Minority-owned businesses face more than capital challenges | Together We Rise
Funding remains an obstacle for minority-owned businesses, but even successful entrepreneurs say they face discrimination.
The 'It' factor: "I saw a brand that had unlimited potential"
There are four million minority-owned businesses in this country, and they bring in billions of dollars in profits.
Yet some face the problem of getting capital to start up or even expand on their dream.
"I always knew I wanted to have a business, but I didn't know what," Daryl Smith said.
The 33-year-old husband and father of three is watching his vision of chicken wings and daiquiris-to-go flourish. Smith and Bernardo Baxter cofounded WingIt in Kirby in 2012.
The two were selling wings separately and joined forces. But Smith said keeping WingIt flying was not always easy.
"It was hard, you know, not being able to keep the lights on sometimes," he said. "People don't see that that back end, you know, not be able to pay yourself. You know, having to work another job."
The hustle and sacrifice paid off. Two WingIt locations, the second in Universal City, will become more. They are expanding in Cibolo, and their flagship location is at Culebra Rd and Alamo Ranch Pkwy.
"I saw a brand that had unlimited potential," Andrew Barlowe said.
Barlowe, a football teammate to Baxter, became a partner in the expansion. The 31-year-old has at least five business ventures, including his WingIt and SipIt investment.
"It's not easy," Barlowe said. "There's going to be things forces and people that come against you and to stand strong."
SipIt, the daiquiri-to-go division of the business, became a profitable hit during the pandemic. For the young entrepreneurs, customers wanted more sips.
"We have SipIt Military (Drive). We have SipIt Huebner (Rd). We have SipIt Culebra (Rd), SipIt Universal City, and SipIt Cibolo," Barlowe said. "And we've got two more opening this year."
Their growth sounds good, but not everyone wants a piece of it. The business owners still have to convince landlords to lease space even as they walk in with funding and successful concepts.
"The fact is we are young," Barlowe said. "We are, you know, of an ethnic background."
Barlowe said they don't allow that to become a factor. But they can't ignore it.
Smith said he remembers selling plates until the sun came up. Funding wasn't always available to help them plant their seed.
"I don't think that the funding was available," Smith said. "Sometimes I still don't think it's available, you know, especially for, you know, people that look like me."
Don Mooney Rising: "When I saw this business, I knew this is a business that I wanted to go into."
In 2000, retired Lt Col Don Mooney opened Don Mooney Enterprises. His companies provide healthcare staffing in the public and private sectors.
"When I saw this business, I knew this is a business that I wanted to go into," Mooney said.
The 69-year-old Houston native went from a boy's home to the West Point Military Academy.
He served in the United States Army, which gave him the operational skills to run his business.
"The skill sets were very similar to the skill sets that I used in the Army," he said. "It was dealing with people."
But the Army did not provide all the funding Mooney said he needed. He had loans, went through his savings, maxed out credit cards, sold his dream house, and his wife worked an extra job. It all paid off as the profits started coming in.
"The first year, we did 460 (thousand dollars). Second year, we did 660 (thousand dollars)," he said. "It took us five years before we made a million dollars in revenue."
His business acumen grew with the profits. Mooney said his monthly payroll is over $2 million. The husband and father was confident he would build a business for his grandchildren. But everyone did not share his enthusiasm.
"They're not going to buy from a Black man in South Texas," he said.
And, even when Mooney said he had money in the bank, the institutions would not lend to him.
"I had $500,000 in the bank as collateral, and I looked at the banker, and I said, You know, I believe if I was not Black you would consider this a little bit more carefully," Mooney recalled.
Mooney said he learned delayed gratification is a part of the process, so is getting a business mentor, networking, and determining where you want your profit to go."
"You have to make a decision whether or not you want to build a business of value or you want to build a lifestyle business," he said.
Mooney mentors business people of all races but especially Blacks.
Money, management, market
Dr. Sergio Palacios is an associate professor of management at St. Mary's University, specializing in entrepreneurship and business innovation. He is also the Director of Meadows Center for Entrepreneurial Studies.
Palacios said minority-owned businesses typically face the same problems: Money, management, and market.
"First of all, access to credit in general for minorities is still the challenge," Palacios said.
He points to the racial makeup of lending reflected the Small Business Administration for Paycheck Protection (PPP) loans: Whites 65%, Hispanics 14%, Asians 12%, African-Americans 8%, and American-Indian 2%. But he said those statistics come with an asterisk because not all borrowers shared their race.
According to the Kauffman Index of Startup Activity, the Latino rate for opening businesses outpaced any other minority group at 52%. African-Americans followed at 38%. Whites came next at 36% and Asians at 35%.
"What happens with minorities in the U-S is that they tend to serve their own markets," Palacios said. "They tend to open businesses that have low barriers of entry. And what that means is that anyone can get into a business like that."
The Kauffman Index of Startup Activity also shows a 17.1 drop in entrepreneur opportunities. The rate went from 86.9% in 2019 to 69.8% in 2020, with the pandemic causing the decrease.
Palacios said capital should not stop want-to-be business owners from opening their doors.
"The traditional view of entrepreneurship is that you put a lot of money, and then you take a ton of risk--and that's not necessarily true," he said. "You don't have to have cash to start a business."
Palacious said minority-owned businesses could suffer from a lack of education, generational knowledge from family-owned companies, poor networking, and no mentors.
He said startups should test their ideas in a network of people, get feedback, work on that prototype, consider a business partner and, then, make a small financial investment.
"You can make money without investing money, for instance, doing pre-sales," he said.
In April, St. Mary's University's Meadow Center for Entrepreneurial Studies will offer a community workshop series. Pre-registration for the series is available here.