Chicago’s African American entrepreneurs are seizing the moment to scale up their businesses—and create a legacy of generational wealth in the process.
Founders of the Black Bread Co.—Charles Alexander, from left, Mark Edmond and Jamel Lewis—at the Mariano’s store in Bronzeville.
Dispatched by his wife to buy groceries for their family, Mark Edmond went looking for the first item on her list, bread. He spent nearly an hour in the bread aisle of a Pete’s Market Googling bread manufacturers on his phone while thinking: “I’m not going to support any brands that aren’t Black-owned.”
Edmond returned home without any bread. He brought back something else instead—a business idea. After sharing it with his wife, he called his two best friends, Jamel Lewis and Charles Alexander, who instantly bought into Edmond’s desire to start a sliced-bread company. His wife, Natasha, approved.
The Black Bread Co. opened for business on Feb. 1 with a livestream on Facebook and Instagram. But Edmond’s epiphany in the Pete’s aisle happened shortly after the murder of George Floyd, when media and activists were bringing attention to the minuscule share of consumer dollars going to Black-owned businesses.
“As African Americans, we don’t own or make any of the products that we use every day,” says the company’s co-founder Jamel Lewis. He believe it’s important for Black entrepreneurs to produce “something that we use every day.”
The fact that as a consumer Edmond couldn’t find one Black-owned company that made an everyday staple like sliced bread prompted him to “take action with my money,” he says. “We have to start competing.”
“Walmart called us a couple of days ago,” interested in getting Black Bread Co.’s products on its shelves, Edmond says. There’s interest from Target, Sam’s Club and Pete’s Produce and a contract signed with Meijer. Black Bread is in all Mariano’s stores.
In the last year, stories about how whites in Tulsa, Okla., destroyed Black Wall Street 100 years ago helped spur interest in supporting Black-owned businesses, as large retailers like Sephora, Target and Walmart highlighted Black-owned brands. Statistics, however, show the high hill such brands have to climb.
The 19 million white-owned businesses in the U.S. collect 88% of overall sales and control 86.5% of U.S. employment, according to government data. Black businesses have 1.3% of total U.S. sales and 1.7% of the nation’s employees. Latino businesses are responsible for 4% of U.S. sales and 4.2% of U.S. employment. In 2013, the top 1% of households had 62.8% of all business equity. The total racial wealth gap amounts to between $8 trillion and $10 trillion, according to estimates based on the Federal Reserve’s Survey of Consumer Finance and analyzed by Boston Consulting Group.
Facts like these bring into stark relief the vast disparities that limit the ability of Black entrepreneurs to scale up their businesses. Among Black entrepreneurs in Chicago that Crain’s interviewed, growing revenue, creating jobs and entering high-growth sectors are essential in the ongoing drive to achieve social and financial equity.
Stephen Davis, who founded the Will Group, an electrical-, lighting- and energy-related business in 1986, says an unintended consequence of desegregation was a weakened social infrastructure that left many Black communities struggling financially. He says, “When I drive by the West Side and I see the struggles, I stay awake at night because my community lies in ruin and what am I doing to help?”
Stephen Davis, founder of the Will Group, with daughter Jessica Ashley Garmon, chief operating officer and general counsel, and son Joshua Stephen Davis, president.
Davis is committed to leveraging his financial success “to create jobs in communities that have been abandoned.” His company, which had $70 million last year in revenue, made a $20 million investment on the West Side earlier this year, when it opened a 60,000-square-foot factory and warehouse at 4647 W. Polk St. in the Lawndale neighborhood. The company, which specializes in contract manufacturing of light fixtures for customers like ComEd, plans to eventually offer more than 120 jobs on the site.
“Our goal is to create a work environment where people can have above-minimum wage, health care and retirement benefits,” Davis says. “And also create housing so that we can revitalize our community, where there is an ecosystem, where you can buy groceries. I can’t do it by myself, but if we can collectively plant a seed and get it to grow and get other people that are socially conscious entrepreneurs, we could see a difference. I’m counting on it.”
Ariel Investments CEO John Rogers often speaks on the challenges, gains and opportunities made by Black businesses and entrepreneurs.
“In the past here in Chicago, we had these giant Black businesses” Rogers said, referring to Johnson Publishing and Johnson Products, manufacturer of hair-care and cosmetic products, during a virtual conversation in October co-presented by the University of Chicago Booth School of Business. “They employed hundreds of thousands of people and created enormous amounts of philanthropy.”
George Johnson, who founded the hair-care company with his wife, Joan, created the now-closed Independence Bank, once the largest Black bank in the country, and buoyed other Black-led organizations with meager resources, Rogers said. “We need to get back to where Chicago is the mecca, where we had these large Black businesses that hired people, that were inspirations. They were role models.”
The Business Leadership Council, or BLC, is a catalyst for creating opportunities for Black businesses in Chicago, says Cory Thames, chief engagement officer. The organization has 170 members representing over 25 industries, from construction to financial services to legal services to information technology. Some 70% of its members are CEOs.
During the summer, BLC launched a chairman’s breakfast, hosted by Charles Smith, CEO of the BLC and CS Strategies insurance firm. The breakfasts “bring industry leaders to BLC membership to talk about the existing opportunities that they have in their respective organizations,” Thames says. So far, BLC members have met with Illinois Transportation Secretary Omer Osman; Don Biernacki, the executive vice president of construction for Related Midwest; and the leadership team from Farpoint Development, a commercial real estate developer working on the Bronzeville Lakefront development project.
“Ultimately the takeaway is to create real business opportunities,” Thames adds. “What you are seeing now are more Black firms that are willing to partner with each other and do strategic alliances so that they can be competitive in the marketplace and go toe to toe with your well-known primes.”
Thames cites two examples. One is the Lakeside Alliance, a joint venture of four African American firms—Powers & Sons Construction, UJAMAA Construction, Brown & Momen and Safeway Construction—that have partnered with Turner Construction on the building of the Obama Presidential Center. Another partnership, GRE Ventures, brings together Cornelius Griggs’ GMA construction, 548 Development founder Robert ‘A.J.’ Patton and Torrey Barrett, principal of Imagine Development Group, a boutique real estate development firm. GRE Ventures won the Lawndale Redefined project, a $31.4 million development that’s part of Mayor Lori Lightfoot’s Invest South/West program, aimed at spurring development in communities of color that have been historically neglected.
Many Black entrepreneurs approach business owning, and building bigger businesses, as the primary equalizing factor in African Americans’ long struggle to move up the economic ladder.
“The idea of generational wealth-building was one of the premises that led to BLC being created,” Thames says. BLC’s executive committee at the time wanted an organization that would actively advocate for the interests of Black businesses and entrepreneurs at a higher level (and) creating true generational wealth in our community. BLC is being intentional about “building the pipeline of the next generation of talent” and grooming that talent to ascend into leadership positions to “one day start their own firms or take over their firms.”
For Hugh Williams, an entrepreneur and commercial real estate developer involved in multiple projects, these partnerships have to be more than checking-the-box-on-diversity deals. “Every time I talk to a majority contractor, I say, ‘If you guys are excited to meet me because I’m an MBE and this is the box you want to put me in, I have no interest in doing long-term business with you.’ ”
Chicago, indeed, the country needs more “great minority-owned companies,” Williams says. And that means not being relegated to one niche or sector. He wonders what some reporters who have interviewed him mean when they say to him, “ ‘You seem busy.’ Does anyone say Warren Buffet is busy?”
Black CEOs like Ariel’s Rogers accept the fact that a certain level of buy-in from the majority business community is essential. He noted how after the tragedy of George Floyd’s murder, Chicago’s civic community came together.
Referring to the Civic Committee of the Commercial Club of Chicago, Rogers said that, “In the past, they’ve focused on new runways, education reform or pension reform. They take on these big giant issues. They decided to take on the issue of the Black wealth gap and made a commitment to really start to try to drive forward in building larger Black-owned businesses of scale here in Chicago.”
Lita Selmon opened her own lifestyle brand store in downtown Oak Park to sell organic and natural apothecary products.
Asked to comment, Civic Committee President Kelly Welsh says: “We’re in early stages of addressing this challenge in business diversity and in developing a program in this regard.
“The thinking is that this is going to be a long-term commitment over years. We’ve engaged members and also have gotten tremendous pro bono support from McKinsey and BCG and teams from those organizations to help us review best practices and undertake pilot programs to develop innovative and better ways to grow business diversity.”
Research provided by the Civic Committee shows that in 2017, Illinois had 7,197 MBE businesses in the professional and business services sector, with average revenue of $1.6 million. MBE is defined in the research as a business with a Black, Latino or Asian/Pacific Islander owner.
Rogers says the committee is talking to leaders throughout the Chicago area to get commitments “first to try to build out large technology businesses of scale in the African American community.” The focus there is on high-growth sectors, with business and professional services being the top category and generating about $85 billion with profit margins typically 5% to 20%. Rogers notes that previous efforts to increase Black business participation focused on supplier diversity, “pushing Black businesses into the lowest margin, least important parts of the spend while the wealthiest people in Chicago were in professional financial services and technology.”
A Bank of America national survey over the summer found 85% of Black small-business owners say social justice issues have impacted their approach to running or conducting their business, including, openly communicating a commitment to equity. The Small Business Administration defines a small business by firm revenue (ranging from $1 million to over $40 million) and by employment (from 100 to over 1,500 employees).
But more Black-owned businesses want to get beyond “small.” Williams, a principal at MK Asset Management, owns and manages more than $100 million in commercial and residential buildings. He co-founded Umoja Supply Chain Solutions, a logistics company that specializes in hunger relief and food for health with warehouses in Houston, Sacramento, Calif., and Youngstown, Ohio. “More than half of my partners are Black. All businesses are minority controlled.”
His college student niece said to him, “Uncle Hugh, it sounds like you want to build a legacy.”
“I want to build a Black conglomerate,” he says.
Others want to build a brand. In mid-August, Lita Selmon opened Einnim, what she calls a lifestyle brand, in downtown Oak Park. The store, next to the Lake Theater, sells organic and natural apothecary products handcrafted by Selmon. She watched her Los Angeles-based friend grow her own beauty brand, Freck, into a multimillion-dollar company in three years. Since opening, Selmon, a former director of operations for a marketing agency, has added several employees. “I want to hire people who have the same spirit as I do to grow and then move on or help build this empire.”
In Hyde Park, Leslie Roberson opened the Velvet Collection, the only Black-owned luxury linen rental business in Chicago, on 53rd Street. Roberson, who once worked for the e-commence home goods company Wayfair, wasn’t deterred by opening a shop during the pandemic. She’s already thinking about more studios, warehouse spaces, delivery trucks and brand recognition. Her growth prospects are based on the market research she’s been doing. “I’m going to go big or go home,” she says.
The founders of the Black Bread Co., Einnim and the Velvet Collection are all in their mid- to late 30s. They bring a sophistication with digital platforms and social media that an earlier generation didn’t have. And, some might say, a boldness about building their businesses that their predecessors also didn’t have.
“The Black Bread Co. founders are looking to go beyond selling premium loaves and hotdog and hamburger buns. They plan to move in gourmet foods—and extend their brand throughout the store. To get an estimate of what the company might one day be worth, they sought an independent valuation. “Up to $50 million,” the valuator told Crain’s.
“We look at what we’re doing and what many Black entrepreneurs are doing,” says Alexander, one of the Black Bread Co. co-founders. “It’s the new Black Wall Street. We are reinventing.”
Article Courtesy of CRAINS CHICAGO: https://www.chicagobusiness.com/equity/chicagos-black-owned-businesses-look-scale