Black in Business
The inability of Black-owned businesses to thrive in this region has hurt our economy deeply, and now COVID-19 threatens to wipe many out.
In June, the National Bureau of Economic Research came out with its first report on COVID-19’s effect on small businesses and, as was to be expected, the news wasn’t good. From February through April, the number of active business owners in the United States dropped by 3.3 million, or 22% — the largest drop ever recorded by the bureau, in operation since 1920.
But while the shuttering of nearly a quarter of U.S. businesses is hard to comprehend, the reality is far worse for minority-owned businesses. Asian-owned businesses fell by 26% after just the first full month of the pandemic and Latino-owned businesses fell by 32%.
But the hardest hit by far was Black-owned businesses, which dropped by 41%. In February of this year, there were 1.1 million Black-owned businesses operating in the U.S. By April that number had plummeted to 640,000.
Part of the reason for the drop is that the proportion of Black businesses in what are termed as “essential” industries is lower than the overall national percentage of businesses that fall into this category — 66% vs. 76% — which put them in a less favorable position during COVID-19. According to the U.S. Census 2012 Survey of Business Owners, four in 10 Black-owned businesses are in the service industries, including healthcare, social assistance, repair and maintenance, administrative support, waste management, and personal and laundry services.
Black-owned businesses also tend to be smaller. In 2012, 95% had no paid employees. As such, it’s not surprising that they also tend to have lower revenues. Nationally, 67.3% of firms without employees reported annual sales of less than $25,000, while 57.9 % of businesses with paid employees reported annual sales of more than $249,999.
But these are all national statistics. What about the Greater New Orleans area?
In 2012, the Data Center came out with a report on inclusive entrepreneurship that highlighted a staggering statistic for metro New Orleans: While minorities made up 47% of the area’s total population (and climbing), they owned only 36% of the businesses and those businesses received a pitiful 2% of the total sales receipts.
“When it came out, that statistic really created a jolt,” said Lynnette White-Colin, vice president of small business ecosystem development at the New Orleans Business Alliance. “It became a real rallying cry for people to take action.”
In 2018, the U.S. Census American Community Survey reported a different demographic makeup for New Orleans, placing the Black population at 59.74% of the city’s total population.
“The power of entrepreneurship is its ability to create wealth for families and communities,” explained Klassi Duncan, vice president of the Urban League of Louisiana’s Center for Entrepreneurship and Innovation. “Our [Black-owned] businesses have the ability to create jobs and strengthen our economy. As such, it is in all of our best interest to support them in whatever way we can.”
According to a 2016 profile of the city, Black New Orleanians tend to be poorer not just than their white counterparts, but the Black population nationally. The profile was developed by the Racial Wealth Divide Initiative at CFED — the nonprofit now known as Prosperity Now — as the first step under the Building High Impact Nonprofits of Color Project, funded by JPMorgan Chase. Among the findings were that the city’s Black unemployment numbers were 2.1% higher than the national average, and while the average income of New Orleans whites was $5,377 higher than the annual national average, Black workers made $10,194 less.
Unsurprisingly, the poverty level of the Black population in New Orleans was 6.1% higher than national averages and 71% lacked the savings to live above the poverty level for three months if they faced the loss of a job, a medical crisis or any other significant income disruption. The same situation was true for only 29% of white residents.
The reality is that minority-owned businesses tend to hire minorities, which, White-Colin says, is critical in New Orleans.
“Fifty-two percent of our Black men in this city are unemployed,” she said. Pre-COVID-19, the unemployment level in New Orleans for white residents was 5%, for Black residents it was 15%.
As we find ourselves in the middle of not only a global pandemic, but within earshot of a new rallying cry for equity, some who have dedicated their livelihoods to helping minority businesses reach the success of their white counterparts say now is the perfect time for change. More than just about doing what’s “right,” it’s an economic necessity. Providing Black-owned businesses with what they need to thrive would logically result in increases to the city’s income tax base and homeownership levels, while lowering poverty, crime and unemployment numbers.
In speaking with multiple businesses and area organizations, the same three topics dominated the conversation. Change, they say, lies in improving three areas: equal access to private and public opportunities, equal access to capital, and having the support and guidance needed to help existing businesses first, survive the current pandemic, and then go on to thrive.
Part 1 | CONTACTS
A business owner for 30 years, Michelle Gobert’s most lucrative contract to-date was creating signage at the airport’s new North Terminal last year.
Making the Connections
The private sector holds the key to creating the most significant change
After 30 years in business, Michelle Gobert, owner of Image 360 graphics and signage, said, in a way, this year is no different from the rest.
“I’ve been in survival mode since day one,” she says. “I started this business right out of college, making 200 calls a week to get customers, and we’re still doing that.”
A franchised business owner, Gobert owns Image 360 (previously known as Signs Now Center) on Poydras Street and its sister business, Signs Now, in Slidell. Together, the shops employ 15 people, including Gobert’s daughter, Christian.
After graduating from Xavier University, Gobert’s plans were to become a CPA. It was her new husband, a systems engineer whom she met while interning at IBM, who had the dream of becoming a business owner — he just wasn’t sure what kind.
Inspiration struck, said Gobert, in an unexpected place — during the XXIV Super Bowl at the Louisiana Superdome on Jan. 28, 1990. While everyone else was focused on the battle between the San Francisco 49ers and the Denver Broncos, Gobert’s eyes were elsewhere.
“I was noticing all the signage, all the different kinds, and the graphics,” she says. “That experience changed the way I looked at signs, and I thought, I can do this.”
Eight years later, she returned to the Super Bowl in San Diego, this time to provide the signage she’d once admired.
“Our contract was for 800 signs,” she said. “We made a majority of them in advance and then we moved our operations on site for one week so we could provide last-minute signs as needed.”
For the next 16 years, Gobert’s relationship with the NFL continued. Her last Super Bowl was Super Bowl 50 (2016).
When the Super Bowl returned to New Orleans in 2013, she said she was shocked to learn what the Harahan-based company chosen for the signage was paid. “They got more business off that one Super Bowl than we got from the NFL in 14 years.”
Gobert still does some work for the NFL, and has also had partnerships with the NBA and NHL, but her most lucrative client to-date is much closer to home — the Louis Armstrong New Orleans International Airport. Image 360 was selected as the prime contractor for the signage in the short-term parking lot at the new North Terminal and as a subcontractor for the signage inside the terminal.
Gobert said the airport contract resulted from her own raw determination — for three years she attended every outreach meeting the airport hosted — as well as the airport’s decision to break the work into smaller parts and permit DBEs (disadvantaged business enterprise) to act as primes.
“Solomon Group was selected as the prime for the internal signage, and fortunately that job had a DBE component and they selected us,” she said. “Those jobs made 2019 a really nice year.”
While being a DBE can have its advantages in some cases, Gobert says it’s been frustrating to watch non-minority businesses chosen over and over for the larger contracts.
“There’s three businesses that I can think of that used to buy from us, and now they do five, six, even 10 times the volume we do.”
Still Gobert says the timing of the airport jobs could not have been better, as they have helped the company survive the current pandemic, along with the fact Image 360 falls under the category of an essential business. She has since pivoted to creating COVID-19 related signage and acrylic shields for organizations like her alma mater, Xavier University, locally owned Liberty Bank, and many restaurants.
“We’re at probably half of our normal sales, but we’re fortunate in that we haven’t had to cut staff,” she said. “Still, our PPP is long gone, and the fact is we don’t have any contracts lined up for the future. Every day I wake up starting from ground zero, wondering, ‘What are we going to do next?’”
Currently, Gobert’s biggest hope lies in securing a contract with Ochsner.
“We don’t know what it would look like yet,” she says. “We were contacted by Thrive New Orleans to fill out a capability statement, and now we’re just waiting to hear. If we could get in with Ochsner or LCMC, that would be huge. We could afford to hire more people, including a creative director, and pay higher wages.”
The New Orleans Business Alliance (NOLABA) is also working to make more connections between businesses and corporations. As part of the organization’s InvestNOLA initiative, the organization launched a Procurement Council last June — a group of approximately 20 public and private institutions who meet monthly in an effort to be more intentional about their spending. The council then posts opportunities on NOLABA’s website.
“We are lining up the pipeline to match the opportunities and help these institutions make personal connections to Black-owned businesses,” says White-Colin. “Last year the council and other partners awarded more than 18 contracts totaling about $8.5 million and created 53 jobs that paid above a living wage.”
White-Colin said the public sector contracts have been good as far as equitability, but they aren’t enough to close the huge gap between businesses of color and their white counterparts.
“The public sector represents about $1 billion in projects on an annual basis,” she says. “While the private sector could do 50 times that much.”
Chuck Morse, executive director of Thrive New Orleans, a nonprofit focused on providing affordable housing and job and business training, agrees that the biggest opportunity for change lies within the private sector.
“The problem is that minority businesses have been largely unable to secure the big contracts with our anchor institutions,” he says. “People tend to do business with people they know, with those they’ve always worked with. But if you’re going to move the needle, this is where the needle has to move.”
In 2014, Morse created Launch NOLA, an effort to help underserved urban entrepreneurs with revenues of up to $150,000 to grow their businesses.
“It’s all about creating those connections. When a business owner comes to me, one of the first questions I ask is, ‘Who would you like to meet? Who in this city do you think is untouchable? Right now, with minority businesses it’s like standing on a well fishing for minnows, but if we were to open the gates and allow these businesses to have an equal shot, well, it would be a game changer for this city.”
By the Numbers
41% | Of Black-owned businesses nationally shuttered after the first month of COVID-19 — almost twice the rate of businesses as a whole, which fell by 22%, the largest drop ever recorded
95% | Of Black-owned businesses have no paid employees
59.74% | Of New Orleans’ population is Black
2% | Of New Orleans sales receipts go to Black-owned businesses, even th
ough they make up 36% of the city’s businesses
71% | Of New Orleans’ Black population lack the savings to live for three months if hit with an unexpected financial disruption. The same is true for 29% of white residents.
Part 2 | CAPITAL
“I’ve been told ‘no’ so much that I’ve come to expect it,” says Otis Tucker, owner of T.I. Contracting, of his struggles with securing loans. Boasting an 820% growth rate, Tucker’s company was just ranked one of the fastest-growing private companies in America.
Black Does Not Equal Risk
Financial support is hard to come by for Black-owned businesses — even multi-million-dollar success stories.
Raised by a single mother in the Lower 9th Ward, Otis Tucker, owner of T.I. Contracting (formerly Trucking Innovation, LLC), graduated high school and, unable to afford college, found himself in search of a future.
“I went on the old search engine Ask Jeeves and typed in ‘good paying jobs with no college degree’ and truck driving popped up,” he says. “It said you could make $50,000 to $120,000 a year. My mom made $25,000 a year and had to support four kids, so I thought if I could do this, I could make something of myself.”
Tucker earned his commercial driver’s license and began driving around the country. When Hurricane Katrina hit, he came home to his family and began driving locally.
“I would get to the No. 2 or No. 3 spot in an established company, but I could never get any higher,” he says. “I knew at that point I needed to strike out on my own.”
In 2013, using money he’d managed to save over the years, along with a personal bank loan, Tucker purchased his own truck and Trucking Innovation was born. He continued as a one-man operation until 2016, when he was able to secure his first government contract with the Sewerage and Water Board of New Orleans.
“I used kind of the Uber model and hired about 10 to 15 guys to use their own trucks to fill the purchase orders,” he says. “That gave me the ability to bid more contracts and bring on more drivers. Eventually, I bought more trucks. Last year I 1099’d over 70 people and brought in $3.5 million. I now have 20 employees and 14 trucks.”
T.I. Contracting was just ranked in the 2020 Inc. 5000 list of fastest-growing private companies in America. The company’s 830% growth rate gave them an overall rank of 572. But despite his success, Tucker says securing financial support has been a continuous struggle.
“I’ve been told ‘no’ so much that I come to expect it,” he says.
Tucker’s experience is far too common. According to the latest data from the Federal Reserve, Black-owned businesses are far less likely to be approved for bank loans than their white counterparts — only 46.5% receive approval compared to 75.3%. They also receive less than 1% of the venture capital, and for Black women that number drops to 0.2%.
In order to help minority startups get off the ground, local nonprofit Fund 17 began awarding them micro loans in 2012, but has since moved to a crowd-funded approach, in partnership with online lending platform Kiva, that facilitates 0% interest business loans of up to $15,000. The effort is part of a program Fund 17 calls Capital Ready, which also offers one-on-one help with personal and business finances and assists businesses with applying for other capital.
“We started the partnership with Kiva in 2016 and have since helped nine entrepreneurs raise over $41,000,” said Fund 17 Executive Director Antonio Alonzo. “Our goal is to expand the capacity of the program during COVID-19.”
For more established businesses like Tucker’s that are looking to grow further, NOLABA’s InvestNOLA initiative includes a partnership with JPMorgan Chase’s $150 million Small Business Forward Program geared toward helping businesses with minimum annual revenues of $1 million. Along with three local, Black-led community development finance institutions, which match private funds with federal funds, NOLABA is building a $10 million fund for entrepreneurs of color.
“The capital is patient,” says White-Colin. “The businesses get what they need, and our innovative repayment structure is based on benchmarks in growth planning.”
JPMorgan Chase has invested $1 million in New Orleans through InvestNOLA in the past two years as one of four pilot cities it chose for its national Ascend program, the goal of which is to build wealth in communities of color.
“New Orleans is one of the cities where we see the greatest opportunity,” said Greg Hassell, executive director of JPMorgan Chase.
When Gobert went looking for funding for Image360, she turned to Liberty Bank, the largest of 21 Black-owned banks in the nation, the only one in Louisiana and one of 150 minority depository institutions (MDIs) in the country.
“With MDIs, about 80% of loans are to people of color, while with the majority of banks that number is in the low single digits,” said Todd McDonald, senior vice president at Liberty Bank. As a business, MDIs also rely on outside support. Liberty Bank depends on support from corporations, foundations, individuals and even other banks. Among the bank’s supporters are IBERIABANK, First Bank & Trust, Hancock Whitney, Fidelity, and Chase. The more financial support a bank receives, the more they can turn around and offer support to their community, and on that end, McDonald says things have been looking up.
“Most MDIs have trouble raising capital,” he says, “but the amount of calls we’ve been receiving now from potential investors is night and day compared to pre-COVID-19 and pre-George Floyd times. This is actually the most attention I’ve seen in my 17 years with the bank and that’s really exciting.”
Other Organizations Assisting Local Minority Businesses
Camelback Ventures | Supports innovative, diverse leaders ready to take their social impact venture to the next level through a rigorous, six-month fellowship program.
Good Work Network | Since its founding in 2001, the organization has worked with women and minority small business owners in New Orleans through various programs that assist with making contacts, finding contracts and securing capital.
New Orleans Regional Black Chamber of Commerce | Awarded 2019 Chamber of the Year by the United States Black Chambers, Inc., NORB supports, promotes and educates member for sustainable growth and seeks to empower and sustain Black businesses and entrepreneurs in the Greater New Orleans region.
Propeller | Dedicated to growing and supporting entrepreneurs in tackling social and environmental disparities, Propeller has a strong focus on equity and supports businesses through its Impact Accelerator program and 10,000-square-foot incubator building.
Southern Region Minority Supplier Development Council | Since its founding in 1973, has assisted major corporations with developing and enhancing their small business utilization programs with an emphasis on MBEs. Also helping businesses pivot into new sectors. Boasts “largest database of ethnic minority businesses in the Gulf South.”
Part 3 | SUPPORT
The third and fourth generations of the Chase family are fighting to secure the future of Dooky Chase’s Restaurant.
Fighting for Survival
COVID-19 is threatening the future of even the city’s most iconic institutions.
Dooky Chase’s Restaurant is more than just a place to get a good meal. From its humble beginnings as a Treme sandwich shop in 1941, it has grown to a kind of second home for thousands of New Orleanians, a place where families have turned to celebrate the biggest events in their lives. Throughout almost eight decades, the restaurant has also been the regular meeting place for a wide array of organizations. It served as a safe space for civil rights freedom fighters and social activists of all races to meet and strategize and has even entertained sitting presidents. The restaurant’s famed proprietor, Leah Chase, grew to notoriety as the “Queen of Creole”— the nation’s preeminent Creole chef. When she passed away on June 1, 2019, at the age of 96, the loss was felt throughout the city and in the culinary community worldwide.
Since her death, other members of the family have stepped in.
Her daughter, Stella Chase Reese, now serves as president of the family business, with her brother, Edgar “Dooky” Chase III as vice president. They are joined by two members of the family’s fifth generation: Tracie Haydel Griffin, whose mother was Leah’s late daughter Emily, now manages front of house operations, while Edgar “Dooky” Chase IV, or “Dook,” serves as the restaurant’s chef. Together with the help of other family members, they are determined to guide the iconic establishment during a time that continues to challenge all restaurants in unprecedented ways.
Like many other establishments, Dooky Chase’s takeout menu fills the void left by less crowded dining rooms. For Reese, the move brings back memories.
“All throughout my high school years, and maybe into college, I would work the takeout register on Friday nights,” she said. “Friday nights were when people would cash their checks, sometimes with us, and they’d have money in their pockets and were looking for a good meal.”
Reese says takeout saw Dooky Chase’s through the 1950s and ’60s until tourists started to find it. It was again the savior when the restaurant was finally able to reopen two years after Hurricane Katrina.
Due to the size of the restaurant, it has been able to still serve some private events safely — with temperature checks and contact tracing — led by Griffin’s guidance as a trained nurse with a background in public health. Its famed buffet, however, remains closed, as does the second restaurant opened in New Orleans’ new airport terminal, Leah’s Kitchen, which closed March 12. The family has still managed to donate over 4,500 family meals to the community. It’s what they say Leah would have wanted.
In mid-August, Dooky Chase’s closed for two weeks to undergo repairs and technological upgrades Reese says are necessary to provide guests with the safest, most enjoyable experience upon their return, but Chase notes that this time recovery will be much different from Katrina.
“The whole country, the whole world is going through this, so there’s nobody coming to help us,” he said. “Plus, the tourists are few, which means we’re all pulling from the same community.”
Reese adds that while the restaurant operated for years as a very informal bank for its customers, even providing the occasional loan, that is no longer the case.
“Now we’re the ones looking to borrow,” she said. “We’ve got the whole family in on looking for every grant, every opportunity we can find.”
The calls for help from the business community are plentiful right now as “pivot” has become the word of the hour. For the Urban League’s Center of Entrepreneurship and Innovation, that’s meant transitioning all services to an online format and working to handle an influx of businesses reaching out from across Louisiana.
“Our first few calls offering help with PPP funding were attended by over 1,000 people from all across the state,” said Duncan. “And for those businesses without employees, we’ve been able to assist them with applying for EIDLs (economic injury disaster loans) and SBA express loans.”
Duncan says business advisors are also working with owners to develop pivot plans and to look at contracting opportunities both locally and nationwide.
“Many state and local contracts haven’t stopped,” she said. “We’re helping small businesses to work together to bid on larger projects. We can build capacity through partnerships.”
Of the 13 businesses that have taken part in NOLABA’s InvestNOLA initiative, White-Colin says 10 together have experienced over $4 million in losses from March until the end of June.
“If this goes on for another 12 to 18 months, they’ll need $20 million to survive.”
Fortunately, organizations like Thrive New Orleans, Fund 17, Urban League and NOLABA are only a few of those working to help minority business owners, along with CDFIs like Hope Credit Union and MDIs like Fidelity Bank.
“The difference between this and Katrina is that people are not displaced,” says Duncan. “And over the years we’ve developed a strong ecosystem of support with so many access points. That’s something we can be proud of.”
Still, as even the most iconic institutions fight for survival, it’s a scary time.
“My biggest fear is that we’re going to lose all the progress that’s been made,” said White-Colin. “We’re going to lose these businesses that are such an integral part of our economy and our society. It’s horrifying, honestly. It keeps me up at night, but it also keeps me motivated.”