Black Women Are The Fastest Demographic Starting Businesses

Black women are the fastest growing group of entrepreneurs in the United States owning roughly 2.7 million businesses nationwide. According to a 2019 report by the National Women's Business Council, the number of firms owned by black women grew by 164% between 2007 and 2018. Black women-owned businesses represented the highest rate of growth of any group in the number of firms between 2014 and 2019 as well as between 2018 and 2019. They started 42% of net new women-owned businesses, which is three times their share of the female population (14%)

Black female owned businesses have grown 114% while overall entrepreneurship among all demographics has declined. Black women are starting businesses at rates double of white women and 6 times the national average.This growth can be attributed to a number of factors.

GROWTH FACTORS

The rise of the digital economy: The internet and social media have made it easier for Black women entrepreneurs to reach customers and grow their businesses. Especially, in the internet age, they have a countless number of visible examples to model themselves after.

Strong sense of community and support: Black women entrepreneurs often rely on networks of family, friends, and other business owners for support and resources which can be crucial for starting and growing a business.

Rising demand for products and services that cater to diverse communities: As the population of the US becomes more diverse, there is a growing demand for products and services that cater to the specific needs of diverse communities, including those owned by Black women.

Addressing a need in the market: Many Black women entrepreneurs start businesses in industries that are underserved by mainstream companies, such as hair care, fashion and beauty.

A desire for financial independence and control over their careers: Many Black women entrepreneurs start their own businesses as a way to gain more control over their financial futures and career paths. During the pandemic, people were forced to be innovative, decided to pivot and realized that it was possible to create their own career path. For many that included entrepreneurship.

Lack of representation and opportunities in traditional corporate settings: Black women often face discrimination and bias in the workplace, which can make it difficult for them to advance in their careers. Starting their own business allows them to create their own opportunities and achieve financial independence.

High levels of education and professional experience: Many black women have high levels of education and professional experience, which gives them the skills and knowledge needed to start and run their own businesses.

Government and private initiatives to support and encourage the entrepreneurship of black women and the awareness of the challenges they face are also contributing factors to the growing number of black women-owned businesses.

BARRIERS

It's important to note that despite this growth, Black women-owned businesses still face significant barriers to success and access to capital. The 2019 State of Women-Owned Businesses Report by American Express highlighted that businesses owned by Black women tend to be smaller, have lower revenues and less likely to be profitable than the national average.

Limited Access To Capital:

There is a lack of access to traditional forms of funding: Black women often face discrimination when seeking funding from traditional sources such as banks and venture capitalists, leading them to turn to alternative forms of financing. digitalundivided’s ProjectDiane (2020) study found that the median seed round a Black woman founder raises is $125K compared to the national median seed round of $2.5M. Firms started by Black women received only .0006% of VC funding raised by startups between 2009 and 2017. Less than 100 Black women raised $1 million or more in venture capital funding in 2020.

Another study found that Black women faced more obstacles than white men when accessing financing for their businesses, even with similar qualifications and credentials. compared to the national median seed round of $2.5M. Firms started by Black women received only .0006% of VC funding raised by startups between 2009 and 2017. Less than 100 Black women raised $1 million or more in venture capital funding in 2020.

CONCLUSION

African American women have moved up from being the least likely to start a business to become the fastest growing demographic. Despite the myriad of challenges that Black women entrepreneurs face, they are determined and resilient, and they are making a significant impact in the business world. May the startups continue, may the gates open wide for funding and may the support for Black women-owned businesses grow exponentially!

Resources

American Express, “The 2019 State of Women-Owned Businesses Report.” (September 2019)

digitalundivided’s ProjectDiane (2020)

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HEY, I’M MIA…

I'm a multi-passionate creator, small business owner, designer, wife, mother of three, foodie and travel daydreamer born and raised in Los Angeles, California.

I'm a digital product entrepreneur and small business startup coach who teaches aspiring entrepreneurs who don't know what to do, or where to start, how to create and launch their dream business.

I'm excited to partner and coach those who desire to share their gifts and talents with the world through entrepreneurship; from starting a side hustle to creating a legacy by being in business for themselves, resulting in lives changed and communities uplifted.

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