Black-owned small businesses are at the forefront of innovation. They’re embracing technology, trailblazing in their families and communities with entrepreneurship, and powering employment across the country — but not without barriers. 

QuickBooks data from last year and this year’s Intuit QuickBooks Black History Month Survey shows that the financial success of Black small businesses is often threatened by harmful biases, stereotypes, and racial disparities. And while Black business health is strong for many, a sizable portion is still struggling. 

Part of championing Black entrepreneurship means understanding their specific pain points. As an advisor, it’s important to understand their vulnerabilities and the unique challenges Black entrepreneurs face to provide more holistic support.

In honor of Black History Month, Intuit QuickBooks commissioned a survey of 2,069 Black business owners with 0-100 employees* to investigate how these innovative entrepreneurs are navigating their finances and the small business landscape amid these uncertain economic times.

The Intuit QuickBooks Black History Month survey uncovered five insights about Black small business ownership that accounting professionals can use to better advise their small business clients. 

1. Black business owners are dipping into personal funds
2. Despite the pressure of inflation, Black businesses still aren’t charging their worth
3. Credit card spending is up — but not for business growth
4. Financial literacy powers financial security for Black-owned businesses
5. Black-owned businesses leverage the power of AI

1. Black business owners are dipping into personal funds

Only 4 in 10 Black-owned small businesses report good financial health—which means many are still struggling with financial issues like cash flow and profitability. But the data reveals that Black business owners will do what it takes to keep their business moving forward — even if that means dipping into personal savings at the expense of fulfilling their financial dreams.

Most Black small business owners (85%) say they’ve used personal funds to cover business expenses at least once over the last 12 months. On average, Black small business owners have dipped into their personal accounts 10 times in the last year to help their business.

And it’s not without sacrifice. For many, drawing from personal funds means postponing their financial dreams, like launching new projects or buying a home. More than half (51%) said using their own money to help their business has delayed building personal wealth. Roughly a third delayed their plans to start another business (36%) or buy a home (31%).

2. Despite the pressure of inflation, Black businesses still aren’t charging their worth

Small businesses are especially susceptible to the strain of inflationary pressure, and data from this year’s Black History Month survey shows a significant impact on Black-owned businesses. Inflation tops the list of challenges for Black small business owners, with 30% saying it’s their greatest challenge. This is double the number of respondents who said competition from larger businesses (16%) or attracting customers (15%) is the biggest hurdle.

What’s more, a significant number of Black-owned small businesses still aren’t charging what they’re worth. More than half (57%) believe they’re undercharging for their products and services — but they don’t plan to raise prices anytime soon. Nearly 3 in 10 Black small business owners say they’re not planning to increase their prices within the next year, or aren’t sure yet if they will, despite the pressure of inflation.

In fact, inflation is the very reason many Black-owned small businesses aren’t charging their worth. Of those businesses, nearly half (44%) say customer sensitivity to inflation is the primary reason they won’t be raising their prices — compared to only 32% of their non-Black peers.

3. Credit card spending is on the rise — but not for business growth

Data from the 2023 Intuit QuickBooks Small Business Index Annual Report found that one side effect of higher inflation and interest rates is an increased dependency on credit cards for small business owners — and Black business owners are no exception. More than 1 in 2 (57%) Black-owned small businesses report an increased use of business credit cards over the last year.

Of these businesses, nearly 7 in 10 (69%) say they won’t be able to pay off their credit card balance within the next month. On average, Black businesses estimate paying off their balance in no less than 3 months, accruing interest in the interim.

And while 3 in 10 Black business owners say they’re primarily using credit cards to invest in the future growth of their business, the majority (39%) say they’re turning to credit cards for emergency funding for immediate business costs — compared to 32% of their non-Black peers. A higher percentage of non-Black-owned small businesses (41%) report higher use of credit cards to help fund investments for future business growth. 

4. Financial literacy powers financial security for Black-owned businesses

Many small business owners confess they don’t have a tight grasp on financial literacy — after all, that’s not why they started their businesses. While 43% of non-Black business owners admit to not having good financial literacy skills before starting their business, this number jumps to 49% for Black small business owners.

But financial literacy plays a key role in understanding where to take risks and where to invest for better business success. Starting out with low confidence in financial literacy can put small businesses at a disadvantage. To bridge this gap, small business owners are increasingly employing accounting professionals in an advisory capacity. More than 3 in 5 accountants report that their clients have needed more support with financial management, filing taxes, and financial forecasting over the past two years. 

However, Black business owners aren’t opposed to taking matters into their own hands. Among Black small business owners who rated their financial literacy as high or very high before starting their business, most (49%) say self-led learning is to thank. 

For these business owners, financial literacy has a strong correlation to financial security and business innovation. High financial literacy can inform better financial decisions, which powers investments, funds new products and services, and improves business operations.

Across the board, 72% of Black entrepreneurs say business ownership has improved their financial security. But Black small business owners who were highly confident in their financial literacy before starting their business were more likely to say that business ownership has improved their financial security (83%) than those who were less confident (61%). Additionally, those who were more confident in their prior financial literacy skills were more likely (88%) to report creating a new business innovation in the last 12 months than those who were less confident (80%).

5. Black-owned businesses leverage the power of AI

Black-owned small businesses champion innovation by creating new intellectual property and adopting new technologies — including AI. Data shows small businesses are increasingly using AI technology to boost productivity and business efficiency. Accountants agree that AI technology will play a key role in the growth and expansion of their practices this year — allowing them to provide better value to clients, update workflows, and add new services. 

Black small business owners are leveraging the advances in AI to make their businesses more resourceful and responsive. More than 8 in 10 (84%) Black business owners say they’re using AI to help them manage their business — 39% say they’re using it to help generate ideas or spark inspiration, 36% are using it to help with customer support, and 35% are using it to help analyze data.

These trends in Black business ownership present a clear opportunity for accounting professionals to advise Black small business clients (and all small business clients) on making informed financing decisions, anticipating future expenses and developing profitable pricing structures, and planning digital strategies by leveraging the power of AI. 

Methodology

*Intuit QuickBooks Black History Month 2024 Survey Methodology 

Intuit QuickBooks commissioned an online survey completed in January 2024 by 2,069 Black small business owners and 3,440 non-Black small business owners (adults aged 18+) throughout the US. Eight in 10 (79%) Black business owners surveyed had 1-100 employees and 21% had no employees. Overall, 51% of Black respondents were male while 49% were female. Nearly 1 in 5 (18%) Black respondents were Gen Z, 54% were Millennial, 16% were Gen X, and 12% were Baby Boomers. Percentages have been rounded to the nearest decimal place so values shown in data report charts and graphics may not add up to 100%. Responses were collected using Pollfish audience pools and partner networks with double opt-ins, random device engagement sampling, and post-stratification based on census data to ensure accurate targeting and results. Respondents received remuneration.