22 Reasons Why Black Businesses Fail

Abstract

It is common knowledge that the characteristics of Black-owned American businesses differ from the characteristics of businesses owned by other ethnic groups in the United States. Specifically, there are fewer Black businesses per capita; Black businesses experience lower levels of gross receipts; and Black businesses are less likely to be large enough to employ workers. It is also common knowledge that the survival rate of Black American businesses is lower than the survival rate for businesses owned by other ethnic groups. The logical question to ask is: "Why?" This BlackEconomics.org Report Brief identifies and explains 22 reasons why Black businesses fail. There are 11 structural reasons, 6 cultural reasons, and 5 psychological reasons why Black businesses fail. The goal of the analysis is to enable a more comprehensive perspective on why Black businesses fail so that Black entrepreneurs can fashion strategies that lead to more Black business successes.

Keywords: Business failures, survival rates, entrepreneurs, Black, African American

JEL Classification: L100, Z19