How do minority entrepreneurs succeed? There’s power in networks

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Erika Stowe finally opened her salon, Emages N Style Salon and Spa, in the fall of 2013 and now sees opportunities for even more growth as she continues bringing in more business. (Photo by Katie Kuntz/ The Gazette)

Two weeks before Christmas, holiday music wafts through Erika N. Stowe’s Cedar Rapids hair salon. Stowe and her client, Chelsea Watson, share laughs as Stowe finishes styling the curls atop Watson’s head.

Red and white stockings hang from mirrors throughout the salon, at 3411 Mount Vernon Road SE in Cedar Rapids. A mini Christmas tree is decorated with ornaments shaped like high-heeled shoes.

The atmosphere inside Emages N Styles Salon & Spa is important to Stowe who, after years of renting studio rooms, finally was able to open her own shop last August.

“This place is just like a great escape,” said Stowe, the salon’s owner and manager. “I feel like it’s so peaceful in here and that’s what I really wanted. I wanted a place where people can come and escape from the children, the business of the day, the job.

“They can just come and just relax here.”

Like so many prospective small business owners, Stowe’s first hurdle to opening her own storefront wasn’t financing or even finding a place to rent. It was figuring out where to start.

Experts agree that personal and professional networks can be critical resources for entrepreneurs launching a small business, but mentors can be hard to find for Iowa’s African-American entrepreneurs, who form a small minority of business owners across the state. In 2007, the most recent year data is available from, just a tiny fraction – 0.8 percent – of 259,931 small businesses across the state of Iowa were African-American owned firms.

“A lot of people have good ideas but there’s no one that you can actually go to,” said Betty McArtor, who owns Ebony Beauty Supply in Cedar Rapids. “Especially African-Americans, because in the past we’ve had so many problems getting loans and just starting a business because the money is just not there.”

THE POWER OF NETWORKING

Making a call to McArtor — “Miss Betty” – was one of Stowe’s first moves once she committed to joining the ranks of Iowa’s small business owners. McArtor told Stowe about the Small Business Administration, and the funding they had for businesses just starting out.

McArtor, who first opened Ebony Beauty Supply thirteen years ago, said aspiring young black entrepreneurs need somewhere they can go for initial inquiries and advice as they begin to formulate their ideas.

“I’m one of the lucky ones,” said McArtor, who is in her late 60’s. “My husband and I had both retired, so we used our retirement to start our business. So therefore we didn’t have to go to SBA (Small Business Administration) or the banks or anything and ask for money.”

San Wong, director of the Iowa Department of Human Rights, said that’s common among Iowa’s successful African-American entrepreneurs: “The ones who are most successful have some kind of personal assets to bring into the formula, as well as a kind of a network and a connection with the entrepreneurial community,” she said.

Even if a business person has a really good idea for a product or a service, if the network doesn’t exist, it’s very difficult to succeed, Wong said. Organizations in the Creative Corridor are beginning to take note of this need.

The Regional Economic Development Institute in Cedar Rapids, which focuses on representing African-American and underrepresented communities, offers regular networking events designed to give prospective employees a chance to hand out resumes.

The Cedar Rapids branch of the U.S. Small Business Administration is now actively reaching out to groups like RED-I to provide African-American entrepreneurs with greater access to capital and counseling resources for small business development.

Finally, the Kirkwood Small Business Development Center is helping aspiring entrepreneurs with business structure, financing options, business modeling and market research. The regional director also noted the importance of celebrating the successes of minority-owned businesses.

CONNECTIONS

At RED-I’s December networking event held at the African-American Museum in Cedar Rapids, attendees were encouraged to mingle and sit at tables with guests they didn’t already know.

Karl Cassell, RED-I’s executive director, said he wants to connect people looking for work with employers looking for minority candidates. He also wants people with business acumen to be able to share their wisdom with others.

“For the African-American business owners, we want to put other people in front of these individuals so people can see the human face of these organizations and they can have business come their way,” Cassell said.

The networking events are about connecting people and resources, Cassell said.

“People who are trying to start businesses, connecting them to SCORE (Service Corps of Retired Executives), SBA (Small Business Administration), making sure they know who are other people to talk to,” he said.

One of those important contacts is Dennis Larkin, branch manager of the Cedar Rapids division of the U.S. Small Business Administration. Larkin attended the December networking event and said he plans to go to more in the future.

Larkin, who has worked for the SBA for 26 years, said some borrower groups seem to have easier access to capital than others. Among those who have more difficulties getting capital are those who are socially and economically disadvantaged, he said.

“It just follows through that the problems they deal with follow through in things like starting a small business,” Larkin said. “The SBA is fully aware that we need to do as much as possible, probably more than we’ve been able to do, to provide assistance to African-Americans.”

African-American entrepreneurs also may face social pressure not to invest in the risky process of small business ownership, but to find a line of work that is more reliable, Wong said.

Wong noted that first-generation immigrants are often the exception to disenfranchised groups.

“Some of the characteristics that make somebody become an immigrant, to migrate, sort of that sense of adventure, they have those personal characteristics that helps them overcome (disadvantages),” she said. “Whereas African-Americans have been here for a longer time and a lot of times once we’ve been here for a while, family pressures, etc. form more security rather than entrepreneurial endeavors that at best don’t give you the same sense of security.”

“Populations and communities that are more disenfranchised, have higher rates of poverty … I think it’s accentuated in entrepreneurship because of what it takes to be successful entrepreneurially,” Wong said.

COLLABORATION

Aspiring African-American business owners can start by contacting SCORE of East Central Iowa and U.S. Small Business Development Centers, both of which provide counseling resources, Larkin said.

They also might take a workshop or course to help “put their ideas down systematically,” he said.

“That’s for their own benefit as much as for a potential lender’s benefit if it helps them to understand the pieces of the process,” Larkin said.

Stowe, who says the Kirkwood Resource Center helped her fine tune her business plan, said organizations designed to help black entrepreneurs are “absolutely” helpful.

“Finding the help, knowing where to go and how do I even start, the business plan, all that stuff, it’s so much,” Stowe said. “There was no list that said, this is who you go talk to … you just had to [use] trial and error.

“Sometimes I felt like I was getting the run around but eventually I knocked on the right door.”

Scott Swenson, regional director of the Kirkwood Small Business Development Center, advised prospective business owners “not to get scared off and to trust your idea.”

“Collaboration is probably the key element that we see in successful entrepreneurial launches,” he said. “It takes a network of other entrepreneurs to help develop those ideas. Access to those resources that they’re missing comes through that collaboration.”