooperation and working in collaboration. We learned a lot about what it takes to reach those business owners that aren’t already our network. Our members doubled, tripled, and sometimes quadrupled the number of businesses they served. And the State of California recognized the importance with significant investments in the ecosystem.
CAMEO is proud to publish our latest white paper, “California Small Business Policy Review,” where we examine how California’s small business fared and how California contributed to a strong local entrepreneurial ecosystem during the pandemic.
We have also released an advocacy toolkit, “An Equitable Small Business Recovery,” which details our policy recommendations in order to foster the right ecosystem of support for underserved small businesses and guide an equitable recovery that increases wealth.
 The concept of an entrepreneurial ecosystem is not unique, and many descriptions use different nomenclature, but conceptually they are similar. For more explanation of the 5Cs and the LEEP, download CAMEO’s LEEP Toolkit. The 5Cs are aligned with Ewing Marion Kauffman Foundation’s America’s New Business Plan: Access to Opportunity and Support encompass, Climate (policy); Access to Funding is directly analogous to Capital; Access to Knowledge is directly analogous to Coaching.