How diverse-owned businesses can gain access to a professional network and resources.
As an entrepreneur, finding a small business mentor or sponsorship can be the key to reaching new levels of success. Studies show that diverse-owned businesses are more likely to lack access to a professional network that can connect to crucial resources like capital.1
These relationships matter. According to a 2021 Small Business Credit survey by the Federal Reserve, diverse small business owners were more likely than white-owned firms to report poor or fair financial conditions. The majority, or 79% of Asian-owned firms and 77% of Black-owned firms, reported fair or poor financial conditions compared to 54% of their white counterparts.2
One way to combat these disparities is to pursue small business sponsorships and mentorships. Sponsors and mentors are similar, but slightly different relationships; both can help business owners.
Whether you’re a business enterprise seeking guidance or in a position to provide it, here are some tips on how to expand your network through these relationships. Networks can be a catalyst for beneficial business partnerships and access to capital, ultimately helping business owners build financial resilience.
What is the difference between a mentor and a sponsor?
Mentorship centers around guidance such as coaching, goal setting, or accountability. Sponsorship includes mentorship plus resources like access to capital, key relationships, and influence to support key business endeavors.3
What does an ideal mentorship relationship look like?
There are no hard and fast rules when it comes to mentorship. Providing advice, guidance, and goal setting is a great start. An ideal mentor is a seasoned professional in your industry who wants to pass on what they’ve learned. Mentors with special expertise can provide insight on critical topics like taxation, raising capital, scaling, marketing, technology, and more.
Tip: Understand what you need
These relationships tend to be informal, so it helps to know what areas you need the most help in so you can seek it out. It’s also a plus to find someone who relates to or understands your challenges as a diverse business owner. Small business owners looking for a mentor should also understand the kind of commitment they are looking for. Assess how much support and time your mentor can provide. Think about how often or where meetings can take place. Traditional mentoring relationships are one on one, but it could also be calls or at industry events.
What does an ideal sponsorship relationship look like?
Sponsorship is very much like a mentorship with added benefits. Sponsors may also provide capital, help with credentials like certifications, advocate on your behalf, or provide connections. These resources can be a catalyst for businesses to reach financial and growth milestones much faster than they would without a sponsor. Traditional sponsorship typically involves money in exchange for promotion. Sponsorships are not easy to find, but can come from many sources, including larger competitors, vendors, clients, or anyone willing to vouch for you.
How can diverse business owners find a sponsor or mentor?
Start with your personal network and reach out. Next, attend networking events in your industry. This could include conferences, Facebook groups, or mastermind cohorts. You might also check out industry forums, local community groups, or your church or other religious organization (if that’s a part of your network), and connect with established professionals on social media as appropriate.
Another valuable resource is your local SCORE branch, which has mentorship opportunities specifically for Black, Latino, and Asian American business owners. Large corporations sometimes host formal mentorship and sponsorship programs and post updated information about these efforts on their websites. These programs may be part of supplier diversity programs.
Tip: Boost your online presence
As you do outreach, make sure that you’ve got a public-facing profile, such as on LinkedIn, so your contacts have something to reference. When you broadcast your businesses’ activities, you are letting potential sponsors know that you are already active in your industry, which might inspire them to help you.
Make the ask
Once you find a potential sponsor or mentor, make the ask. For mentorships, it’s important to form a relationship first. If you’re discussing a sponsorship and money or something else of value will be exchanged, create written documentation such as a promissory note or assignment of shares when exchanging equity for capital.
Keep at it. Expanding your network takes time. Suppliers, customers, consultants, or brand ambassadors are all places to look. No matter the arrangement, perform on the deliverables, and pay it forward to other diverse small business owners when you can.
The good news is that both mentorship and sponsorship arrangements can advance the diverse business owner community as whole. No matter which side of the relationship you fall on, these mutually beneficial opportunities can be the tide that rises all boats and can support lasting business growth.
1. Federal Reserve, Small Business Credit Survey: 2021 Report on Firms Owned by People of Color
2. Federal Reserve, Small Business Credit Survey: 2021 Report on Employer Firms
3. Time, How to Find a Sponsor to Boost Your Career