Black-owned small businesses are embracing digital tools at higher rates than their non-Black counterparts, helping them navigate financial challenges and drive long-term success, according to a new Intuit QuickBooks Black History Month Survey. The report highlights how early technology adoption is proving to be a key factor in business resilience and financial health, even as access to funding remains a major hurdle.
Technology Adoption as a Competitive Advantage
The study, based on insights from 2,490 Black and 3,000 non-Black small business owners, found that 28% of Black entrepreneurs are early adopters of new technology, compared to 20% of non-Black entrepreneurs. Businesses that adopt technology later or not at all are nearly twice as likely to struggle or face closure, highlighting the importance of digital tools in long-term business viability.
Social media, mobile point-of-sale (POS) systems, customer relationship management (CRM) software, and AI-powered solutions were identified as key drivers of success, with 84% of Black business owners stating that technology is a major contributor to their growth.
Social Media and AI Fuel Business Growth
Among digital tools, social media stands out, with 70% of Black entrepreneurs crediting it as a critical business driver. It is primarily used for product promotion (64%), brand awareness (51%), and customer engagement (50%).
AI adoption is also significantly higher among Black-owned businesses, with 79% integrating AI tools, compared to 62% of non-Black business owners. AI is being used for idea generation (47%), customer support (34%), and marketing (31%), reinforcing its role in streamlining operations and improving efficiency.
Financial Challenges Persist Despite Progress
While Black entrepreneurs are making strides with technology, financial barriers remain a significant challenge. The study found that 80% of Black business owners used personal funds to cover business expenses in the past year—down from 85% last year but still higher than the 47% of non-Black entrepreneurs who rely on credit cards.
Additionally, Black business owners were twice as likely to be denied a bank loan (30%) compared to their non-Black counterparts (15%). Fewer Black entrepreneurs applied for startup loans in the past year, with 45% seeking funding, down from 76% in 2023, mirroring an industry-wide shift away from traditional lending sources.
Early Tech Adoption Reduces Financial Strain
The report suggests that businesses leveraging technology early are 20% less likely to use personal funds to sustain operations. Seventy-eight percent of Black entrepreneurs believe that digital tools better prepare them for financial challenges, while 93% agree that technology adoption is helping close the racial wealth gap.
Lower Barriers to Business Entry
The study also found a sharp decline in startup costs for Black entrepreneurs. The average cost to start a Black-owned business fell to $9,800, down from $21,000 in 2023, and lower than the $12,900 average for non-Black entrepreneurs.
Looking Ahead: Technology as an Equalizer
Black entrepreneurs overwhelmingly view technology as a leveling force in business, with 82% agreeing that it is creating more equitable opportunities. As more Black-owned businesses embrace AI, digital marketing, and automation tools, early adoption trends are likely to continue, reinforcing technology’s role in reducing financial risk and fostering business sustainability.
This article, “Black-Owned Businesses Leverage Early Tech Adoption to Overcome Financial Barriers” was first published on Small Business Trends
Source: Small Business Trends
