Diversity & Social Justice in Entrepreneurship
Laura Marti – August 3, 2021
In almost every category, Women of Color are leading the women-owned business charge!
According to the 2019 State of Women-Owned Businesses Report, women started almost 2,000 new businesses per day in the U.S., and women of color accounted for 9 out of 10 of those new businesses. In fact, Black women started an impressive 42% of net new women-owned businesses, which is three times their share of the female population!
As work trends shift towards side hustles and the gig economy, so does female entrepreneurship.
Women of Color are more likely to have a part-time business. This is often called “sidepreneurship,” and it allows more options for traditional employment and entrepreneurship for women. From 2014-2019, the number of women sidepreneurs increased to 39%, compared to a 21% average rate of entrepreneurship. Among minority women, it’s even higher: 65% compared to 32%.
The annual report, based on U.S. Census Bureau data, also found that when looking at specific minority groups over those five years, growth in women sidepreneurs is up:
- 99% among African American women
- 70% among Native Hawaiian/Pacific Islander women
- 63% for Asian American women
- 46% for Latina/Hispanic women
- 36% among Native American/Alaska Native businesswomen.
These entrepreneurial ventures are concentrated in three sectors:
- service businesses like hair, nail salons and pet care;
- healthcare and social assistance; and
- professional/technical services like lawyers and bookkeepers.
Source: Create & Cultivate
Even though minority-owned businesses are growing, the revenue disparity is increasing. In 2014, minority-owned businesses averaged $67,800 a year; by 2019 the average had dropped to $65,800, a decline of 3%. Determining the reasons for this disparity is one of the most studied topics by economists, sociologists and other social scientists over the past several decades. It’s also notable that the top three money-making sectors are wholesale trade, retail trade and manufacturing, which are not represented well by Black-owned businesses.
Besides the normal challenges of running a business, Black business owners must also navigate various kinds of historical discrimination such as funding gaps between white- and Black-owned businesses, whether being discouraged from requesting loans or being denied access to capital. Research shows Black business owners are often fighting an uphill battle against low credit scores, racial bias, and societal expectations. That’s why so many activists are encouraging people to support Black-owned businesses.
While becoming more aware of these disparities and discrimination, it was exciting to come across the new Goldman Sachs investment initiative called One Million Black Women. They are committing to $10 billion in direct investment capital, and $100 and philanthropic support to “address the dual disproportionate gender and racial biases that Black women have faced for generations.” Their research has shown that “one of the fastest ways to accelerate change and effectively begin to address the racial wealth gap is to listen to and invest in Black women.” We agree!
So they are launching a series of listening sessions to solicit input from Black women across the country on investments, companies, resources and programs that can be most impactful in serving Black women and transforming communities.
Black women (and other women of color) are resilient! Despite whatever odds may be against them, they continue to push forward using their creativity and innovative thinking to bring positive change.
Here’s your challenge
During Black Business Month, find Black women-owned businesses in your own local community and online that you can support, and use your spending power to make a difference and help drive that revenue disparity down.
- You can start by taking a look at this great piece by Create & Cultivate, which features a wealth of incredible Black women-owned businesses you can support today. Let’s all give them some love and invest in Black women! 99 Black Women-Owned Brands and Entrepreneurs to Support Now and Always (Create & Cultivate, 2021)
- Check out the Goldman Sachs initiative here: Goldman Sachs One Million Black Women
Black Women-Owned Businesses on the Rise References
Woman-Owned Businesses Are Growing 2X Faster On Average Than All Businesses Nationwide — The Amex Report in Business Wire (2019)
Women are Leading the Rise of Black-Owned Businesses — US Census Bureau 2016
Survey of Business Owners and Self-Employed Persons (SBO) — US Census Bureau
Black Womenomics: Investing in the Underinvested — Goldman Sachs Research
Financing Black-Owned Businesses — Stanford Institute for Economic and Policy Research