There is an important disclaimer to our discussion this week: your vision for your life and work can absolutely be accomplished no matter what anyone says. With that said, we need to have an important conversation about starting businesses in the “right” categories. For this discussion, we are focused on the industries of the future—those with higher margins and expected growth. This isn’t to say you can’t succeed outside these industries, but being aware of industry trends is crucial for long-term business planning.
These principles apply to everyone but are particularly acute for Black entrepreneurs. A McKinsey report from a couple of years ago highlighted that “Black-owned businesses also tend to earn lower revenues in most industries and are overrepresented in low-growth, low-revenue industries such as food service and accommodations” (McKinsey & Co, 2020). The report noted that the vast majority of Black-owned companies are concentrated in five industries: social assistance; professional, scientific, and technical services; administrative support and waste management services; construction; and transportation and warehousing. These are industries where margins are often thin, and raising capital is challenging. Collectively, these sectors “represent only 20 percent of business revenues across all categories. In contrast, although wholesale businesses account for 24 percent of business revenues, only 1 percent of Black women and 2 percent of Black men who are entrepreneurs are in this sector” (McKinsey & Co, 2020).
So, what are the industries of the future, and how do you get into them? Industries such as high tech, pharmaceuticals, financial services, healthcare, and food/agritech are examples. Businesses in these sectors have higher margins and strong growth potential. Investors are attracted to areas where there appears to be disruption, which translates into high growth. That is why AI companies are currently attracting significant capital.
One of the best ways to transition into the industries of the future is to credential yourself for a pivot. As you know, I produce this blog in partnership with the MBA Programs at Kennesaw State University. At KSU, they are working overtime to build a curriculum that reflects the topics students need. There is a fintech concentration, AI is being leveraged in the classroom and discussed, along with multiple other timely topics that are being studied actively in the classroom.
The first step in thinking about where to go next is knowing where we are now. Even if you are in an industry not labeled as high growth, are there new tools you could incorporate? New technology you can adopt? A new business vertical altogether? Is it time to go back to school? All in all, it's about staying adaptable and forward-thinking. Although we may not be building in the “right” industries right now, as long as we know where things are headed, we can still win the future.
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