Here’s why Detroit needs to get serious about supporting entrepreneurs of color

I took a few minutes this week to explore the 2018 scorecard compiled by nonprofit Prosperity Now, which advocates for economic stability and wealth building for low-income families. The trove of data revealed a deluge of critical but familiar statistics for Detroit: high poverty, high housing cost burdens, low rate of college graduates. However, two data points about the business landscape stood way, way out.

The average value (in terms of sales, receipts or revenue) of male-owned businesses in the city is 12 times higher than those owned by women. The disparity is worse for minorities: white-owned businesses on average have 25 times the value of businesses owned by people of color. Other cities have similar trends, but the gaps are much wider in Detroit, and our disparity is particularly staggering considering the majority-black population.

Prosperity Now considers business value a key indicator because small business “is one of the main drivers of upward economic mobility throughout the history of the United States,” said Lebaron Sims, senior research manager at the nonprofit. But they believe national, state and local policies generally funnel benefits to established and white-owned businesses that rely on inclusive networks, making it difficult for new entrepreneurs, particularly women and people of color, to break through.

“The flight of capital from [Detroit] means that the businesses that are owned by the people that live in the city aren’t worth much,” Sims told Detour. “It means they aren’t selling quite as much. It means they aren’t getting the investment that they need to really thrive and attract dollars from around the region.”

(Metro Detroit and the state of Michigan have much lower levels of disparity. Sims said that was in part because suburban and rural areas had fewer of the extremely large businesses, as well as fewer minorities.)

Even as the city attracts more investment and businesses relocate here, “we’re ultimately failing the residents of the city of Detroit, because we’re not allowing them that opportunity to build wealth for themselves and their communities,” he added.

Detroit has unveiled some key initiatives to support new and existing small businesses in recent years, including the Motor City Match program and Motor City Re-Store, which have awarded hundreds of thousands of dollars to entrepreneurs and focus on minorities. Less talked about but still significant is the DEGC’s D2D database, helping businesses procure products and services from local suppliers.

But as the city celebrates Ford’s investment in Detroit — and likely prepares to offer the company major tax incentives — it’s important to continue focusing on how to offer equal opportunities to the smaller businesses, many with women and minority owners. They’ve kept this city going — and they’re just as essential to its economic success.

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