February 10th 2024.
During the difficult times of the COVID-19 pandemic, there was a silver lining for Black women entrepreneurs. Despite the challenges, they were able to thrive and grow their businesses, even outpacing some of their peers. This was shown in the 38-page report, the 2024 Wells Fargo Impact of Women-Owned Business Report. It highlights how Black women were able to start or scale their businesses when presented with new opportunities, such as targeted grant programs during the pandemic.
This was a game-changer for Black women who have historically been left out of the entrepreneurial ecosystem. The report also addresses the recent pushback against firms that fund businesses, including those owned by Black women. According to the report, women-owned businesses, mainly fueled by Black entrepreneurs, grew almost twice as fast as men-owned businesses across all sectors between 2019 and 2023.
While the report highlights the successes of Black women entrepreneurs, it also acknowledges the challenges they face. These include business closures, difficulties in raising capital, and the need to generate revenues that are equal to their competitors in the small business space.
The report not only celebrates the triumphs of Black women entrepreneurs, but also identifies areas where progress is still needed to help them overcome barriers and achieve future success. Some of the key findings from the report include:
- Black women drove business formation during the pandemic, with their businesses growing to nearly 2.1 million, representing about 15% of all women-owned businesses.
- Black women's businesses were the only demographic with a majority share of businesses owned compared to their male counterparts.
- Despite financial challenges, Black women-owned businesses saw a nearly 33% increase in revenue in 2023, compared to all women-owned businesses' 11.2% increase.
- Black female entrepreneurs grew revenue by almost 50%, while all women-owned firms and Black men-owned businesses saw increases of around 26% and 24%, respectively.
- In 2023, businesses owned by white men generated nearly 16 times more revenue than the average revenue of Black women-owned businesses.
- If Black women-owned businesses could reach the revenue level of businesses owned by white men, they would add an extra $1.5 trillion to the nation's economy.
So, what does this mean for the future? According to observers, it is crucial to continue providing grant programs, creating more opportunities for contact with the private and public sector, and increasing access to capital for Black women entrepreneurs. The report also highlights the value of no-cost programs that help women build networks, leading to funding and partnership opportunities, such as the Milestone Circles program.
Geri Stengel, founder and president of Ventureneer, which conducts research on issues facing minority and women entrepreneurs, shared her insights on the report's findings. Stengel, along with CoreWoman and Women Impacting Public Policy, partnered with Wells Fargo on the report. She addressed some of the key takeaways, both positive and negative, for Black women entrepreneurs. According to her, Black women face systemic disadvantages when it comes to starting and growing businesses, including limited access to financial resources and support. While women-owned businesses bounced back from the financial crisis in 2019, Black/African American women-owned businesses did not see the same recovery. However, during the pandemic, they saw significant growth in revenue due to increased availability of capital and other resources.
When asked about the huge gap in revenue between Black women small business owners and their white male peers, Stengel explained that this is due to systemic disadvantages in access to financial resources and the racial wealth gap. This often results in Black women being "side-preneurs" with lower average revenues compared to full-time entrepreneurs.
The report also highlights the issue of business closures among Black women-owned businesses. Stengel attributes this to limited access to capital, which can hinder growth and create operational challenges, cash flow issues, and reduced flexibility. She emphasizes the need for addressing the racial wealth gap and providing greater support and resources to Black women entrepreneurs.
When it comes to gaining capital, Black women entrepreneurs often have to rely on personal savings and credit cards. Stengel suggests tapping into resources such as Community Development Financial Institutions, which provide affordable loans and technical assistance to underestimated entrepreneurs. She also recommends keeping an eye out for grant opportunities and utilizing crowdfunding platforms to raise awareness and funds for their businesses.
Val Jones, Wells Fargo women's segment lead for small business, expressed her admiration for the progress made by Black women entrepreneurs, stating that they had a positive impact on the economy and helped the country rebound from the pandemic. She also stressed the need to sustain the support and resources provided by government entities, banks, corporations, and philanthropic organizations. While the accomplishments of Black women entrepreneurs are impressive, there is still much progress to be made in leveling the playing field for them.
In conclusion, the report highlights the resilience and success of Black women entrepreneurs, while also shedding light on the challenges they face. It serves as a call to action to continue supporting and empowering Black women in their entrepreneurial endeavors.
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