The Business Struggles of Women and Minorities

There is a significant disparity between women and minorities as business owners when compared to their white and male counterparts. There are a multitude of factors that have precipitated and continue to exacerbate this divide, but despite the inequalities that have prevented women and minorities from starting and operating businesses, both groups have been making progress. These groups of individuals have become a force to be respected in the last few decades, although there is still work to do. We will discuss the current state of these business owners and how we can improve the future diversity of business.

Why are women and minority businesses important?

The U.S. Census, released in January 2021, showed that minority-owned businesses accounted for 18.3% of all businesses, despite comprising 40% of the population. Women-owned businesses accounted for 19.9% of all businesses, while women make up the majority of the population at 50.8%. If these numbers don’t make sense to you, then you are correct.

Minority and women-owned businesses are underrepresented as business owners. This is important because these entrepreneurs not only create jobs and play a vital role in the economy, but they also provide goods, services, and a unique perspective to the women and/or minority populations they are serving. Minority immigrants are actually twice as likely to start a business than minority citizens, but they are also vital to the overall diversity of a community. Minority immigrants are more likely to start businesses in more impoverished areas. These entrepreneurs are able to provide resources to their community while also providing jobs. In addition, their services and products can help uplift a community by bringing capital into the area (Source). Underrepresented business owners provide services and opportunities “by the people, for the people”.

COVID-19 and Underrepresented Businesses

By this time, we all know that COVID-19 has had a significant impact on businesses, both big and small. From February to April of 2020, the number of working business owners dropped by 22%. Blacks and African Americans had a 41% decrease in active business owners, compared to 32% for Latinx, and 36% for immigrants, and women business owners decreased by 25%. By June 2020, the numbers improved, but African Amercans still experienced a disproportionate loss. The ability of a business to come back from a significant loss, such as that caused by the pandemic, largely depends on the ability to gain additional capital. Blacks and African Americans have more difficulty raising start-up money and are less likely to apply for and receive loans than any other minority (Source). 

This is significant, not only to the individuals, but to the economy. These women and minority-owned businesses may be vital to their community, while the collective whole are important for economic efficiency. COVID-19 reiterated that when there is an economic crisis, despite the loss of businesses from all socio-economic statuses, there is a lack of support for the most vulnerable of businesses.

Women-Owned Businesses Are Equal Opportunity

Surprisingly, or maybe not so surprising, women-owned businesses consist of 42% minority-owned, which is more consistent with the population distribution. It is unclear why, but it is possible that when women are not competing with men for business opportunities, there are more openings for equality. This may also be specific to the industry in which men and women open businesses. The majority of women-owned businesses are in the service industry, and the majority of venture capital is given to software and biotechnology businesses. Only about 2% of venture capital funding was being received by female-only founders as recently as 2016 (Source).

How Can We Help?

To improve opportunities for minority and women-owned businesses, the United States has enacted government programs, loans, and discounts for these populations, but the effect is temporary. Starting a business is just the beginning and more challenges are down the road as a business moves to increase sales, profits, and workforce (Source). As an individual, how can we support these underrepresented business owners?

Buy

The easiest thing you can do to support women and minority-owned businesses with your patronage. As a woman or minority, shop local and support businesses with owners and workers that are similar to yourself. Authenticity is apparent in places of business that are true to who they are. Even if you are not a woman or belong to a minority, you can still support those businesses and allow them to share their flavors, products, experience, and knowledge with you. 

As a business owner, you have the opportunity to support other businesses through purchases of goods and services. When choosing an accountant or fishmonger or any other business need, don’t neglect minority or women-owned businesses just because they are not “familiar”. Find a fit that is right for your business, but don’t discount these underrepresented options because they are not what you are used to seeing.

Assist

Starting and owning a business comes with challenges, some expected and some not. Share these challenges with others so that they too can be successful. Especially as a minority and/or woman your experience navigating this difficult terrain, your input could mean the difference between success and failure for another business. There are many ways to share. For example, providing a loan for a business that is having difficulty obtaining funding, a major hurdle for women and minorities, is an option (Source).

Encourage

If a financial commitment to a new business is beyond your capability at the moment, volunteer to answer questions for new or aspiring entrepreneurs could make a significant impact. Wright Village offers activities, talks, and group events to assist its patrons with being successful. Consider speaking to a small group and being an inspiration, it could make all the difference. Finally, you can participate in other ways, such as joining a business meet-up group, writing a blog post (like you see here), or simply having open and honest conversations about business ownership and the importance of supporting women and minority businesses.