This is a story of how systems change.
In this case, the power shifted because a Black entrepreneur asserted his power against the thoughtlessly oppressive credit card and banking fee system. He started a fund to help Black and brown sole proprietors become job creators, and this created the room for the system to shift, and the entrepreneur to redefine who he is in the world.
The fund provided an infusion of capital and allowed entrepreneurs two years of runway before they have to start paying the investment back. This gave the entrepreneurs the breathing room to realize they could claim a position of dignity in the financial system by using their growing economic power to claim their rights as a business owner. Asserting the right to negotiate fees requires a big shift in self perception for many sole proprietors.
Here is the story of how the system changed through CEFs fund manager acting in the role of a controller for the entrepreneur’s business. Steven Lawrence, the portfolio manager for that friends and family fund, called the Community Equity Fund, helped one of their portfolio companies, which gets most of its revenue from credit card transactions, understand how to read his bill and find the fees. The entrepreneur had no idea his fees were one of the biggest costs for his business; he’d just been struggling to pay the bills. As a business, he can negotiate those fees; his business has value to the big card company. But he was never told that. His banker didn’t want to see the fees cut, so the banker never pointed out how much the entrepreneur was spending on card fees. Steven helped the entrepreneur see himself as working on his business and not just having a job.
All of that self definition, as someone with valuable assets in an exchange, requires overcoming intergenerational trauma, internalized oppression, etc. There are so many parts to supporting Black and brown business owners. Helping entrepreneurs overcome the legacy of trauma has to be part of the skill set for people who want to help people who have not had a chance to move up. Stephanie Swepson Twitty, founder and CEO of CEF, relies on the book, My Grandmother’s Hands, to help people of color deal with the trauma that includes self definitions that keep a person from seeing their power in a transaction. This is essential work because the big corporations, on the other side of that transaction, have no interest in letting sole proprietors understand they have that power. The revelation comes when you examine your monthly spending and see the power imbalances that can be addressed.
Once this entrepreneur understood that his business had value and that banks would negotiate with a business owner, his margin was substantially improved. He felt this benefit every month. He began to think of himself as a business owner; not the hustling sole proprietor who sort of “is” his job. All of the promising sole proprietors who were in the fund’s pipeline said during due diligence that they wanted the space to be working on their business, not in their business. To be considered for this support, entrepreneurs had to have three years in operation and be trending toward $100,000 in revenue.
The philanthropic, patient capital from the equity fund gives these entrepreneurs the breathing room to look at their situations differently. That gives them the ability to work on their business, not be swimming in their business. For CEF, that means helping their entrepreneurs, through analyzing their spending history, to redefine who they are and claim a new place at the table. Power is reversed just that way. Through people claiming more rights, one unjust fee renegotiated at a time, these entrepreneurs are on the path to building intergenerational assets. Then there will not be a need for a friends and family fund, but there will be rich aunts and uncles who can give the next generation of entrepreneurs the same runway and a path to economic rights other people have.
Sister Joan Chidester said the reign of God is reclaimed one inch at a time. Sometimes it’s reclaimed one credit card fee at a time. The justice embedded in CEF’s basic operating method is one reason it believes its story resonates so well with people of faith, people who want to invest in the well- being and empowerment of their neighbors who have been systematically excluded from the path to small business success.
The research says the net worth of a Black family that’s a job creator is 12x one that isn’t. With the credit card bills as the trim tab, an entrepreneur gained a new way to look at himself and be in the world, as a person with rights and economic power. The system is changed when you look at your credit card bill and realize that you are more than they told you you were and then take action.
Twitty is leading the track on bridging the racial wealth gap at the invite only conference we are hosting next May in Indianapolis. I will be doing stories on other track leaders and some of the other people who are coming in the next few weeks.