Houston’s Black neighborhoods saw a surge of new businesses. Experts point to COVID and BLM.

“It may have been easier” to wait, Canady said, “but it would never be easy.”

Canady was among the millions of entrepreneurs who braved the pandemic and recession last year to lead a surge in business creation — a surge that was particularly pronounced in Black communities. Some 4.4 million new businesses were launched across the country in 2020, up 24 percent from 2019, according to Census Bureau. The National Bureau of Economic Research looked at business registrations in eight states, including Texas, and found that in 2020 predominantly Black communities had a jump in registrations from the previous year.

The pattern was repeated in Houston, where predominantly Black neighborhoods led the region in the creation of new businesses, according to a researchers at Rice University, who analyzed business registrations by zip code. New business registrations more than tripled in 2020 in the 77016 zip code in the East Little York / Homestead area and nearly tripled in the South Park zip code 77033. This compares to a 51 percent increase in the region. The neighborhoods are 63 percent and 65 percent Black, respectively.

In the section of Third Ward where Canady runs his pop-up comic book store, an area where nearly half the residents are Black, new business registrations jumped 24 percent last year.

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Experts says it’s hard to pinpoint what drove these trends, but several factors likely played roles. Federal pandemic relief programs may have given would-be entrepreneurs the breathing space to launch businesses; a study by the nonprofit National Bureau of Economic Research found that new business registrations increased about the same time federal stimulus checks were sent.

The Black Lives Matter movement, which riveted the nation’s attention following the killing of George Floyd, put new focus on the businesses and economies of Black communities, creating opportunities as consumers and corporations moved to support Black-owned companies. In some cases, the pandemic and recession, which hit minority communities the hardest, forced people to seek new opportunities as they lost jobs, businesses and income during the historic downturn in early 2020.

“It’s out of necessity,” said Jie Wu, director of research operations for the Kinder Institute for Urban Research at Rice University. “It provides another option to earn alternative income.”

Outside the box

Jerome Love, for example, was sidelined when his bank pulled the line of credit for his small construction company, JDL Investments, and he was forced to cancel building projects in the South Park and Sunnyside neighborhoods. So Love, 44, of Pearland, decided to create Tuvi Blends, a company that makes beverages with all natural ingredients.

Love registered the business in May 2020, designing it as an online subscription service that would deliver 30 bottles a month of fresh fruit and spice concoctions while offering access to cooking and fitness demonstrations through an online portal, aiming to tap into the surge in e-commerce as the pandemic kept people at home.

“I had come up with the idea several years ago, but it wasn’t until COVID I started reading and researching how I would actually do it,” Love said. “It’s forced people out of the nest, and made us ditch the traditional marketing and think outside of the box.”

The surge in business creation in Black communities represents a remarkable turnaround. Early in the pandemic, more than 3 million businesses — about 1 in 5 — shut down across the country at the height of the pandemic, according to an often cited study from the Stanford Institute for Economic Policy Research, a nonpartisan think tank at Stanford University. Nearly half of Black-owned businesses — 41 percent — closed as did one in three Latino- and immigrant-owned businesses.

The study, however, only covered March through May 2020. When shutdown orders were lifted and social distancing measures eased, business creation surged in predominantly Black neighborhoods, which had the highest rates of new business registration, according to the National Bureau of Economic Research.

The Black community was disproportionately hit by the effects of the pandemic. Unemployment among Black residents peaked near 17 percent, compared to 14 percent for white workers and 15 percent for all workers in the spring of 2020. In the first quarter of this year, unemployment among Black workers was at 11.2 percent, more than double the 4.9 percent for white employees, according to an analysis from the Economic Policy Institute, a Washington think tank.

Black Americans were also infected with COVID-19 at nearly three times the rate of white Americans, according to an August 2020 report from the National Urban League, a civil rights and urban advocacy organization. For many of the new entrepreneurs, starting their own businesses was their way of taking control, said Carol Guess, chair of the Greater Houston Black Chamber of Commerce.

“It’s just African Americans wanting to take control of their own destinies,” Guess said. “They don’t want to be at the mercy of anyone else when it comes to feeding their families.”

This resonated with Regina Knox, 58, of southeast Houston, as she worked from home during the pandemic. She began to ask herself questions: “How do I want to move forward with my life? And how do I want my life to look going forward? Do I want to just sit and work for a corporation and do the same thing over and over?”

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Knox, who has worked 15 years in the record department of an oil and gas company, had thought about starting a personal organizing business when she helped two friends reorganize an office and a classroom in 2019. The pandemic, and the soul searching it inspired, provided the spark for Knox to make the dream a reality by launching a company called Suite Transformations.

She hired an entrepreneurship coach who helped her define her target market as well as an accountant to do the books. She also is looking to hire a social media specialist to market the company and its services, including eliminating clutter and devising plans to stay organized.

She’s had five clients this year, a good start, but not enough to quit her day job. But now that her website is up, she hopes more clients will come her way once the pandemic fades and the economy continues to reopen.

“When I was a little girl, I always used to change my room around all the time. I always had to have things in place,” Knox said. “It’s funny, because COVID gave me a chance to sit and reflect about what I really like to do and never did.”

Economic justice

The Black Lives Matter movement focused attention not only on social justice, but also economic justice for Black Americans. The recent 100th anniversary of the Tulsa race massacre, when a white mob burned a prosperous Black neighorhoood known as Black Wall Street and killed as many as 300, also underscored the history of racism that denied — or snatched away — economic progress from Blacks.

An outgrowth has been efforts by customers and corporations to shop at, contract with and provide resources to Black-owned businesses, which have long had to surmount obstacles such as the lack of access to capital and predatory lending.

Canady’s young company, Gulf Coast Cosmos Comicbook Co., received a boost when Axelrad, a beer garden in Midtown, reached out, saying it wanted to support local Black businesses. Axelrad included gift cards from Gulf Coast Cosmos Comicbook in a raffle, raising the company’s profile with local audiences.

Canady, who started online, gaining customers from California to New York, opened a pop-up store in the Emancipation Park neighborhood in early March. The Emancipation Economic Development Council, a organization dedicated to revitalizing the neighborhood, allowed Canady to use its office space rent free since March to sell his comic books from Wednesday to Saturday while he saves to rent a a storefront. He had to move out of the space last Saturday because it’s undergoing renovations, but plans to be in another temporary location soon.

His social media strategy aims to promote the diversity of his comic books, which include titles that can’t always be found on the shelves of mainstream stores. Enough customers are coming to the pop-up store that Canady increased the days of week that the shop is open, from one day to four days.

“We share strong interests in comics and making sure people understand that comic books are for everyone, not just one specific group,” Canady said. “And that really resonates.”

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