The Lowdown Hub

Women of Colour Are More Likely to Start a Business than White Men.

In the United States, an astounding 17% of Black women are in the process of starting or running new businesses. That’s compared to just 10% of white women, and 15% of white men.

Yet despite this early lead, only 3% of Black women are running mature businesses. To understand why this steep drop-off occurs, and how to combat it, we analyzed data from interviews with more than 12,000 people, nearly 1,700 of whom identified as entrepreneurs and nearly 1,200 of whom own established businesses.

The research was part of our work with the Global Entrepreneurship Monitor, an annual comprehensive survey of entrepreneurship rates and attributes, conducted in more than 120 economies since 1999. The large-scale survey is administered by academic research teams in each economy; we represent the U.S. team.

Our analysis offers several possible reasons Black women entrepreneurs struggle to sustain their businesses.

One explanation may be the types of businesses started: Our analysis shows that 61% of Black women entrepreneurs start businesses in either retail/wholesale or the health, education, government, or social services sectors, compared to the 47% of white women and 32% of white men entrepreneurs. To the extent that these are small, informal businesses with low margins in crowded competitive contexts, they are more difficult to sustain over the long term.

Another possible explanation is access to capital, which could, in turn, influence what types of businesses Black women open. In previous research, we found that 61% of Black women self-fund their total start-up capital. This is in spite of the fact that in our analysis of the GEM data only 29% of Black women entrepreneurs live in households with incomes over $75,000, compared to 52% of white men. This result, along with data showing that Black people take on a higher level of debt to go to college, and are less likely to