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Why Black Businesses Get Bought Out

Buying from Black-owned businesses has become increasingly popular in recent years and, as a result, has never been easier. However, there are a number of businesses that began as Black-owned but were eventually bought out by large, white-owned companies (for a plethora of reasons).

Therefore, here is the good, the bad, and the ‘oh, that makes sense’ of why Black businesses often get bought out and expanded in white corporate America, and the many effects that can have:

Black Businesses Often Have Fewer Resources Than White-Owned Businesses. This is partially due to discrimination, and partially due to the lack of trust Black business owners feel toward the system. Black people are less likely to be approved for bank loans, venture capital investments, and angel investors. The loans that are approved are often compounded with high returns and high interest fees.

Not All Businesses Sell Out For Nefarious Reasons

Contrary to popular opinion, small businesses don’t always sell their morals out for just the paycheck. Sometimes they are trying to stay afloat, but sometimes they are just making a strategic move to spark a change in their industry. Lisa Price sold her hair care company, Carol’s Daughter, to L’Oreal for both of these reasons. While she did cite needing help elevating her business as one of her motivations, Price states that she looks forward to a day when curly hair care is labeled as just ‘hair care,’ not ethnic hair care. Since that day may be a long way down the road—especially considering the recent trends in marketing that have come about—she felt that selling her company would help her and the brand properly pursue that dream.

Social Effects And Expanding the Fan Base

The effect this can have on customers of a brand spans beyond just a change of face. Change in brand ownership can also mean a change of formula. There have been numerous reports that Carol’s Daughter and Shea Moisture have watered down their formulas to appeal to a whiter clientele. There have also been a number of campaigns from these companies that have alienated their original Black female fanbase by using white and mixed-race women instead of Black women, the most notable example being Shea Moisture’s commercial involving a woman with straight blonde hair talking about her “hair hate.” This sent outrage through the Shea Moisture fanbase, as it is extremely disrespectful to compare the hair hate of a 4c-haired Black woman to the hair dislike of a straight-haired white woman.

The goal of any business is to maximize its profits. Unfortunately, this can sometimes mean sacrificing the core client base in order to generate mass appeal. Personally, I see this as an unnecessary cost. Rather than watering down the existing formula, I don’t understand why Shea Moisture and Carol’s Daughter couldn’t just release another line of watered-down products instead of replacing the existing products that earned them their following. With businesses and brands that cater to Black people only more recently rising in popularity, it is important that the Black community can rely on those brands' commitment to serving them with quality and integrity.

Works Cited


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