African-American women are the fastest-growing group of entrepreneurs in the United States, according to the American Express OPEN 2016 State of Women-Owned Businesses Report. There are now 1.9 million firms in the United States owned by African-American women, generating $51.4 billion in revenue and employing 376,500 workers. This represents a 112 percent increase since 2007, as compared to a 45 percent increase for the general female population. Moreover, African-American women now own 61 percent of all African-American-owned firms. Here’s a closer look at this trend and its significance.[tweetthis]#AfricanAmerican #women are the fastest-growing group of #entrepreneurs in #USA @womenable[/tweetthis]
Finding a Different Way to the Top
For many African-American women, the path to business ownership has been an alternative to the climb up the traditional corporate ladder, explains economist Julianne Malveaux, former president of the Bennett College for Women. African-American women who have earned degrees and have begun the climb up the corporate ladder have often found corporate America wanting, with lack of equal pay, lack of promotion and lack of family-friendly policies. Equipped with knowledge and skills but unable to make full use of them within a traditional corporate environment, they have turned to entrepreneurship as a vehicle to make use of their talent, says Malveaux.[tweetthis]#AfricanAmerican #women find lack of equal pay & promotions in #CorporateAmerica. @drjlastword[/tweetthis]
Entering Different Fields
African-American women tend to gravitate towards certain industries more than others, the State of Women-Owned Businesses Report shows. As business owners, they are more likely than any other demographic to be in the economic sector classified as “other services,” which is largely composed of hair salons and nail salons. They are also the most likely of any demographic to be found in the health care and social assistance sector, which is constituted in large part by day care services and home health care services. They are the least likely to be found in higher-revenue jobs in the scientific and technical sectors of the economy.
Centers of Entrepreneurship
The 2015 State of Women-Owned Businesses Report had found that certain geographical areas were more conducive to African-American women business owners than others. Across the country, African-American women own 14 percent of women-owned firms. In comparison, African-American female entrepreneurs own a greater than average share of all women-owned firms in the states of Georgia (where they own 35 percent of all women-owned firms), Maryland (33 percent) and Illinois (22 percent). Cities such as Detroit also have growing populations of African-American women business owners.
The United States itself is also conducive to the entrepreneurial spirit. 51 percent of all Americans say they could see themselves owning a business, according to the 2015 Amway Global Entrepreneurship Report. This contrasts with a global average of 43 percent.
Finding access to capital remains a challenge for African-American women trying to start up a company, Malveaux says. Gaining social access to sources of capital can be a barrier due to the cultural, economic and gender differences between African-American women and prospective financiers, who are often professional white males, says Natalie Madeira Cofield, President and CEO of the Capital City African American Chamber of Commerce and founder of the Walker’s Legacy business collective. Moreover, with a 40 percent marriage rate among African Americans, being a working single mother can limit the amount of personal funds available to start up a business.[tweetthis]Access to #Capital can be barrier 4 minority #women due to economic/gender differences @ncofield[/tweetthis]
To overcome these barriers, many African-American female entrepreneurs are turning to bootstrapping financial strategies and other creative financial tactics. For instance, entrepreneur Anita Darden Gardyne turned to crowdfunding site Kiva for capital to start up her caregiver company, Oneva, which supports career women by helping arrange child care services, along with arranging other types of care such as elder care.
Cofield suggests that African-American seeking financing should start by getting involved with a local women’s chamber of commerce and groups such as Goldman Sachs’ 10,000 Women or her own business collective, Walker’s Legacy.