Visit Us

Minority Businesses

Where Black-Owned Businesses Should Look to Expand

Where Black-Owned Businesses Should Look to Expand

Black-owned businesses have grown exponentially in the United States. According to the 2014 State of Women-Owned Businesses Report commissioned by American Express OPEN, black-owned businesses account for 2.5 million firms in the United States. As black entrepreneurs look to scale their companies, they should seek out growth opportunities through expansion, franchising and investing. Currently, the best places for black-owned businesses tend to be in the South. Let’s take a look at a few of the areas where black entrepreneurs are thriving:

Georgia – Georgia, according to both cnn.com and an article on Nerdwallet.com, is a great place for black entrepreneurs to start and grow. The first obvious reason for this is because the Atlanta metro area is home to many affluent minorities and fosters an environment where entrepreneurship is encouraged. This also includes the areas of Columbus, Georgia and Savannah, Georgia.

Alabama – In the Montgomery, Alabama area, one-third of businesses are minority-owned, and in particular black entrepreneurs thrive in this region. Similar to the business climate in Atlanta, entrepreneurship is encouraged and there are a plethora of resources made available to those black-owned businesses so that they can succeed.

North Carolina – You can find the Durham, North Carolina area at the top of several lists for the best places for black-owned businesses. This area fosters a positive environment for black entrepreneurs in part because of the high percentage of black college graduates that call the area home. The Raleigh-Durham area is also a technology hub which encourages innovation for all of its businesses – including those that are minority-owned.

Washington, D.C. – Black-owned businesses are thriving in our nation’s capital and the surrounding suburbs, such as Northern Virginia and Southern Maryland. Black businesses are comprised of both private and public sector companies. Entrepreneurs in this diverse region choose to take advantage of several resources such as the National Black Chamber of Commerce and the Northern Virginia Black Chamber of Commerce.

Expansion Through Franchising

Black-owned businesses can also expand through franchise opportunities. Franchising provides business owners the opportunity to expand regionally, nationally, and in some cases, internationally. Black business owners can also choose to purchase existing franchises in order to expand their business portfolio. This can be achieved by investing in successful franchises such as McDonalds Subway or JaniKing.

Expansion Through Investing in Other Businesses

When evaluating a business for investment purposes it’s important to research the following:

Gross Margin – This is the difference between what a product or service sells for and the cost it takes to either make the product or conduct the service. This aspect is important because if a company has a high gross margin it means that there is more money that can be spent on other areas within the company.

Brand – This is what makes the company unique and attractive. Brand identity is important to a potential investor because branding can help attract consumers, which in turn brings in more revenue.

Leadership – A potential investor should take a close look at the leadership of the company. This starts with the Chief Executive Officer. This may include conducting reference checks and interviewing senior executives.

Revenue – This includes both the current revenue of the business and recurring revenue. The current revenue of the business is important because it shows how the business is performing in the current business climate. The recurring revenue is important to review as an indicator for the future growth of the business.

Attractive Industries

Over the past year several industries have become attractive to investors. Here are a few:

Technology – Information technology companies have become favorable to investors. We will continue to see their demand and presence as more IT companies emerge to provide a solution to data breaches and a need for improved security.

Healthcare – There are great opportunities to invest in successful businesses that are providing healthcare services. A great place to start is to take a look at healthcare companies that cater to America’s aging population. The country has seen a surge in these types of companies because the demand is so great.

Health and Wellness – The country is currently experiencing an upswing in the holistic and healthy lifestyles sector. This industry presents a great investment opportunity in several areas including fitness services and products, specialty healthy food stores, spas and holistic practitioners.

What’s Ahead?

As you look to grow and seek out new opportunities, it’s important to continue to invest in your own infrastructure – such as marketing, hiring employees and innovation. Whether you choose to expand your current business, invest in a new business or open a franchise, the future looks bright for black business owners.

Has your business expanded successfully? Tell us about your experience in the comment section below.

email

Kabbage Team

Kabbage is here not only to provide access to the small business funding you need, but to also help you grow your business through free marketing tips, webinars, tools and more. Is there something you'd like us to cover or want to get your small business featured on our blog? Send us a note at content@kabbage.com.