According to the Census Bureau, 89 percent of businesses in America have fewer than 20 employees and 62 percent have fewer than five. Yet, they play a huge role in building sustainable, equitable local and regional economies. Many small business owners often struggle with how to incorporate diversity into their business. Strapped for time and resources, diversity, equity and inclusion (DEI) seems too risky to take on. However, the opposite is true: Small businesses have unique opportunities to find homegrown talent and new sales opportunities in overlooked communities.
This is also true in real estate, where many agents are small firms with a couple of agents, looking to grow their business. There are an estimated 5,628 agents in Boston alone, and in Martha’s Vineyard, for example, one out of every 24 people are real estate agents. If you are one of the many agents hoping to build your business, diversity is one of the few blue ocean strategies remaining for this market. This history of exclusion gives agents an opportunity to reach out to communities excluded based on race.
Real estate has a well-documented history of exclusion and predatory inclusion. In 1934 the federal Home Owners Loan Corp. was formed to promote home ownership and worked with banks to expand access to mortgages by providing mortgage insurance. The insurance had two conditions: that properties be new (helping drive people out of the older cities) and that the community was racially homogenous.
“And so that meant that they would be white because they were outside of the city, just as Black people were beginning to move into cities. And this became colloquially known as redlining,” said Princeton professor Keeanga-Yamahtta Taylor, in an interview with Vox.com about her book “Race For Profit: How Banks and Real Estate undermined Black Home Ownership.”
These traditions have not gone away. Just last year the Boston Globe highlighted an undercover investigation on racism in the Boston market and the headline said it all: “Researchers expected ‘outrageously high’ discrimination against Black renters. What they found was worse than imagined.” Over 71 percent of Black renters faced discrimination from ghosting to being offered fewer incentives then their white counterparts. Racism – and consumers’ perception of racism – in the real estate industry is bad for business in a country that gets browner every year. The fact of the matter is people of color are growing working- and middle-class America and building new economies. Black women are starting more businesses than any other demographic, the Black community has over $1.4 trillion in buying power. Latinos, a growing demographic, have an estimated $1.7 trillion of buying power.
Attracting these markets isn’t hard. Here are some ways to think about building your business with DEI in mind.
Recognize the value in diversity. Often when companies think about diversity, the first thought is a charitable one. It assumes that the quality of work, candidates or consumers will suffer by diversifying. But it’s just not true. Study after study finds that diverse teams are more profitable and are more successful entering new markets. Making sure you understand how diverse teams and consumers can build your company creates a sustainable model for weaving DEI into its everyday habits.
Get to know local agents of color. Go into any neighborhood of color and you will see who the community’s local trusted agents are. Building relationships with diverse agents can help you better understand the market and the cultural norms of selling or renting to and with people of color. There may even be business opportunities and partnerships there.
Hold yourself accountable. Tying diversity goals to evaluations including your own is important to the success of any DEI plan. The purpose of accountability is about responsibility, not guilt. Be open about DEI goals to help hold yourself accountable and be more open to learning. DEI work is a practice, and you may miss the mark at first, so grace in learning is important.
Pursuing customers among the Black and brown residents of America are essentially a blue ocean strategy. Millennials are the largest, most diverse demographic living. And being tied in the public eye to historical real estate exclusion is not a smart future growth strategy. Small real estate agencies have a chance to expand and grow with the future in mind and benefit from the new emerging middle class.
Malia Lazu is a lecturer in the Technological Innovation, Entrepreneurship and Strategic Management Group at the MIT Sloan School of Management, CEO of The Lazu Group and former Eastern Massachusetts regional president and chief experience and culture officer at Berkshire Bank.