Diversity and Small Business, Part 2

Manomet: What key facts are important to know about the demographic of small businesses that you focused on? Were there any statistics that surprised you?

Devin Harris, Kean University, Class of 2021 (Black-owned): As of 2017, the latest reference year for business owner demographic data by the Small Business Administration, there were nearly 3 million Black-owned small businesses, with just 124,000 having employees. Just for some context to understand the population of Black-owned businesses in the U.S., of the approximately 330 million people living in America, 60% are non-Hispanic whites and 12.5% are black. So, out of about 41,250,000 Black people, only 2.8 million are business owners, meaning a little more than half of one percent of the race are business owners (0.07%).

About 38% of Black-owned businesses are in health care and social assistance, repair and maintenance, and personal and laundry services. Other categories include advertising firms, auto dealerships, consulting services, restaurants, beauty care (barbershops/beauty salons), and more.

About 28% of the businesses located in Washington D.C. are Black-owned, the highest ratio in the United States. But the state of New York has the highest number of Black-owned businesses overall, with about 8,000. Following New York are Georgia, Florida, and Texas.

Desiree Dator, SUNY Maritime College, Class of 2022 (Women-owned): Women-owned small businesses (WOSB’s) are a critical part of the U.S. economy, with more than 12 million businesses (or 40%) in the U.S. owned by women. These firms are creating jobs, adding diversity, and increasing in number each year. Yet there are some surprising statistics too. Only 25% of women business owners seek financing, and when they do, women request tens of thousands of dollars less in financing and receive around $5000 less in loans than men.

Julia Iannuzzi, University of Maine, Class of 2021 (Women-owned): While fewer small businesses are owned by women than men, the number of women-owned businesses in the U.S. is increasing significantly faster. And I was really surprised to learn that businesses owned by women of color grew by 163% between 2007 and 2018.

Manomet: What challenges (particularly related to sustainability) are most impacting this demographic of small businesses?

Iannuzzi: Financial sustainability seems to be a struggle for many female business owners. In my research on the topic, women are less likely to ask for loans than men, and less likely to be approved for funding.

Dator: Research indicates that women business owners are more aware and actively want to conduct changes related to sustainability, such as reducing their carbon footprint. In my research, I can attest to this, however, I think the biggest obstacle in preventing these changes is funding. Research shows that women ask and receive less money than men, and it makes more sense for WOSB’s, particularly newer ones, to put that money into other areas, such as marketing. With limited funds, even if a business owner wants to make sustainability changes, it’s a toss-up between what is best for their business and what will increase their financial returns. Connected with this, most people aren’t aware that small sustainability changes are great for both the environment and their financial returns. Small changes like going paperless, using LED lightbulbs, etc., can help business owners save money.

Manomet: What did you learn from the small business owners you spoke with about how the past 18 months have impacted their business?

Dator: COVID-19 has impacted the world, and small businesses have heavily felt this. From the WOSB’s that I’ve talked to, they have had to change how they operate their businesses at their core. From going completely remote to learning new operating systems to match this online format better to securing the funds to stay afloat. It has been incredibly difficult for them, but these women have taken it in stride, pushing boundaries and never giving up from what I’ve seen. When they have encountered issues, such as creating health measures to keep employees safe and at work, they were innovative and proactive.

Harris: Overall, the owners explained how the closure of their physical business operations slowed down many of their traditional business sales and communications.  But, although their business slowed down for them in-person/physically, the pandemic opened up a new online avenue for some business owners to try out.  Online sales, partnerships, and advertisements are all ideas and new opportunities that impact these businesses for the better. As a result, their business practices have improved, and they have built trust with their employees by implementing new ideas.  In 2020, when the killing of George Floyd occurred, a spotlight was put on all forms of racial inequality, including business.

According to a data analysis by Yelp, “The resulting conversation about race has changed where many consumers have been spending their cash. Searches on Yelp for Black-owned businesses across the country jumped 3,085% from February of 2020 to February 2021.”

More on the topic of the boom of black-owned businesses since the killing of George Floyd can be found here: https://www.wgbh.org/news/local-news/2021/05/27/how-the-black-lives-matter-movement-boosted-local-black-owned-businesses.

Manomet: How has focusing on this segment of small businesses impacted/changed you?

Iannuzzi: As a young woman in the early stages of my career, speaking with women-owned small businesses has made me feel that owning a business someday is possible. Before this, I never saw this as a feasible option, but I was inspired by the many women I spoke with, especially those in male-dominated fields.

Harris: Focusing on the Black-owned business sector has left such a remarkably great impact on my mind and heart.  As I am pursuing higher education and going to graduate school, getting to know these small business owners’ operations and how they got to the level they are now has enlightened my mind to great heights.  Risks will test how bad you want something or how you want something to come out; each owner explained the risks that they took to get to the place they’re at now. Learning their stories made me appreciate how they became Black business owners in America even more.

According to an annual study by the Kauffman Foundation, “last year there were more new Black-owned businesses proportionate to the total population than at any time in the last quarter-century…Black entrepreneurism ranked higher than for white-owned and Asian-owned companies,” the group found.

Here are a few statistics from last year on the black-owned businesses:

• On average, 380 out of every 100,000 Black adults became new entrepreneurs during the 2020 pandemic, up from 240 in each of the prior two years.
• Some 40% of Black-owned firms closed in the immediate aftermath of the outbreak versus 20% of all active U.S. businesses.

To found out more information about how black businesses strived and took significant hits, visit the link below:

https://www.latimes.com/politics/story/2021-06-28/pandemic-silver-lining-black-owned-business-startups-surge-to-25-year-high.

Dator: As a young woman in college, soon going into the business sector, it has been an honor to talk to so many successful women. I have been impacted immensely by seeing how strong and determined these women are; they are role models, someone to look up to and learn from. Speaking to these women has taught me to never give up, to believe in myself, and that the sky is the limit for my success.