Beyond 5: Supporting Scalable Enterprises
According to the 2012 Survey of Business Owners, minority-owned businesses collectively employed nearly 7.1 million people and generated $1.4 trillion in annual revenues. Despite this number, over 90% of them are non-employer firms and 85% of firms generate under $100,000 in annual receipts. It is a known fact that the potential for new majority firms is stifled by a lack of access to capital, technical assistance, and services needed grow and scale. In order for a founder to reach profitability and achieve scale, founders need contextual technical assistance to help them become better operators and guidance on what tools they should adopt to scale with confidence.
Problem
While many entrepreneurs of color aspire to grow beyond sole proprietorship, many barriers exist. As many new majority entrepreneurs are concentrated in urban environments, they struggle to navigate increasing real estate prices, input costs and changing demographics. The wealth and opportunity gap keep many firms in a depressed state of growth leading to increased risk of failure. Without a targeted effort to help new majority firms transition from high potential to high growth, we risk creating asymmetrical business conditions that advantage non-minority firms who are often better capitalized and more likely to be backed sources of growth capital.
Opportunity
- Urban areas are increasingly becoming a source of mid to high affluent customers with an increasing affinity for purchasing products and services online.
- Urban areas are also experiencing increased density creating new opportunities for emerging entrepreneurs to engage new market opportunities.
- Technology is enabling businesses of all types to acquire customers more efficiently thus leveling the playing field between small businesses and their larger and better capitalized peers.
Solution
The SBA states that the majority of businesses fail with in the first five years — up to 80%. More specifically, data shows that only 30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10. Our goal is to help promote and support New Majority businesses exceed the national average of failure and focus on the success and resiliency of entrepreneurs of color.
For investors and business advisors, the key benchmark for a startup is making it beyond the fifth year of operation. Getting to the fifth year means that the business has made it through the “valley of death” and has a greater likelihood of becoming a sustainable enterprise. Its rooted in the notion that execution risk is highest at the early stage as founders struggle to validate their market and replicate the way they deliver their product or service to incrementally reduce the costs of operation.
Beyond 5 is a national campaign to promote and support New Majority businesses to increase the likelihood of business success beyond the typical failure rate of 5 years.
At 1863 Ventures we have identified at least 150 New Majority entrepreneurs in the DMV area who have survived the 5-year mark and continue to scale. Starting February 1st,we will launch a national campaign to highlight and initiate a “call for” new majority entrepreneurs who have made it Beyond 5. The content will include online profiles, select case studies and a research paper of key inputs and strategies to replicate this success. We will also host workshops at relevant venues to promote the stories and strategies to increase the number of entrepreneurs achieving success beyond 5 years. Our goals are to promote the role of contextual technical assistance, identify catalytic capital to help founders reach critical milestones (not all products are the same), and prepare new majority entrepreneurs for scale through technical assistance that helps reduce the odds of execution risk.
We will also host a multi-city, in-person and virtual workshopseries that provides technical assistance and strategic support to high potential startups founded by New Majority entrepreneurs. The program blends online learning with virtual coaching to help participants set a foundation for their business and set a roadmap to scale. The program seeks to help systematize key areas of the business to improve operational efficiency, reduce the cost of business and catalyze growth.
Expected Outcomes
· We seek to change the negative narrative about the potential and capacity of New Majority entrepreneurs. Through case studies, profiles and research we seek to highlight the key tenets that drive success beyond 5 years for founders of color and demonstrate a robust pipeline of talent and investable businesses.
· Our workshops will provide contextual technical assistance to entrepreneurs of color for the sole purpose of helping them scale their businesses and minimize their failure rate. We believe this work will be critical in creating economic security for our entrepreneurs, employment for their peers and stakeholders, and wealth for their communities.
Get Involved
We look forward to promoting the voices of new majority entrepreneurs who have built sustainable enterprises and have survived beyond 5 years. If you are a new majority entrepreneur who has been running a business beyond 5 years, we want to hear from you. Please share your story with us so we can promote you and your business as part of our national social media campaign.
If you are interested in participating in any of our programs, workshop series or receiving additional support for your business then contact us and we will be in touch.
We invite you to follow us on social media as well as share our posts to help change the narrative about entrepreneurs of color.
- Twitter: @1863ventures
- IG: 1863ventures
- FB: https://www.facebook.com/1863ventures
