Reciprocity in the Marketplace — July 2017

Articles | Posted by Jim Clingman July 22nd, 2017

We hear a great deal of discussion about the percentage of money Blacks spend with Black businesses versus how much we spend with White businesses—and others as well. It is said that 90%+ of Black dollars are spent at non-Black businesses. Obviously, that leaves about 10% for our businesses. What are we getting for that 90%? Blacks must drastically change our spending habits and/or leverage what we do spend.

The average annual revenue (sales) for Black owned businesses without employees is $58,000 and for those with paid employees it is $948,000, both of which are much lower than other so-called “Minority Groups.”

A report published by the U.S. Small Business Administration, titled, “Minority Business Ownership: Data from the 2012 Survey of Business Owners” by Michael McManus, Regulatory Economist, had this to say about Sales Disparities:

“Evaluating disparities using per-firm sales average shows the stark difference between minority and nonminority firms. It also highlights key variations between minority groups. For example, [Black]-owned firms average about $58,000 in sales per firm, while Hispanic firms generate two and a half times this amount; Asian-owned firms, 6 times as much; and nonminority-owned firms over 9 times this amount.”

One can reasonably extrapolate a couple of things from that point: Black businesses must grow to the point of being able to hire employees; and Black businesses need a great deal more support—from Black consumers as well as other consumers—to reach parity.

One other point of consideration is the industry in which we choose to start a business.
The report states, “While the number of minority-owned businesses is growing rapidly, disproportionate amounts are in the lowest 20 industries in terms of sales. In aggregate almost 58.9% of all African American-owned businesses are in the 20 lowest sales-generating industries…”

Finally, as I have cited many times, of the more than 2.6 million Black businesses only 111,000 have employees. Do the math and see why we must grow our businesses in order to make them more viable in the marketplace. In order to have more of our $1.2 trillion flowing through Black businesses we must have larger ones in more profitable industries. Make sense?

Now here’s the rub against us as consumers of Black products and services from Black entrepreneurs. Paradoxically, while we must have more sustained growth and we must venture into more scalable business ventures, many Black consumers are buying from other groups and some are even refusing to do business with Black firms, for one reason or another. Add that reality to the fact that other groups do not support our businesses to any great degree, which could be due in part to the industries we select, and Black business is stuck on a treadmill, expending a lot of energy without moving forward, multiplying but never growing.

Top all of this off with the fact that we hold our entrepreneurs to a higher standard than we hold others. We want reciprocity from them, and we want them to “give back,” which is quite reasonable and appropriate. However, we do not demand the same level of reciprocity from the other businesses that we support virtually every day. Don’t agree? Then tell me, where is the balance of our $1.2 “trillion” annual income when we deduct the $188 “billion” in annual revenues earned by Black businesses, not all of which comes from Black consumers?

Let’s face it, Black consumers could never spend all of our $1.2 trillion with Black owned businesses; we do not have enough businesses for that ideal to become a reality. We can certainly increase the amount we currently spend, but until we establish and grow more businesses, which will take at least a generation if we concentrate on it, we will continue to spend vast sums of money with businesses other than our own. So why are we not seeking reciprocity from them?

We must use collective leverage that can be given or withdrawn at a moment’s notice. Understanding that Black consumers cannot get around spending dollars with non-Black companies, the Collective Banking Group of Maryland, http://www.collectiveempowermentgroup.org/Partners.html and its local chapters, work with White owned and other companies, in mutually beneficial strategic partnerships, to obtain reciprocity. Banks, furniture stores, carpet stores, automobile companies, restaurants, movie theaters, supermarkets, and many other companies that profit from the Black dollar should reciprocate to their Black customers beyond sponsoring a dinner or a youth baseball team.

If we are going to spend tremendous sums of money with White owned, Indian owned, Chinese owned, and Arabic owned businesses, then it’s up to us to initiate and negotiate reciprocal agreements that benefit both groups. One side of that equation is already complete: We benefit them. Since we inevitably will keep spending our money with them, don’t you think we should complete the equation by getting some benefit ourselves?

 

 

It’s your money. — July 2017

Articles | Posted by Jim Clingman July 17th, 2017

Yet another report, the Nielsen African American Consumer Report, was released in October 2016. Titled, “Young, Connected, and Black African American millennials are driving social change and leading digital advancement,” it points out various issues related to how Blacks spend our dollars, with an emphasis on our young people. To put it bluntly, this report is about your money—how much you earn, what you spend it on, and how it can be obtained from you in exchange for products and services. Yes, it’s your money, but for how long?

Since most of us will not read a 56-page consumer report, I am going to draw heavily from its contents in hope that you, the Black consumer, will learn to teach your dollars how to make more sense. Information is only power if you use it appropriately. The Nielsen Report contains a lot of information, but the question is: Who will benefit from it?

The report states, “African-Americans are exuberant and reflective—optimistic about present-day advances in income, education, entrepreneurship and healthcare, and determined to forge a better future as influential leaders and catalysts of social awareness against discrimination and social injustice. With incomes steadily rising at a rate that outpaces that of the general population, African-Americans’ ‘buying power’ is expected to grow 21.6% between now and 2020, by which time it will reach just over $1.4 trillion…” Is it Black buying power or Black buying weakness?

Nielsen says, “African-American consumers are focused on ‘eating well’ and ‘looking good,’ over-indexing across a wide variety of product categories, ranging from beauty products to fresh foods and ingredients that reflect their proud heritage and cultural traditions. ..There is a ‘clear opportunity’ for innovation and new-product development in the convenient-healthy eating space.” Are Black people taking advantage of the “opportunity” we have created?

In a section titled, Valuing the Beauty Within, the report states, “Personal image is highly valued and is regarded with an immense sense of pride in the African-American community. African-American millennials have higher buying rates (per household) for hair care products and personal soap and bath products than their millennial counterparts.” Do you think they are talking about Black manufactured products?

Another section, Feeling Proud, Looking Good, and Spending More, points out that, “Personal image is highly valued and is regarded with an immense sense of pride in the African-American community. Consumer product companies have long been aware of the ‘dedicated consumption’ of personal healthcare items by Black consumers. African-Americans of all ages show higher buying rates than non-African-Americans for women’s fragrances, grooming aids, personal soap and bath needs, deodorant, sanitary protection, family planning, and feminine hygiene…The long history of personal care spending has led many consumer products companies to offer highly-developed lines of popular African-American cosmetic, fragrance, and hair-care products that cater to the wants and needs of African-American men and women.” Is that why L’Oréal has purchased Black hair care and cosmetic companies? As their commercial says, “Because [you’re] worth it.”

Uh oh, here it comes, the pièce de résistance: “Optimism about the future. In 2012, for the first time in American history, African-Americans had the highest rate of voter registration and turnout of all races, 66% versus 64%. And while the majority of African-Americans are optimistic that the country is headed in the right direction, there is an ongoing need in their communities for more affordable housing, healthcare, childcare and higher education.” Does that seem a bit oxymoronic to you? Besides, what did we get from all that voting?

The report says, “In 2015, African-Americans ‘controlled’ $1.2 trillion in buying power, 8.6% of the nation’s total, and a 21% increase over 2010…The gains in Black buying power reflect not only African-Americans’ population growth, but also their increasing education and entrepreneurship, as well as their advancing into their peak earning years.” Our money is “subject” to our “control” but we are not appropriately controlling it; we do not leverage it.

Finally, the report says, “Nielsen has provided these reports to better illustrate the ‘unique’ qualities of the African-American community, the ‘business opportunities’ that exist, and the best methods for a productive and successful ‘connection.’ As business executives look for opportunities to grow their businesses and gain market share, it is critical to measure and evaluate the opportunities.”

Dr. James Lance Taylor points out that Black millennials, many who earn $60,000 to $85,000 straight out of college, are migrating to the south in record numbers. Armed with that kind of money they must take full advantage of it, collectively, and build something for themselves and their progeny—something they “control.”

Black consumers are the most studied segment in this nation, because as Willie Sutton once said when asked why he robbed banks, “That’s where the money is.” It’s our money this report is talking about, Black folks; are we accessing the opportunities therein?

 

 

A Timeless Strategy — July 2017

Articles | Posted by Jim Clingman July 9th, 2017

Before we are able to make the kind of meaningful progress necessary to bring about a change in our economic status, we must educate ourselves in the areas of collectivism, mutual economic responsibility, and the advantages of supporting one another in our endeavors.

Economic empowerment does not have to be shrouded by confusing economic terms nor as complicated as many of us think it is. Economics, for our purposes, must be brought down from the lofty heights of academia to the “street talk” with which we are all familiar. It too must become a part of our vernacular, because at that level we will be able to deal with our concerns, our complaints, and our problems with the only ammunition that is effective: Our Dollars.
During the sit-ins of the 1960’s, while we were seeking equality and the right to integrate socially, we began to lose sight of the economic advantages we did have, the most important of which were Black owned businesses; they soon began to fade away. As we explored our new found “right” to buy the same products and services we had always bought, only now we could enter through the front door instead of the back door, we forgot about our own businesses. Another boycott was about to begin—that of our own businesses by our own people.

This is not to discredit the sacrifices we made to bring about our civil rights; those were some of the most important and significant times in Black history. We owe a debt of gratitude to those who helped make it possible for many of us to have the things we have today. But now, with the so-called “New World Order”, with all of our political and social progress, we are even more behind, economically, than we were a generation ago.

Why is this true? One reason is the political complacence that sets in after we elect Black people. Black Mayors and Black Congresspersons do not necessarily equate to Black economic prosperity. Our African-American politicians can only do so much, and sometimes that’s very little, to relieve the plight and blight of our communities. After we have helped them get into office, we cannot then sit back and wait to see what they are going to do “for” us. We must continue to help them so they will be able to do something “with” us.

Our politicians, at least the ones we helped get elected, must be accountable to us, and that will only happen if we abide by the one rule that counts in politics: The money rule. Unless African Americans are willing to support our candidates with our dollars as well as our voices, we will have neither accountability nor influence in the political arena.

We, as a national community, are generally well skilled in making our points when it comes to social issues. But, we are sorely lacking in our knowledge and execution of basic economic strategies for our local communities. Politics is important but first we must support one another, demand reciprocity from those with whom we do business, and work together toward ownership of our communities. Politics will fall in place when economics succeeds.

Collectivism was a very positive precept of our African ancestors. Today, in some circles, that principle has been put forth as the sole reason for the dearth of African-American entrepreneurs. Some say that because we are a communal people, we are reluctant to seek the individual path of entrepreneurship. This may be partially true, but it does not have to prevent us from using that same spirit of communality to support those of us who are entrepreneurs. Can you imagine how empowered we would be if we drew upon our basic natural inclination to be a real community? We would be well on our way to economic, social, and political parity.

Right now, we don’t count. Can you imagine that? We spend a trillion dollars, and we don’t count. Why? There’s no need for the majority to deal with us in any serious manner, especially economically, because we do not act collectively. That’s not to say that we should all think alike and act alike and never disagree. It simply means that we should consider one another first and not be so willing to push one another aside for own individual advancement.

In this country, for Blacks, economics must be collective and cooperative. Witness all of the mergers, buyouts, alliances, and conglomerates occurring today among other companies. African Americans must practice the principle some of us only celebrate one day each year: UJAMAA (Cooperative Economics). If we do that, we will count, we will be empowered, and we will prosper.

Note: Believe it or not, with the exception of two updates, I wrote this article in March 1993.

 

 

Look back and see the future. (Part Two) — July 2017

Articles | Posted by Jim Clingman July 3rd, 2017

An excellent example of the impact our history has on the way we are today, especially economically, can be found in an article titled, The Reluctant Entrepreneurs, by Joel Kotkin, author of the book, Tribes.

The feature discusses several reasons for Blacks not going into business and being surpassed in this area by other ethnic groups. Among other reasons, the history of African Americans was cited. The article quotes Robert Hill, a Black Historian at the University of California at Los Angeles, who traced the lack of entrepreneurial tradition to African origin and the brutality of the American system of slavery. “Africa”, Hill explained, “is more a communitarian society, where notions of private property have never been so entrenched as in Europe or North America. The culture of capitalism is just not part of our African heritage.”

The piece goes on to say, “…certainly slavery and its progeny, the sharecropper system, did nothing to foster confidence, independence, or a capitalist inclination among African Americans. Before slavery and after, white landowners believed the proper way to treat the Black was, in the words of one slave owner, ‘to create in him a habit of perfect dependence…’ And it was a system that proved to be enormously successful and enduring.”

The article continued, “we are a race of people who for generations, both before and after Emancipation, were denied freedom of movement, education, and even a rudimentary familiarity with the free market, not to mention credit, legal status, or safety from lynch mobs. That we, as descendants, have not taken naturally to entrepreneurship should hardly come as a big surprise.”

The fact still remains that despite their poorest of circumstances, some Black people engaged in entrepreneurship even before the Emancipation, and did well at it. According to John Sibley Butler, in his outstanding work, Entrepreneurship and Self-Help Among Black Americans, “They (Black entrepreneurs) became the merchant class in northern cities, and it was through their enterprises that Black income in the last third of the nineteenth century grew faster than that of whites.”

The INC. article cited the economic protestations of Booker T. Washington, who established the National Negro Business League, exhorting Blacks to “uplift” themselves by striking out on their own. It celebrated the “new” ministers like Adam Clayton Powell, who urged aspiring congregants to go into business on a larger scale.

While early Black businesses had to rely solely on the Black consumer market, such is not the case today. However, if we do not move collectively through the economic maze, making our monetary clout felt in the widest of circles and obtaining the reciprocity we deserve as a massive consumer army, our businesses will not achieve the growth they need to prosper in this economy. Moreover, African Americans will have abdicated our responsibility to carry forth the legacy passed on to us by our fathers and mothers.

We must never forget our history and the reasons for our attitudes on economics, business ownership, and mutual support. We must also realize that if we are going to make it in this country, we had better get down to business NOW! I think our ancestors would be proud.

Economic empowerment is a constant struggle, and if we do not view it as a struggle, we will never achieve the goals to which we aspire. No one is going to “give” us anything. If they do, it will not be without encumbrances. The economic power we seek is within us all, and examples for us to follow are everywhere. We simply need more cooperation within our own ranks.

In seeking that economic power, remember what Frederick Douglass said: “…This struggle may be a moral one; or it may be a physical one; or it may be moral and physical; but it must be a struggle. Power concedes nothing without demand. It never did and it never will. Find out just what people will submit to, and you have found the exact amounts of injustice and wrong which will be imposed upon them…The limits of tyrants are prescribed by the endurance of those whom they oppress.”

I say: If we rise up, as Marcus Garvey exhorted us, resolving to cooperate with one another and do for ourselves, our economic manifesto would be clear. Our struggle will be easier, and the powers we face will concede to our demands. However, if African Americans choose individuality over collectivism, yes a few of us will “make it”, but we will go down in history as a paradoxical people; a people who, with all of our wealth and knowledge, acquiesced and continued in economic oppression. And the blame will rest squarely upon our shoulders.

Let our past be the light that guides us to a brighter economic future.