A conversation with Tosh Ernest, head of Wealth, Advancing Black Pathways at JPMorgan Chase & Co.
Tosh Ernest (Photo by JPMorgan Chase)
Q: Last year, between February and April alone, the U.S. lost 440,000 Black-owned businesses. What made these firms so vulnerable?
A: The unfortunate reality is that far too many Black-owned businesses entered this crisis under-capitalized and under-resourced to begin with. Through our own research, we know that businesses in predominantly Black and Latinx communities have significantly lower cash liquidity than businesses in predominantly White communities. In fact, roughly six months before the COVID-19 crisis began, we found that in the majority of Black communities, most small businesses had fewer than 21 cash buffer days. This has been a major problem for Black-owned businesses in this country for decades and the pandemic has shown just how vulnerable the businesses in our community really are. We’ve lost hundreds of thousands of Black-owned businesses since the beginning of this crisis, and there is still no end in sight to the pandemic. We’re focused on helping as many Black-owned businesses as we can survive this pandemic through our Advancing Black Entrepreneurs initiative.
Q: What is the best single piece of advice you can offer Black small business owners to help them prepare for future downturns and emergencies?
A: It’s critical to always have a contingency plan and a playbook for a worst-case scenario. None of us are clairvoyant or foresaw a black swan event like the COVID-19 pandemic coming. But this crisis has revealed that preparation is vital. Beyond taking steps to ensure that a business is prepared to withstand a severe economic downturn, preparedness also means doing what it takes to be financially healthy as an individual. The road to financial health includes revisiting our spending priorities, saving money into emergency funds, and even mapping out expenses in a budget. It’s important that we know what’s coming in and going out every month, spend below our means, and also save money to build wealth over time. These are the first actions we can take that will put us on a path toward financial wellness and position ourselves to be resilient during future crises.
For business owners, this crisis is also showing just how important it is to have strong operational discipline around areas like managing cash flow, bookkeeping, maintaining a strong digital presence online, and perhaps most importantly—contingency planning. We launched Advancing Black Entrepreneurs by Chase for Business earlier this year to help Black small businesses owners in each of these areas.
(Photo by Getty-Images)
Q: Why is access to capital such a problem for Black entrepreneurs in America, and how can they bolster their bankability?
A: There’s a well-documented history in this country, unfortunately, of Black entrepreneurs facing significant barriers to accessing capital from banks – barriers that prevent Black business owners from growing and scaling their businesses. We’re trying to break down these barriers with our $30 billion Path Forward commitment, which is focused on building diversity and inclusion into how we do business – with a key focus on serving Black business owners. Over the next five years, we will promote and expand affordable housing and homeownership for Black people, grow Black-owned businesses, improve financial health, and spend more with Black suppliers.
One thing that Black entrepreneurs can do is connect with a banker at their local Chase branch. Banking is about relationships. If we are to close the racial wealth divide in a meaningful way, we’ve got to forge a stronger connection between our bankers and the communities we’re trying to serve. So we encourage Black business owners to meet with a banker and begin cultivating that relationship. We’re actively looking to hear directly from Black entrepreneurs on their biggest pain points. The two questions that we’re asking Black entrepreneurs today are, “What are your greatest barriers to financial success?” and “How can we help you overcome them?” The more we know about where they are struggling, the easier it will be for us to help them improve.
Q: What resources are available for Black business owners to use to help navigate financial crises?
A: Chase recently launched Advancing Black Entrepreneurs to help Black small business owners navigate the economic slowdown brought on by the COVID-19 pandemic. We’ve developed a curriculum to help Black entrepreneurs quickly pivot their business models and rethink how to serve customers, manage vendors and connect to their communities. To help us connect with Black entrepreneurs on a national scale, we partnered with four organizations that represent more than 350,000 businesses across the country to deliver the curriculum: the National Minority Supplier Development Council, National Urban League, US Black Chambers and Black Enterprise.
They’re teaching a variety of timely topics, including how to manage cash flows, maintain vendor relationships, cut costs, keep customers and more. Visit www.jpmorganchase.com/abe to learn more.
Sponsored content from JPMorgan Chase & Co.