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.
Click here to read more.
SOURCE: Harvard Business Review, Donna Kelley, Mahdi Majbouri, and Angela Randolph