Minority entrepreneurs in the United States face significant challenges when starting a business, but they also have unique opportunities. Diversity and innovation go hand in hand, and minority businesses often inspire and elevate local communities.
One thing is sure: The drive to make business ideas a reality is just as strong (or stronger) in Black, Hispanic, Asian, Native American, and other minority business owners. Successfully launching a business requires a combination of attitude, imagination, and connecting with the right resources, funding, and business strategies. The purpose of this guide is to help you find those resources and connections so you can succeed in e-commerce.
Overcoming Common Challenges for Minority Entrepreneurs
What obstacles are you facing on your road to becoming an entrepreneur? Racism is a real problem in the United States, but it’s not the only roadblock to success. Even factors like where you grew up can work against you.
Funding Barriers
Small business owners in general have a hard time meeting the strict loan requirements of banks, but minority businesses also have to deal with unconscious biases. If you’ve been turned down for a loan because you don’t have a high credit score or a large savings account, you’re far from alone.
To find solutions, think outside the box of traditional funding:
- SBA microloans: The Small Business Administration offers microloans of up to $50,000 for equipment, inventory, working capital, and similar expenses. You may need to use personal assets to qualify, depending on the lender.
- Partnership: If your best friend believes in your idea and has the cash to back your project, a partnership is a valid way to be successful for minority entrepreneurs. To qualify for benefits, your business needs to be at least 51% minority-owned.
- Crowdfunding: Kickstarter, Indiegogo, Crowdfunder, and GoFundMe can help you get your business idea off the ground. These platforms take a cut, but the upside is that you’re more likely to connect with people who want to help you, not stop you.
- Family: Starting an e-commerce business isn’t as expensive as you may think, and interest-free loans from family members can help a ton. If you start with one or two unique products, $2,000 to $5,000 can go a long way on platforms such as Shopify.
Some startups turn to online lenders for alternative financing, but we don’t feel comfortable recommending that path. Many of these companies charge high interest rates that can hurt your new business.
Legal and Regulatory Hurdles
The laws for starting a small business are the same for all entrepreneurs, but if you don’t know how to navigate the process, it’s easy to feel overwhelmed. A good workaround is to create a checklist for yourself:
- Business plan: A description of what your business does and what your goals are.
- Location: For e-commerce, a home address is fine.
- Business name: Check your state’s website (Secretary of State) to see if the name you like is already taken.
- Registration: You can register your business online on your state’s website. Registration fees are usually around $100 to $300.
- Trademarks: You can use a ™ to protect your business trademarks, like your company’s name, but this only applies in your geographic area if no similar businesses are using it. Official registration with the U.S. Patent and Trademark Office costs at least $250.
- Federal tax ID: LLCs, partnerships, and minority entrepreneurs with employees need to apply online for a federal employer ID number. The process is relatively easy (and free).
- State tax ID: You may need to get a state tax ID if the products you sell (and some services) are taxable.
- Licenses and permits: Check your city’s chamber of commerce and the state website to see if your products or services require any licenses.
- Business bank account: Once you have your business ID number, you can open a savings account or checking account with it. That way, you can purchase inventory and accept payments.
Remember that launching a business isn’t a race. Take each step one at a time, and before long, you’re ready to go.
Market Competition
Getting noticed can be a challenge if you live in a large city with lots of competition due to the sheer number of businesses vying for customer attention. E-commerce businesses also have to compete with sellers of similar products. You can turn this into an opportunity by focusing on niche markets and connecting with specific audience segments that are underserved.
As a new business owner, you need to stand out. Here’s how:
- Embrace your identity: Many minority-owned e-commerce businesses have a loyal following because they tell their stories, such as House of AAMA’s mom-daughter team of Rebecca Henry and Akua Shabaka.
- Find your niche: Put a unique spin on popular items. One Shopify store only sells socks, but it offers distinctive designs and “build your own bundle” deals.
- Use videos: High-quality product explainer videos can help you beat established websites. These days, everyone loves videos.
- Make your site amazing: Give your website plenty of personality. Visitors usually notice the site’s vibe before they even see your products.
In this situation, being a minority entrepreneur can actually work in your favor. Be bold and creative, both for your products and your brand.
Accessing Grants for Minority Entrepreneurs
Grants are even better than microloans at improving your business resources, but they have a few strings attached.
Understanding Grants and Funding Opportunities
Getting a grant is partly like applying for a loan and partly like receiving a gift. The person or organization offering the grant wants to support minority business owners, so they offer a financial incentive to help.
As long as you follow the terms of the grant, you don’t need to worry about paying back the money. Unlike a gift, though, grants don’t let you use the funds for anything you want.
For example, some grants for minority-owned businesses only cover professional education, such as certification at a technical school. Others require you to use the capital for inventory, equipment, hiring costs, or specific startup costs. You also need to report on your progress periodically.
Applying for a grant and meeting the requirements takes time, but the effort is worth it. Even $2,500 can go a long way toward setting up a new business. A $10,000 or $25,000 grant can completely transform a minority-owned e-commerce business, giving you a massive infusion of money for marketing, technology, products, and other expansion plans.
How To Find Grants for Minority-Owned Businesses
There are many grants for minority business owners. Some are available every year and others only appear for a short time. To find out what grant opportunities are currently available, check local initiatives, federal grants, and private options.
Federal Grant Resources
The Minority Business Development Agency is a federal agency with the responsibility to promote the growth of minority-owned businesses. It can point you in the right direction for grant applications that fit your business.
The Small Business Administration also has a program to support minority entrepreneurs called the 8(a) Business Development program.
Private Grants
Businesses owned by women of color can apply for the monthly $1,000 HerRise MicroGrant. Black small business entrepreneurs can qualify for a Wish Local Empowerment Grant of $500 to $2,000.
All women and minority small business owners can apply for the Galaxy Grants $2,250 non-profit giveaway. Latino business owners with one year of experience can apply for the Support Latino Business Impact Fund grant program. These are just a small selection of the private grants available for different minority groups in the U.S.
Regional Grants
It pays to do your homework locally, too. Depending on your city and state, there may be important support initiatives for minority-owned businesses or small business owners. For example, the Founders First CDC grant program offers small business grants to women minority entrepreneurs in Illinois, Texas, Minnesota, New Jersey, Pennsylvania, and Southern California.
Tips for Writing a Successful Grant Application
Keep in mind that the pool of applicants for each grant is usually very large. To win a grant, your application needs to stand out. How?
First, take care of the details. Read the grant requirements carefully and follow them to the letter. Gather all required documents, which often include a precise business plan, proof of business registration, and financial statements.
Next, draft the application. This usually involves several parts:
- Cover letter: Briefly introduce you and your business.
- Statement of need: Explain the obstacle or problem the grant will help you solve, such as lack of resources, hiring challenges, or few opportunities.
- Project description: Explain in detail how you will use the funds to reach your objectives, including a timeline, specific steps, and measurable goals.
- Budget overview: Show financial projections for the way you plan on spending the grant, such as equipment (with exact costs) or employee payroll.
- Executive summary: Outline the key points of the application, such as why your business is a good choice and how you plan to use the funds.
Spend time creating the perfect description of why your business is a good investment for the funds. You may need to rewrite the letter several times to make sure you deliver your message simply but powerfully. Even though you’re applying online, you should treat the application like a meeting with potential investors.
Certification for Minority Entrepreneurs
To qualify for the vast majority of grants for minority business owners, your company needs to get certified as a minority-owned business. Some local governments offer this certification, and you can also apply via the National Minority Supplier Development Council. This involves submitting tax and business documents as well as proof that you belong to a disadvantaged minority.
For grants that apply only to women business owners, you can get certification with the Women’s Business Enterprise National Council or the SBA Women-Owned Small Business Program.
Building Strong Professional Networks
For minority business owners, the biggest contributor to success isn’t necessarily money. Mentorship can be an invaluable resource that helps new entrepreneurs learn what to prioritize and how to overcome specific challenges. Building a strong network can also provide opportunities to grow your business or your professional career, such as referrals, new clients, or internships.
Connecting with Minority Business Associations and Chambers of Commerce
Many minority entrepreneurs are surprised to discover how many educational resources and networking opportunities are available locally and regionally. There are people who want to see your business succeed, and it’s not as hard as you may think to connect:
- The National Minority Business Council offers training programs like the Entrepreneurial Bootcamp and the Women’s Business Committee.
- The U.S. Minority Business Development Agency can help you learn about local contract opportunities that are reserved for minority-owned businesses.
- By contacting the U.S. Black Chambers organization, Black entrepreneurs can quickly discover and connect with local chambers of commerce, programs like Amazon’s Black Business Accelerator, and other resources.
- Black Founders is an organization focused specifically on helping Black professionals succeed in the tech industry. Resources include networking events, mentorship programs, loans, and grants.
For local mentorship opportunities, keep tabs on nearby universities, trade groups, and vocational colleges. Educational and business organizations often host workshops and networking events with minority business resources. Don’t forget to reach out to acquaintances from high school or college who are business owners. They can be an important part of your professional network.
Leveraging Online Communities and Social Media for Networking
In many ways, mentors are like parents and grandparents who offer wise time-tested advice. You can also benefit from networking with “brothers” and “sisters” — other minority entrepreneurs who are in your shoes right now.
How can you find them? Join Facebook or LinkedIn groups dedicated to minority-owned e-commerce businesses. Here are a few examples of well-moderated, positive Facebook groups for women entrepreneurs and minority business owners:
Take the time to share your insights and story. It doesn’t take long to meet people with a similar perspective. Some may comment on your posts, ask questions, or offer helpful tips about marketing or product trends.
These fellow entrepreneurs can be working moms and dads, tech-savvy grads, military vets, and new franchisees. Whatever your circumstances, you can bet other people are out there who can sympathize, support you, and offer practical solutions for modern challenges.
E-Commerce Growth Strategies for Minority-Owned Businesses
E-commerce has an amazing potential to empower minority entrepreneurs. It gets rid of many traditional barriers to entry, such as excessive startup capital requirements.
Is warehouse space too expensive where you live? With e-commerce, it doesn’t matter. You don’t need a physical business location, storage, or capital for inventory purchases. You can launch a dropshipping model with a few products and gradually scale your business.
E-commerce stores have a global reach. Forget about facing discrimination in your region when it comes to buying or selling. Connect with clients who understand your vision, love your creativity, and want the solutions you offer.
Building a Digital Storefront
Whether you’re starting a new business or you already have a retail store but want to expand online, your first step is to create an attention-grabbing website. Don’t worry — you don’t need any programming skills, and you don’t need to hire an expensive design firm.
Platforms like Shopify give minority entrepreneurs the tools to create and customize a website quickly. User-friendly controls walk you through the processes of building web pages, adding products and images, setting up sales tax, and handling pricing. Shopify apps are plug-and-play, helping you design professional size charts, set up bundles, and manage shipping in a few clicks.
How do you make your site stand out? Follow web design best practices:
- Optimize for mobile devices (Shopify takes care of this automatically).
- Use images that show off your products or brand identity.
- Choose a store theme that is simple but interesting.
- Describe product features and benefits with clear, short, and engaging sentences.
- Get excited about your products so customers are, too.
- Use calls-to-action to tell clients what to do next (e.g. “take advantage of our BOGO sale” or “add it to your cart”).
Above all, make the website your own. Emphasize your unique values and viewpoints, whether you love surfing, pets, sustainable materials, or social programs.
Optimizing Online Marketing Efforts
To connect with your target audience, you need to market your brand. There’s no way around it. The good news is that many e-commerce marketing avenues are cost-effective and deliver long-term value:
- Social media marketing: Create an account for your business on the social media platforms that potential customers use the most, such as Instagram, Pinterest, Facebook, and LinkedIn. With helpful tips, thoughtful messages, positive images, and bits of your journey as a minority entrepreneur, you build your brand’s reputation and win over your audience.
- Paid advertising: Online ads are a valuable way to get noticed, but you need to manage your budget carefully. Learn how to target Google and Meta ads to specific groups so you only get clicks from the people who are most likely to buy your products. Time ads around seasonal discounts to give users an extra incentive to visit your site.
- SEO content: Another way to attract visitors to your site is by answering the questions they search for online. Search engine optimization means including topics and keywords that your main customers care about, such as “The right sunglasses for each face type” or “How do you find your dress size?” Create comparison guides to help your audience choose the right products for their needs.
- Email marketing: On average, email marketing delivers over $35 in revenue for every dollar you spend on it. You can send group emails to visitors who opt-in for sale messages, newsletters, or just friendly messages from your business. This type of marketing can turn one-off purchases into recurring sales and loyal customers.
Don’t be afraid to dig in your heels and stay true to your roots. Your racial identity, social background, and personal story are what breathe life into your business, and that authenticity may be exactly what customers love about you.
When racism reared its ugly head and some users tried to review bomb Black-owned store The Honey Pot, minority entrepreneur Bea Dixon was touched to see loyal customers take to social media to support her. Their reviews and efforts completely counteracted the effects of hate.
Considering International Sales
E-commerce platforms like Shopify, WordPress, and Staytuned Digital can help you go beyond borders literally. Once you have trustworthy suppliers, you can fulfill orders in Europe, Asia, Australia, and elsewhere.
That said, we recommend getting your feet wet in North America first. Learning the ins and outs of your business is easier without worrying about import/export laws, GDPR data protection guidelines, currency conversion, tax differences, and other international regulations.
The good news is that when you are ready to go international, the same minority-business resources that help you start your business also provide guidance on scaling minority-owned businesses overseas.
A Friendly Team With Experience Helping Minority Entrepreneurs
At StayTuned Digital, we have a single goal: helping our customers achieve their vision of the perfect Shopify store. As a minority entrepreneur, you deserve the credit for your success, and we’re honored to play a small part. We stand behind you on every step of your journey, answering questions, following up on your needs, and recommending apps that can solve specific problems new e-commerce businesses often run into. Reach out to our friendly team right away.
Resources for Minority Entrepreneurs
Find trustworthy resources for education, mentorship, funding, contracts, networking, and other opportunities.
Government Resources and Grants
The following organizations are good resources for grants and contracts reserved for minority-owned businesses:
Nonprofit Resources
Reach out to nonprofit organizations for mentorship, education, networking opportunities, and funding:
- National Minority Supplier Development Council (NMSDC)
- SCORE
- Community Development Financial Institutions (CDFIs)
- NAACP
- Operation HOPE
- National Association for the Self-Employed (NASE)
- Small Business Development Centers (SBDCs)
Digital Resources
Discover free resources to learn about digital marketing, manage your website, and optimize your e-commerce store:
- HubSpot webinars
- Semrush Academy webinars
- Staytuned Digital Shopify apps
- Moz tools for keyword research
- Google Analytics for website metrics tracking
- Photopea free Photoshop-quality photo editor
- Canva for free advertising templates
- Grammarly for improved online content writing