4 half-truths about black-owned businesses — and why you should still buy black

1. “Customer service is terrible with black-owned businesses.”

Black businesses have the reputation for having poor customer service. What is often left out is that many white-owned businesses are plagued with poor customer service as well. As I can attest, one of the most challenging things to do with any new business is to set up a culture and process of excellent customer service.

Not all black businesses have bad customer service. The poor reputation of black businesses leads to confirmation bias, which is our tendency to favor information that confirms our beliefs. We selectively recall the bad experiences that we have with black businesses while ignoring all of the good ones. Often, we completely ignore the good and bad experiences from businesses outside of the black community and just assume that they were all superior.

2. “The prices of black-owned businesses are higher than at other firms.”

Prices at many black-owned businesses are higher than large retail chains like Wal-Mart, as well as some other small businesses. What people do not consider is that black businesses neither have the size nor the solidarity that it takes to command low prices from suppliers. Large companies have the ability to buy in large quantities, which lowers the cost per item. There has never been a company started by black people of that size, therefore the prices that suppliers charge us is higher. We have a habit of comparing the attributes of Fortune 500 companies with those of small businesses, even though they are not always competing on an even playing field.

Lack of solidarity and our inability to control our own value chain is another reason that black businesses experience higher prices. A great example is the black hair care market. Black hair salons are charged higher rates from suppliers because people from other cultures often own the raw materials and means of production that go into having a nice hair-do. A way around this would be for black businesses to consolidate buying power, but this can be challenging in a fragmented market. The above example plagues black businesses in other industries as well.

3. “Encouraging people to buy black is racist. We need to encourage people to buy American.”

I read this statement a lot on blog posts written by people of every race, but it is faulty logic. By this assessment, anyone who wants people to buy American can then be labeled a nationalists. They are implicitly saying that we can overlook nationalism, but advocating for the development of a particular segment within that nation somehow crosses the line.

Encouraging people to buy American does not ensure that every segment of the population will benefit equally. Trickle down economics does not trickle to everyone. For black people to ensure their piece of the American pie for generations, we have to take a proactive stance and support our own businesses. This still helps the American economy as well, as black Americans are still a part of it and have contributed to it greatly through our excessive consumerism over the years.

4. “There aren’t any black products that I really want to buy.”

One of the very first things that we noticed while starting Ujamaa Deals is the tendency for black companies to be in the hair care/beauty, jewelry, or food markets. These are all industries that have a low cost of entry and can be started out of people’s homes. I would love to see more of a diversity of black businesses, but that takes time. Because some businesses have a higher cost of entry, and blacks have a harder time acquiring the necessary capital to compete, our community just doesn’t offer a huge array of products and services — for now. If we can develop the independent black economy, I predict that there will be a more diverse pool of black products to choose from. When our entire community has more capital, we can capitalize more businesses.

There are many things that black-owned businesses need to do to improve their service offerings, which I will address in a later article. Similar to other emerging markets, we need to have a level of protectionism over the black economy in order for it to reach a critical mass so that it will be self-sustaining. Until then, we have to bear the burden of “the black tax” and sacrifice some short-term individual gains for long term collective economic stability.

The assumption that all black-owned businesses are inferior is a false statement. Although they may lag, on average, in many categories, there are still many that are doing extraordinary things. These businesses should not be overlooked. A change in self-perception is needed in order for us to thrive in this global environment.

Lawrence Watkins is the founder of Great Black Speakers, Great Pro Speakers, and co-founder ofUjamaa Deals, which is a daily deal site that promotes black-owned businesses. He graduated in 2006 from The University of Louisville with a B.S. in electrical engineering and earned his MBA from Cornell University in 2010. Lawrence currently resides in Atlanta. You can follow him on Twitter@lawrencewatkins.

Read more about Lawrence Watkins’s entrepreneurial efforts on The Grio