More women are taking the leap into entrepreneurship than ever before. As life can be unpredictable it’s advantageous to have more than one source of income. For many owning a business is their fulltime job but for most entrepreneurship is a stream of side income–but apart from being your own boss, there is a slew of reasons entrepreneurship has become so attractive to women. But why are black women now seemingly in droves starting their own businesses? this article is will answer that question.
Entrepreneurship and Black Women
MadameNoire partnered with Civic Science to conduct the MadameNoire Financial Behavior Study by implementing a reader poll of more than 500 Black women to learn more about their money habits. Here are a few highlights regarding entrepreneurship:
- Approximately one-third of Black women polled are entrepreneurs.
- Individuals who made more than $150,000+ annually are most likely entrepreneurs.
- Individuals with a graduate degree are most likely entrepreneurs.
According to experts, it isn’t surprising that many six-figure earners are also business owners. “More women of color are attuned to the slights of being passed over for deserved promotions and race/gender-based pay gaps. Entrepreneurship is a way to remove some of those limits and provides an opportunity to follow one’s own path,” says Aliche. While education (formal and informal) and money are great resources for budding businesswomen, history proves you don’t need either to start a small biz.
“Business ownership really opens the doors to unlimited earning potential,” says Tiffany ‘The Budgetnista’ Aliche. “Entrepreneurship shows women that they can (and should) unapologetically charge what they’re worth for their products, services and time. As this happens, they are better able to support themselves, support their families, and invest for the future.”
The 2018 State of Women-Owned Business Report commissioned by American Express, revealed, what’s more, a catalyst for making the leap into entrepreneurship, the Federal Reserve Bank of Kansas City report said, “often was poor treatment and the perception of being undervalued in the workplace.” The Amex report echoed this, noting that “higher unemployment rates, long-term unemployment, and a much greater gender and racial pay gap have led women of color to start businesses at a higher rate out of necessity and the need to survive.”
The number of women-owned businesses grew an impressive 58% from 2007 to 2018. There are 2.4 million African American women-owned businesses in 2018, most owned by women 35 to 54. Black women are the only racial or ethnic group with more business ownership than their male peers, according to the Federal Reserve.
Differences in Sales Amongst Races
Black women may be on top of the entrepreneur hierarch, however, the number of Black women owning businesses doesn’t mean it is easy to secure the bag. American Express found that the gap is widening between the average revenue for businesses owned by women of color and those owned by non-minority women. For women of color, average revenue dropped from $84,000 in 2007 to $66,400 in 2018, while for non-minority businesses, revenue rose from $181,000 to $212,300. And the gap between African American women-owned businesses’ average revenue and all women-owned businesses, Amex found, is the greatest.
On average, annual sales at businesses owned by black women are two times smaller than the next-lowest demographic group, Hispanic women, and close to five times smaller than for all women-owned businesses, according to the Federal Reserve. The average annual sales for businesses owned by black women was $27,752 in 2012 (the most recent figures available), compared to $143,731 for all women and $170,587 for white women. There can be a myriad of reasons for Black women sales being much less than other races; including, not having access to certain loans, marketing costs, services rendered or even support from her own community.
According to How Men and Women Business Owners Perceive Success there are four factors that business owners use to measure their success: 1. financial success 2. personal satisfaction 3. work-life/family-life balance, and 4. satisfied stakeholders. Those factors are very similar to those working in traditional employment.
Kudos to women across the world stepping out and taking a leap of faith or even circumstance in starting a business especially black women as there are far more battles for them to overcome. If you’re thinking about starting a viable business the first step would be creating a business plan then seeking out available resources such as the small business administration to help you succeed.