COVID-19’s Effect on Minority-Owned Small Businesses in the United States
McKinsey
First published May 2020
Whether by necessity or ingenuity, minority-owned small businesses may be giving us an early sign of how US businesses will adapt in the wake of COVID-19. These businesses are experimenting with new ways of working to ensure their employees’ safety, offering monetary relief to employees and community members, and introducing new services such as free delivery to those who need it.
According to our recent poll of more than 1,000 small businesses nationwide, more than 40 percent of minority-owned small businesses have added new services to support their communities and employees, compared with 27 percent of all respondents. A majority of minority entrepreneurs are optimistic about economic recovery in general:
56 percent of minority small-business owners reported that they were optimistic about post-COVID-19 economic conditions, compared with 49 percent of all respondents.
Yet minority entrepreneurs, facing myriad challenges, are also concerned about risks to their own businesses. Of all vulnerable small businesses, minority-owned ones may be most at risk. Many were in financially precarious positions even before COVID-19 lockdowns, and minority-owned small businesses often are in industries more susceptible to disruption. Ensuring that these businesses survive in the current circumstances will require fundamental shifts in how private-, public-, and social-sector organizations come together to support them.