Report: Black Women Entrepreneurs Offer Opportunity to Impact Poverty Gap

PhenomenalMAG Staff  |  Business Savvy

The number of businesses owned by Black women has been on a steady climb.

In fact, “Black women started 1 million businesses between 2002-2012”, but so few are talking about what the data represents and what it has the potential to bring to the table.


In a focus group done by the Federal Reserve Bank of Kansas City, 34 black women business owners participated, and the findings drew nationwide attention.


The Bank determined it was important to gain insight into this group of business owners for two reasons: First, the recent growth in the rate of business ownership by black women has been faster than any other group in the nation. Secondly, small businesses make important contributions and play a key role in the growth of national and local economies.


Yes, Black women businesses are on an upswing, but how do you make sense out of the dollars?


Here’s how!


“From 2002-12, the number of businesses owned by black women increased 179 percent compared with 52 percent for all women-owned businesses and 20 percent for all businesses. Businesses owned by black women tend to be significantly smaller on average than other business ownership identified by race and gender. However, research that these micro-businesses provide become valuable contributions to local economies.


“Phelica Glass, a licensed clinical social worker who works in private practice states, ‘Black women are actually building businesses at a large rate that the community does not talk about.’”


“‘To be a part of the number is phenomenal, but I also love the idea of talking about how do we support black businesses that are owned by women or minorities in general, so that they can become large-scale,’ she said. ‘We’re groomed to grow up and work for someone else, and make someone else a millionaire. We’re never taught that we can be that millionaire.’”


But what do you do with the data now that it's been brought to focus?


Research shows that an increase in entrepreneurial activity is associated with faster local economic growth, provides a potential pathway to developing economically challenged communities, provides local jobs and improves the tax base.


The high growth rate of black women-owned businesses provides policymakers and economic developers a unique opportunity to create policy and programming to accelerate and expand the economic impact of these businesses in their local economies.


Dell Gines, senior community development adviser of the bank’s Omaha branch, talked about what the real numbers behind the report means, and what communities can do to back these businesses.


“The first stage is awareness, then it’s acknowledgement, then it’s activation,” Gines said. “The reality is [that] people just don’t know. I’ve known about this trend for a long time. Why is no one really talking about this?” Gines adds, “for folks that want to develop programming to accelerate economic growth, reduce [the] poverty gap, decrease [the] wealth gap, it gives you a blueprint of what your general black woman entrepreneur is.”


Though business owned by black women are going uphill, it hasn’t really tipped over into the hiring of employees. The data revealed that black women don’t have employees, work part-time in their business and have an average annual sales of $28,000. This is significantly lower than the $140,000 average for all women-owned businesses, Gines said. And with that, many of those businesses don’t necessarily convert overtime into hiring employees, often staying a one-woman show.


Though low sales may be part of the reason communities and economic developers don’t really focus on the Black women business and general entrepreneur populations, Gines said, it does have the power to change communities through two factors: “being located in concentrated areas and intergenerational impacts.


“At the city level or the national level, the impact probably isn’t that great,” Gines stated. “But when I put them all in the same community and it’s concentrated, and the funding is impacting household income, paying for their kids’ diapers, putting money into their local economy, that impact grows tremendously within the context of their community.”


So what now? Since children of entrepreneurs are more likely to become ones themselves, now is the time to develop and establish programs to help combat or prevent them from having to build their future businesses in a starved environment -- like as their mothers are today.


Gines mentions, “We have to say, are our systems reinforcing some of the inequities in the outcomes that we want to have?”


There is also a desire for more mentoring, peer-to-peer support, and opportunities around businesses.

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