In today’s society, women-owned businesses reinforce the fabric of the U.S. economy, accounting for approximately 40% of all small businesses. According to the 2016 State of Women-Owned Businesses report, 8 out of every 10 businesses started since 2007 were launched by women of color. African American entrepreneurs make up the fastest-growing group of women-owned businesses, and comprise over 1.5 million businesses. All of this success, however, comes in the face of tremendous challenges. This is reflected by the almost 10 million women-owned businesses that average lower sales and employment than their male counterparts. The difference is considerable; with women-owned employers averaging $1.2 million in revenue, while male-owned employers average $2.6 million. Despite these tremendous challenges, there are ways to overcome them.
1. No Representation
More often than not, women can find themselves “alone” in business meetings. This is especially true for women of color who are just starting out. These women are often striving “alone” in industries dominated by men, such as technology, and can find the lack of representation intimidating and unfavorable.
This is where self-efficacy comes into play. Self-efficacy refers to someone’s belief that he or she has the skills and abilities to perform a given task. Numerous studies have found that women tend to have lower levels of self-efficacy than men. If women entrepreneurs have less confidence in their abilities, they could become less willing to take the types of risks associated with launching or growing a successful business. If you are a woman entrepreneur, find a mentor or advisor who has launched a successful firm and knows the ropes. These individuals have experienced the types of pressures and strains that you may also encounter, and can share strategies as to how to get through them.
2. Biases in the Business World
From entertainment to technology, women entrepreneurs continue to face biases due to their race and gender. This can translate into difficulties raising capital, networking, and establishing business relationships. Still, black women continue to overcome biases from those who do not embrace their skills and talents. Black women entrepreneurs are not only the fastest growing group of entrepreneurs in the United States, but the National Center for Education finds that they are also the most educated group, receiving more degrees than any other group. This is a powerful reminder that there is no ceiling that cannot be shattered by this group.
3. Building Relationships
48% percent of female entrepreneurs report that the lack of advisors and mentors has limited their professional growth, according to Inc. The divide is even larger for women of color due to bias and limited networking opportunities. Like financial capital, social capital is a crucial resource for women entrepreneurs because relationships serve as a means for securing the resources needed to launch and grow a business.
4. Lack of Access to Capital and Funding
It is no secret that women entrepreneurs are offered smaller loans, on average, from the same group of lenders. Research confirms that women raise less capital than men and tend to rely more heavily on internal sources of funding.
For minority women, raising capital is even more challenging. Black women still receive less than 0.2 percent of all venture capital. According to the Minority Business Development Agency (MBDA), small business owners of color are more likely to be denied credit than other small business owners and tend to pay higher interest rates than other groups. As a result, fewer women of color entrepreneurs attempt to even apply for loans.
In spite of such challenges, black women and other women of color are having success and many are creating their own economy. Be diligent about finding a mentor and building a community of supporters who can help teach you the ropes. Celebrate the many successful women of color entrepreneurs. When successful, be intentional about teaching young women of color how to become entrepreneurs – keep the legacy going.