3. BUSINESS METHODS

The age and permanence of a firm does not influence its success so much as its business methods. And an index of its efficiency in this respect is its methods of accounting. These are shown in the means used for keeping accounts Negro business men were asked whether or not they used ledger, journal, cash-book, day-book, or other records. Some enterprises such as grocery stores, would have need of a mechanical register. If a firm had one, it was inspected. Facts about 49 establishments were not available. Of these, 35 firms had no means of keeping accounts, other than the memories of those running the place.

These were, however, very small enterprises. Of the 260 remaining, 60, or 23 per cent, kept a ledger, 122, or 46.9 per cent, kept a cash-book, and 33.5 per cent had day-books. Thus showing that 37 more firms kept day-books than kept ledgers, and 62 more firms kept cash-books than ledgers. Of the 260, 28 had mechanical cash registers and 64 had some form of record in addition to or other than those named. In a phrase, the Negro business man is learning the methods of the business world in keeping track of his business affairs, though in most cases they are small.

4. CREDIT RELATIONSHIPS

The manner and care with which a firm keeps record of the business it transacts is closely connected with its credit relations with the buying and selling community. And both these determine to a large extent its business operations. Considerable light was thrown upon the credit relations of Negro enterprises by finding out, wherever possible, whether a firm gave credit occasionally or habitually to customers and whether it received credit from suppliers. Naturally, many proprietors would not give any reply to such an inquiry, and especially about their credit standing with wholesale firms. On such a delicate point, however, information about the giving of credit was secured from 205 firms, and about the receiving of credit from 94 firms. Of the 205 that furnished statements on the matter of giving credit, 87, or 42.4 per cent, occasionally, and 69, or 33.6 per cent, habitually had given credit to customers, while 49, or 23.9 per cent, did not allow credit. When asked about their credit relations with suppliers, 47 replied that they did receive credit, and 47 that they did not receive any; and 215 gave no reply on this point.

5. THE PURCHASING PUBLIC

Length of time established, length of location at an address, methods of accounting and the credit relations play no more important a part in the efforts of Negroes to build up their business enterprises than do the subtle whims and prejudices of the community. This is shown first by the location of nearly all the enterprises in Negro neighborhoods. Of all the 309 enterprises, 288 were located either within or upon the border of the Negro districts. It may be expected, of course, that Negroes will look to their own people first for their patronage, but they should be allowed to cater to the public at large, especially in a cosmopolitan commercial center like New York. In the case of real estate brokers, this is partly true and has grown partly out of the Negro broker's ability to handle more successfully than others properties tenanted by Negroes. It is not generally the case in other lines of business, however, as the testimony of many Negro business men shows.

It was difficult to get statements that would be a basis for a percentage estimate of how liberally white people traded with these Negro firms. Brokers gave no statements that could be so used because nearly all of the 16 brokers had many transactions which involved white owners and colored tenants, white or colored sellers and white or colored buyers. Employment agencies faced a similar situation. Of the other 279 firms, 81, or 29.7 per cent, reported no white customers; 92, or 33.3 per cent, reported that less than 10 per cent of their customers were white. Thus 63 per cent of the Negro business firms have to depend upon the small purchasing power of their own people for the trade with which to build up their enterprises. This is partly due to the feeling of the Negroes in business that they are to cater mainly to Negroes and partly to their inexperienced way of handling customers. But the main reasons are the difficulties they have in renting places in desirable localities and in the refusal of white people to patronize Negroes in many lines of trade.[76] Of the remaining firms 42, or 15 per cent, reported between 10 and 49 per cent white customers. The numbers above were small and only one firm, in the cla.s.s of dressmaking and millinery, and three in the miscellaneous cla.s.s, reported an exclusive white trade.

What a battle the Negro business man has to fight can be surmised when to the fact of a narrow patronage from his own people, who have the small purchasing power of their low-paid occupations, is added the severe compet.i.tion of white firms with larger capital, with more extended credit and larger business experience, that vie with him for even this limited field. Table XXVIII (p. 125), which follows, was compiled on the basis of proprietors' statements of the probable number of white and colored customers over a given number of months.

It is about as accurate as such an estimate can be and is far more reliable and definite than general impressions. The percentages of white customers are given, it being understood that the remainder were Negroes. This small amount of information is very significant in showing how the att.i.tude of the white public affects the economic advancement of the Negroes.

In the foregoing chapter we have reviewed some very definite facts concerning the Negro business man's dealing with the community. We have seen that his enterprises are permanently established although against great odds, but that permanence of address is not so well secured. Nearly all, 260 out of 309, were known to have some of the usual methods of keeping accounts, and of the 205 from whom information on the matter was obtained about three-fourths gave credit either occasionally or habitually; while of the 94 who answered as to their receiving credit, about half did and the other half did not receive credit.

The att.i.tude of the white purchasing public has had a tremendous effect on Negro business, because it has failed to forget color in its business dealings. In many lines of business white people will not patronize Negroes at all and about two-thirds of all enterprises depend upon the low purchasing power of the Negro group. The idea that white people will not trade with them to any considerable extent and that they must depend upon their own people is so steeped into the mind of the Negro that he often does not perceive that he is catering to the whole public, white and black.

FOOTNOTES:

[76] This conclusion is based upon the statements of Negroes that white people have entered their stores apparently to buy, but beat a retreat upon finding a Negro in charge. Two Negro proprietors employed white workmen to call at residences, _etc._, in the operation of their businesses while they kept in the background. The writer traced out cases of refusals to rent places to Negro firms. Some of the incidents would be amusing if they were not tragic.

CHAPTER IV

SOME SAMPLE ENTERPRISES

In the first chapters on Negro business enterprises, the several cla.s.ses of establishments were described in order to present a picture of business among Negroes as a whole. A more concrete idea of the organization and operation of these enterprises, as well as of the proprietors who own and operate them, may be gained from detailed descriptions of selected establishments of each kind. These have been chosen as representing a fair type of the cla.s.ses to which they belong. On some points there may be wide variations, but each cla.s.s as a whole is fairly represented by those detailed.

1. INDIVIDUALS AND PARTNERSHIPS

Establishment No. 1 was a barber shop started in 1898, and moved once to the present address eleven years before. The proprietor was born in Savannah, Georgia, had resided in New York City for about twenty years, and was a journeyman barber before starting his own shop. He employed four barbers besides himself, paying each barber between forty and fifty per cent of his receipts. This shop was about 12 feet by 40 feet, and the rental was $30.00 per month. The estimated value of his tools and fixtures was about $700.00, and the estimated gross receipts of his business were $3,500.00 in 1907 and $4,000.00 in 1908.

The proprietor kept a cash-book which he balanced once a week. He started his enterprise with one chair, bought with savings from his earnings as a barber. He did a strictly cash business. His customers were Negroes only, although he kept a first-cla.s.s, cleanly place, was in a district where there were a large number of small white business establishments and some white tenants, and bought his supplies from a white firm.

No. 2. This was a barber shop established in 1890, had moved twice, and had been located at the last address four years. The proprietor called himself "the pioneer" as he visited New York City in 1856-7 and had been living here 32 years in 1909, coming from Calvert County, Maryland. He had worked as a barber in a shop run for white customers, and by this means saved money to set up for himself in Mott Haven some years before opening in New York. He employed one additional barber, had a shop about 12 feet by 28 feet, for which he was paying $35.00 rent. His tools and fixtures were worth about $200.00, and his gross receipts amounted to about $900.00 in 1907 and about $850.00 in 1908.

He used a cash-book and occasionally credited customers, although he paid cash for supplies from a white firm. His shop was located in a distinctly Negro neighborhood and all his customers were Negroes.

No. 3. This establishment was a grocery store started by a West Indian at the address where it was found, who took a partner at the beginning of the second year. The junior partner, a Virginian by birth, was brought to New York by his mother 12 years previously, while the other had resided here ten years. The senior partner had a very small grocery business during one year in the West Indies and worked as an elevator boy and saved capital after coming to New York, as his change of residence had absorbed his limited resources. The Virginian was peddling tea and coffee before entering the firm. He had been a porter in a department store, but preferred "to be independent, as it seemed too hard to work for another man." They employed one helper and both put in their time; they occupied a floor s.p.a.ce 20 feet by 40 feet, at a rental of $35.00 per month. The tools and fixtures were estimated at $350.00; these included a safe and a large national cash register. The careful inventory of stock showed $450.00 worth on hand, and the gross receipts from May, 1908, to May, 1909, was estimated at $6,000.00. The large national cash register and bank book were sufficient means of keeping accounts for the strictly cash conduct of the business. Only a few whites, about all of whom were Jews, live in the blocks adjoining the Negro neighborhood. They found this store most convenient and traded with the firm, but more than five-sixths of its customers were Negroes. The firm sent out hand-bills weekly, and used other forms of advertis.e.m.e.nt.

No. 4 was a grocery, started in September, 1906, at the same address where it was found by the investigator. The proprietor came from the West Indies to New York City about 12 years previously and engaged in hotel work by means of which he saved his capital. He was still so employed, while his brother conducted the store. The store room was about 14 feet by 40 feet, at a rental of $35.00 per month. The tools and fixtures were valued at $100.00, and the merchandise on hand at about $300.00. The estimated gross receipts were between $2,500 and $3,000 in 1907, and about $2,700 in 1908. Only a cash-book was used in keeping accounts. This was balanced once a week, and an inventory of the stock was taken once a quarter. Credit was habitually allowed to customers, all of whom were Negroes. No whites lived in the neighborhood.

No. 5. This was a real-estate and insurance agent, who began business in July, 1907, and had moved once since. He was born in Virginia and had been in New York City twelve years. This man's business career started as soon as he left college, as his father had given him an education and arranged affairs to that end. He entered his father's barber shop in Virginia and remained three years, then came to New York and started a club and saloon business with capital brought from his native home. This was carried on four years and sold out. After several intervening years, the present enterprise was started on some of the capital derived from the sale of the previous establishment. He employed two collectors, had an office s.p.a.ce of about 12 by 40 feet in one of the tenements of which he had charge. His gross receipts from commissions, _etc._, were about $2,300.00 in 1908. Ledger, cash-book and day-book were used in accounting. The landlords of the properties he handled were all white, but all tenants were Negroes. The real estate sales and exchanges he has handled have been of a similar kind.

No. 6. This was a real estate broker who began business in November, 1903, in Na.s.sau street and moved to his present address two years later. He was born in New York and has always made his home there.

Before he finished his high school course, he worked during spare hours and vacations for a real estate firm. After graduation from high school, he started to work with the same firm on a commission basis until he began business for himself as a regular broker. He employed two a.s.sistants in his business and had an office in one of the large buildings in the Wall Street district. His office was modestly but adequately furnished, the fixtures, typewriter, _etc._, estimated at $200.00. In 1907 his gross receipts from commissions, fees, _etc._, were over $2,500, and in 1908 over $3,000. His capital was acc.u.mulated from the business; he used ledger and cash-book in his accounting and both gave and received credit in his transactions. He was a member of the New York Fire Insurance Exchange, and has done considerable study in evening courses on insurance, banking, _etc._ About 95 per cent of his business dealings were with white people.

No. 7. This enterprise in dressmaking and ladies tailoring was started in August, 1906, at the address where found. The proprietress came from her native city, Pittsburgh, Pa., to New York three years previously, and set up her establishment with money she had saved from sewing in Pittsburgh. She employed three helpers and used for business purposes the front room of her apartment, which rented for $25.00 per month. Her tools and fixtures were valued at about $175.00, and she kept less than $100.00 worth of stock on hand, as all work was to order. Gross receipts were about $2,300 in 1907, and about $3,000 in 1908. A cash-book only was used in keeping accounts. About three-fourths of the customers were white.

No. 8. This is an employment agency started about 1889 by the proprietor who came from Delaware the year preceding. In the flourishing days when Negro help was in large demand he made money and formerly employed two or three helpers. When seen, he alone did not find full employment. His fixtures were worth less than $50. He used two front rooms of his living apartment for business purposes. His gross receipts in 1907 were $1,316, and in 1908, $1,076. He used a cash-book and the two record books required by the employment license law. He supplied colored help for white families almost entirely; business was running low because white help was "displacing the colored help of years past."

No. 9. This was a restaurant, established in September, 1904, and moved to the present address two years later. The proprietor was born in Jacksonville, Florida, and had resided in New York six years when interviewed. He was a cook and head-waiter before beginning business for himself. He had two employees, his place occupied a 14 feet by 40 feet bas.e.m.e.nt, for which he paid about $18.00 rental. His fixtures, _etc._, were valued at about $150, and his gross receipts were about $3,500 in 1907, and $3,000 in 1908. He had saved money for the enterprise while engaged in hotel service in Jacksonville. All his customers were Negroes, except one white regular customer. He admitted occasionally giving credit to customers, although a sign on the wall said, "Positively, no trust."

No. 10. This firm sold coal, wood and ice. It was established in September, 1907, at the address where found, by a native Virginian who had lived in New York seventeen years, and had previously worked as a porter in a jewelry house. No help was employed and the small amount of stock on hand, between $40 and $50, was kept in a cellar about 12 feet by 18 feet. For this a rental of about $8.00 per month was paid.

The gross receipts amounted to about $800 in 1908. The proprietor had saved some money from his previous occupation on which to begin; he was located in a Negro neighborhood, so depended entirely on their patronage. He habitually gave credit to customers but received none from his white suppliers.

No. 11. This tailoring establishment was started in September, 1907, by a West Indian, who had lived in New York eighteen years and had worked as journeyman tailor in St. Christopher, W.I. He had moved five times since the business was begun. He did mostly cutting and fitting, but some "busheling." He did not employ any help, and lived in two rooms in the rear of his business place, paying $25 per month for all.

The tools and fixtures were worth about $150, and the stock on hand about $50, while gross receipts had amounted to $1,200 in 1907 and about $1,100 in 1908. He kept a cash-book; gave credit occasionally, but received none.

This proprietor said he came to New York leaving paying work behind, because of tales of high wages in his trade; that at first he answered advertis.e.m.e.nts for journeymen but was turned away when they saw he was a Negro. Finally, he worked as waiter to get money to start for himself. His first "stand" was in a white neighborhood with white trade, but when a considerable number of Negro customers began to frequent his place the neighbors made objections to the landlord, who would no longer rent him the place. At the time of the interview he was in a Negro neighborhood and had only four or five white customers.

No. 12. This also was a tailoring firm, started in 1907, which did mainly cleaning, pressing and repairing ("busheling"). The proprietor was a Georgian by birth, came to New York six years previously, and worked as a valet, and as elevator man in an apartment. He employed one part-time a.s.sistant, used for his business the front room, about 12 feet by 14 feet, of an apartment which rented for $25 per month.

His tools and fixtures were valued at $140, and he carried about $75 worth of second-hand clothing in stock. His gross receipts in 1908 were about $800. He kept lists of work done for customers. He had been in the same line of business for seven years in his native state, and both times had saved wages to carry out his "desire from a lad up to do business." About two-thirds of his customers were white, and he gave credit habitually.

No. 13. This firm for express and moving service was established in September, 1902, in the same block where found, by a Virginian, who had lived in New York City fifteen years and who worked as a Pullman porter before beginning in this line of business. He usually employed from five to seven men, according to the seasonal trade. He had an express wagon and two vans, which with the horses were valued at $1,200. His gross receipts amounted to about $3,100 in 1907, and about $3,600 in 1908. In keeping accounts both ledger and day-book were used. The proprietor had run a small grocery in Virginia before coming to New York, and some of the capital from its sale had been saved and put into this enterprise. He depended upon white customers for about two-thirds of his patronage.

No. 14 was a manicurist and hair-dressing firm started by the proprietress in May, 1903, who had been in New York eleven years in 1909 and who worked at a pocket-book factory before starting into this venture. She was a native of Virginia. The enterprise was not large enough for any employees; tools and fixtures were worth about $60, and hair goods, _etc._, on hand were valued at $75; the front room, about 12 by 14 feet, of the living apartment was used for business purposes.

In 1907 and 1908 the gross receipts averaged about $1,000, which was mainly fees for manicure and hair-dressing services. This enterprise was started that the proprietress might "be at home," and a cash trade almost solely among white people was being developed.

No. 15. This was an undertakers establishment started in 1897 by a minister, who came to New York from Virginia about twenty-five years ago. The firm had been located at the address where found about nine years, and had a branch in another part of Manhattan. Two helpers were employed, the floor s.p.a.ce was about 20 by 40 feet, for which a rental of $35 per month was paid. Tools and fixtures, including dead-wagon, were valued at $1,200, and about $300 of stock was kept on hand. The gross receipts of the business were about $9,000 in 1907, and about $8,000 in 1908. Ledger, cash-book, day-book, and funeral register were used in keeping accounts. The proprietor started on a small saving from his salary as a minister, having to run the business a year before he had the additional $200 in cash for deposit for registration in the Casket Makers a.s.sociation, thus securing credit on supplies. He habitually allows credit to customers, all of whom, with very rare exceptions, are Negroes.

No. 16 was a hotel on the European plan, established in 1899 by a Georgian who had been in New York five years previously and had saved his wages in several kinds of hotel work to get his start. He usually employed six helpers; the place occupied a four-floor building about 25 by 60 feet, for which a rental of $1,800 per year is paid.

Fixtures, furniture, _etc._, were valued at $2,000. The gross receipts of the hotel were a little over $10,000 in 1907, and between $9,000 and $10,000 in 1908. Both ledger and cash-book were used in keeping accounts. Nearly all customers were Negroes, and whites were not especially sought because those who did come were usually looking for a colored dive and did not act in an orderly way. Credit was occasionally allowed customers and the firm had such standing that it could get such amounts from suppliers as it wished.

No. 17 was a pool-room with a club arrangement in connection. It was started in 1901 by a native of Virginia, who had been living in New York eleven years. The firm had moved once since its establishment.

The proprietor was a waiter before beginning this enterprise; he employed two helpers, his place occupied three floors about 25 by 40 feet, and he paid a rental of $75 per month. His fixtures, tables, _etc._, were valued at between $1,800 and $2,000, and he said they were all paid for. In 1907 the gross receipts were about $3,400, and in 1908 about $3,700, the "best year." A cash-book was kept and balanced twice a year. Negroes "almost altogether" were customers.

This proprietor had an ambition from boyhood to run a business and at one time had a second-hand furniture store in Long Branch, N.J.

No. 18 was a job-printing house, started in June, 1908, run since that time at the same place by two partners, one of whom was born in Washington, D.C., the other in the West Indies. The West Indian had been in New York fifteen years in 1909, and had been in the same business once before; the other had been in New York twenty-five years; both had saved money as they worked as journeymen printers before entering business for themselves. At the time of the interview they did not employ any helpers, but their tools, fixtures, _etc._, were valued at about $900, and the floor s.p.a.ce occupied was about 14 by 25 feet. The gross receipts during the six months of 1908 were about $900, and the monthly average for the first month of 1909 was somewhat higher. A cash-book was used in keeping accounts, and about one-third of their customers were white people. They did a strictly cash business.

No. 19 was a saloon and cafe which was opened in November, 1908, at the place where found. The proprietor came from Kentucky to New York about ten years previously and worked in a cigar store. He employed from seven to nine helpers, and his place occupied about 20 by 60 feet floor s.p.a.ce, with a rathskeller in the bas.e.m.e.nt; he paid $100 per month rental. Fixtures, _etc._, were valued at about $2,200, and stock was kept on hand to the amount of between $700 and $800. Sufficient data for an estimate of gross receipts were not forthcoming. Ledger and cash-book, with cash-register, kept record of business transacted.

Customers were "Negroes, almost exclusively" with a "white person now and then." At one time the proprietor ran a cigar store, growing out of his work in such an establishment.

2. THE NEGRO CORPORATION

As was pointed out in a previous chapter, the Negro enters business either alone or with one or two partners. Small enterprises can be so financed. But for undertakings that require considerable capital those who enter them must either have large means or a number must combine their small funds.

The Negro is alert to business lines which offer chances of profit. He is slowly learning the method of "big business." The corporation, with its advantages of impersonal responsibility, facility for taking in or releasing members, and particularly its combined capital, has been adopted in a few cases. These can be treated briefly for what variations they show from the general type.