Almost half of all U.S. employees work for small businesses, defined as companies with fewer than 500 employees, and a staggering 99 percent of all U.S. companies fall under the “small business” designation, according to the Small Business Association.
Entrepreneurship can be a stepping stone to wealth generation. In recent years, however, small business owners have faced many challenges, and that’s particularly true for those in majority Black, Hispanic and Latino communities. Fortunately, data is showing a strong trend toward improvement and normalization.
Many small businesses have more cash than they did before the pandemic, notably the smallest businesses with less than $100,000 in annual revenue. With more than two-thirds of small businesses expecting increased revenue and sales this year, they’re planning to put that money back into their workforce, to hire and retain employees by increasing wages and offering upskilling and training opportunities, according to JPMorgan Chase’s Business Leaders Outlook survey.
Black, Hispanic and Latino small business owners, in particular, say they’re optimistic about the year ahead, and the number of new businesses formed in cities like Baltimore is at an all-time high – in Baltimore, new business formation is up 46% over the last three years.
“Minority-owned businesses are fueling the U.S. economy – driving growth, innovation and job creation,” said Mikal Quarles, head of Chase Business Banking Racial Equity Strategies. “It’s important that we provide them with tools, resources and network capital to help them take their business to the next level and create and sustain wealth long-term.”
Citing access to capital as one of the top barriers for small businesses, banks play a critical role as catalyst in small business success. Over the last few years, JPMorgan Chase has doubled-down on its commitment to help minority-owned business succeed, including through its $30 billion Racial Equity Commitment that seeks to help close the racial wealth gap, such as through new mentorship programs, events, and expanded access to credit for business owners.
Small business owners have a plethora of resources and information available to help them at any stage of their business. Whether it’s looking for guidance on how to start or grow a small business, or access financial tools, here are some important steps to consider:
- Starting a business: Prospective owners can consider a few important foundational pieces, including writing a business plan, establishing a business bank account and applying for and filing the right permits and licenses. Also, prospective business owners should think through their business structure – will they be a sole proprietor, operate an LLC or choose another structure? Gathering funds and deciding where to do business are two more key steps to take before finally launching a company.
- Growing a business: As business owners continue to generate revenue, they can shift their focus to growing and scaling their business. Future financing plans could include applying for additional loans, grants or investor funding. Business banking accounts can be leveraged to help meet the goals of a business owner.
Forging ahead: If a business owner has a few years of success under their belt, they can discover new ways to optimize their business and streamline operations. That includes keeping cash flow healthy, continuing to build their customer base, and looking for digital tools to help simplify processes like invoicing and payments.
Small business owners can also access new tools designed to help lower the barrier to entry to accessing capital and the tools needed to set them up for success. Last year, JPMorgan Chase introduced a Special Purpose Credit Program to help expand credit access in majority Black, Hispanic and Latino communities for business owners who otherwise might not be approved or receive it on less favorable terms.
JPMorgan Chase also expanded its free one-on-one coaching program to 45 trained senior business consultants in 21 U.S. cities, including in Baltimore. where they’re providing mentoring and advice to Hispanic, Latino and Black business owners within the community on everything from boosting creditworthiness to managing cash flow to effective marketing.
“We’re changing the lens of how we define business success by integrating new practices and products that drive more equitable outcomes,” said Carolina Jannicelli, head of JPMorgan Chase’s Community Impact division, which facilitates the firm’s Racial Equity Commitment. “Our commitment is simply a starting point that is transforming our overall work as a company, driving business and more inclusive economic growth.”
For more tips to help you launch or grow your small business, check out chase.com/business/knowledge-center/start.