New Jersey Urban News: I was a business writer for Black Enterprise magazine for 15 years. I’ve interviewed dozens, if not hundreds, of minority and women-owned entrepreneurs (MWBE’s) over the years. The most common complaint I heard from them was, “We can’t obtain funding…banks don’t want to lend money to Black or Brown businesses. Primary contractors don’t want to subcontract to minority-owned businesses because they think we are unable or unqualified to do the job.” In your opinion, is there still a “stigma” of sorts to being a minority-owned business? There appears to be a misconception that some M/WBE’s are less qualified than majority-owned small businesses. Please share your thoughts…
Jill Johnson: There is not and never should’ve been a stigma associated with being an MWBE. The problems that these businesses have in accessing capital are mostly systemic in nature. Making MWBEs feel “less than” is victim-blaming at its worst. The banking system has been plagued with exclusionary policies that have kept under-resourced populations from access capital for generations. Bank underwriting is designed to provide capital to businesses that fit in a very particular box. There are many reasons businesses don’t fit; for black businesses, the mismatch started with the systemic level barriers emanating from the legacy of slavery and all that followed to keep blacks from accumulating assets.
Let’s dissect your statement about the misconception that some MWBEs are less qualified than majority-owned small businesses. First, there are many unqualified businesses regardless of ownership. The problem is that a white man’s ownership automatically comes with an assumption of quality which others’ ownership requires proof of ability and expectation of disappointment. So, any problem that may occur on a project feeds into that narrative for the MWBE while the white man gets the benefit of the doubt and can work through a fix. We also have to make sure that we evaluate capabilities on an apples-to-apples basis. Often when people look at the capacity of MWBEs, they are looking at businesses that have gotten to where they are with a leg and two arms tied behind their back, and if they are black, they were started at a line 200 yards behind everyone else with a bag over their head. If corporations are serious about increasing their diversity spend and increasing access to opportunity for MWBEs, they will have to be far more aggressive and intentional about the strategies and tactics they employ to change business as usual.
New Jersey Urban News: I interviewed Newark-based business mogul and community leader Randall Pinkett several years ago. I also read his book, Black Faces in White Places. He said, “Creating any new nonprofit organization is an entrepreneurial act. The challenge we see with many of these organizations is that they stop being entrepreneurial after they are created.” His point was that nonprofit founders’ mindset often shifts from just getting started and ultimately loses sight of the resourcefulness and entrepreneurial spirit, and drive necessary to grow a nonprofit.
As someone that has managed nonprofits for many years, please expound or dismiss that pervasive comment from Mr. Pinkett. As we know, nonprofits often must do more with less, and perhaps, initial goals and aspirations of a nonprofit are lost once it’s established.
Jill Johnson: I have to say I’m not a huge fan of black people starting nonprofits. One of the things I’ve observed over the years is that when black people want to help the community, they start a nonprofit and then struggle to raise money and secure the resources necessary to have enough capacity to execute the vision fully. When white people focus on building wealth and then mobilize wealthy friends to pool resources to invest in communities through philanthropy, our tax structure incentivizes. It’s a completely different mindset. When you’re on an airplane, you know the saying that if the gas masks come down, put on your mask and then help the person sitting next to you? In the black community, we need to be thinking about bringing more people along as we are on our respective journeys to finding solid financial footing ourselves. Many people start nonprofits very excited about the mission and vision and don’t understand that success as a nonprofit leader is about raising money. Everyone focuses on securing grants, but fundraising for many nonprofits is about securing individual donors. So, if you don’t have a strong network of people with money who are conditioned to make charitable contributions, it’s tough to raise money. Having the startup board that can get the organization going in the right direction with fundraising is often missing for black-founded nonprofits. They have just as much difficulty securing funding (capital) as black business owners. It’s tough to stay entrepreneurial when working so hard on a “business” that you don’t actually own and that in many cases isn’t even paying a salary. Unfortunately, the philanthropic community doesn’t necessarily reward people for innovation or new ideas. As in the small business community, grant funding is far more plentiful for nonprofits with significant capacity, which often precludes small black-led nonprofits from getting the type of capital they need to execute on their vision. The way I see it if you are going to work so hard to build something from the ground up, build a business that you own that you can use to create jobs and build wealth within the community you want to support.
NJ Urban News: You left the security of a high-profile job in Corporate America because you didn’t feel a passion for the work. Thousands of people in Corporate America want to leave their 9 to 5 and start a small business. However, they are terrified of relinquishing a steady paycheck and benefits for the uncertainty of entrepreneurship. How do you convince them to take a chance, as you did?
Jill Johnson: I worked for two years in New York and then one year in corporate finance in Chicago. I didn’t see a career path for myself there. After observing the exclusion of women and minorities from the capital mainstream throughout my different experiences, I decided to join with my father, who had always been a champion for minority businesses, to launch the Institute for Entrepreneurial Leadership (IFEL). I had a series of amazing experiences that put me on a trajectory to what I do today.
Now on the point of how do you convince someone to leave their job and take a chance…I don’t believe in that. Deciding to start a business to enter the world of entrepreneurship is very personal, not for the faint of heart. Launching IFEL was an evolution. It wasn’t at all about jumping blindly into risk. More often than not, I try to convince people to keep their day job as long as possible to have financial stability and be in a better position to get loans and other capital. They are forced to operate the business in a way that makes the business more independent. This allows them the freedom to move into full-time employment in their business when the business is ready for that. When someone steps out from their job to start and build a business, they personally need to be ready for that, and all that comes with it.
The less confident you are in your plan to make your business succeed, the harder it will be to leave a comfortable situation. Entrepreneurs are not foolish daredevils. They are people who can gather and assess information quickly and make decisions despite limited information. No one knows if they will succeed at the outset. If you do the necessary research to be confident that you have a way to solve a problem for enough people to pay, you are on the right track. The biggest mistake that people make is not getting external confirmation from people who don’t know you. Once you have that, surround yourself with experts and mentors who can help you at every step in your journey. Creating a strong support system is a critical component of success.
NJ Urban News: Someone told me that in order to become a successful entrepreneur, you must first gain experience as an ‘intrapreneur’. Your thoughts…
Jill Johnson: Being a great intrapreneur, meaning working inside a company and developing entrepreneurial ventures or projects within that company, can be beneficial. Still, it doesn’t always translate to being a great entrepreneur. When you’re an intrapreneur, you also often have the resources of a big company behind you. When you start a business for yourself, you generally don’t have those resources. I have seen many people who were knocking the ball out of the park at a large corporation, and when they left to start their own business, they were like a fish out of water, not having all of the corporate resources behind them. When you don’t have the backing of a big company, you have to be extremely resourceful. Being a successful entrepreneur is all about grit and determination combined with having a product or service for which people are willing to pay. And, it would help if you had enough of those people who want it and will pay for it so that you can actually build a company and make money. These are a few of the key ingredients to being successful as an entrepreneur. Of course, there’s a little luck in terms of being in the right place at the right time. True entrepreneurs make sure they get themselves into the right places. As an entrepreneur, you need to be in a constant state of readiness and in a constant state of sniffing out opportunity where every opportunity might exist. In many cases, it makes opportunity out situations where none might exist for others.
NJ Urban News: Will M/WBE’s rebound from the devastation of COVID-19? How is IFEL helping to ensure they will recover?
Many MWBEs will rebound because they have been accustomed to struggling and haven’t given up. The struggles they are having now are not foreign to most MWBEs. Being able to weather this storm will largely depend on how much runway a business owner can create to keep the business afloat until the environment is back to normal. This takes a lot of creativity and resourcefulness, especially for those who cannot secure additional funding. Given that most of our audience has limited financial capacity, IFEL focused on creating opportunities for business owners to access expertise and relationships that can propel their business to the next level without having to make a financial investment or incur the expense. We have activated over 150 business professionals who are willing to volunteer some of their time to help the struggling small business owners overcome their most pressing business challenges. Through this work, we are doing what we can to put the businesses in a better position for accessing capital in the future. We see our primary responsibility as helping struggling business owners to create more runway for themselves. Our work is providing the life support that businesses need to keep breathing, so they have an opportunity to continue to live.
New Jersey Urban News: Lastly, discuss the upcoming Women of Color event next week. What message do you want to send to participants of the virtual summit?
Jill Johnson: The Women of Color Connecting Summit (WOCCON 2021) is an event that brings together women of color entrepreneurs who want to build wealth from their businesses with the allies champions and investors who want to support them and, more importantly, who can open doors for them. We invite anyone who self-identifies as one of these categories to join us March 11-25, 2021, as we embark on a journey to create $1 billion in new wealth through women of color entrepreneurs’ success. The Summit is an opportunity to listen and learn, engage in authentic conversations, and decide how we will take collective action toward our vision. Within our respective lives, we can be the change that we want to see in the world. If enough of us act together with intention, we can create an inclusive entrepreneurial ecosystem in which women of color entrepreneurs have the opportunity to thrive. Visit www.woccon.org/woccon2021 for more information and to register. Institute for Entrepreneurial Leadership 550 Broad Street, 15th floor, Newark, NJ 07102 | www.weareifel.org | @weareifel | 973.353.0611