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Tuesday, February 27, 2024

Back to the basics of business

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“Beneath education, beneath politics, even beneath religion itself, there must be for my race, as for all races, an economic foundation.” — Booker T. Washington


Booker T. Washington, a colleague of Madam C.J. Walker, continually emphasized the importance of African-American wealth creation. In Washington’s view, African-Americans neglected the creation of economic enterprises and business at their own peril. In The Miseducation of the Negro, Carter G. Woodson strikes a similar chord. He argues that Black students who pursued college degrees without regard to the needs of their community reflected a miseducation divorced from the reality that African-Americans lived daily. 

Walker embodied the business principles that both of these men talked about. She amassed a personal fortune and created prosperity and opportunity for others in Indianapolis and elsewhere by meeting a basic need within the African-American community that was neglected by the larger society. This is the essence of Black business and all business. Today, African-American businesses are needed as much as, if not more than, ever before. Time spent in local and other Black communities will show a wide range of residents’ needs neglected by other businesses.

In Indianapolis, there are more than 250,000 African-Americans. Although dispersed throughout the city, most live in predominantly African-American neighborhoods. Many of these communities lack grocery stores providing fresh fruits and vegetables, community-based banks or credit unions, or even dry cleaners. This void exists despite the need shared by residents for the services and goods these businesses would provide. Moreover, our communities need the jobs and opportunities these establishments provide. Although this would seem to be a match made in heaven, few Black entrepreneurs sign up to build businesses in these communities.

There are many practical reasons for this, such as limited access to credit and capital. Competition from establishments in predominantly white areas to which Black residents are content to bus, drive and share a ride is another reason. African-Americans have less wealth than any other racial group, and wealth is the basis of the capital necessary for business ventures. In a similar way, African-Americans also have the lowest rate of business loans from the small business administration of any racial group. Without the necessary financing, brick and mortar businesses are very difficult to start. Competition from regional and national chains also plays a major role in deterring entrepreneurs. Why risk your savings to open a business or go in debt to finance an organization that you do not feel confident your neighbors and fellow residents will patronize?

These are important factors that cannot be ignored. However, while they definitely deter some entrepreneurs from opening businesses, the dearth of Black businesses in this city reflect a deeper phenomenon, as well. African-Americans today have not prioritized business development as a community norm. To be clear, this is not a sign of a deficiency or pathology, but the consequence of urban renewal and highway construction that interrupted a much stronger tradition of business ownership. In Indianapolis, the construction of IUPUI and the interstate hastened the end of Indiana Avenue as a longtime hub of Black business in the city. Additionally, the passage of the 1964 Civil Rights Act and the subsequent creation of the Equal Employment Opportunity Commission reflected expanding employment opportunities across the city and country that attracted young and talented African-Americans who may have otherwise started their own businesses.

With some exceptions, since that time, African-American business in the city has suffered. Many more job opportunities have been made available in businesses owned by whites and others, though, so some may ask why it matters. What difference do Black-owned businesses make?  While you cannot miss what you have never had, our communities miss the mentoring that Black business owners provided to the young people who worked for them. Our neighborhoods suffer from the lack of financial investment that Black businesses provided in past generations. Our youth lack the opportunities to work for a neighbor or family friend and the sense of pride it provides. Our families go without the wealth that business ownership can provide and the skills that children develop working with one or more parents in a family enterprise. In short, we need entrepreneurs who will take the risk of business for the personal and communal benefits that it will impart. More importantly, in Indianapolis, we need to recognize that this is not something special or extra — it is just getting back to the basics of business.


Carlton Waterhouse is a professor of law and Dean’s Fellow at the Indiana University Robert H. McKinney School of Law.

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