Businesses owned by black women have experienced unprecedented growth over the past two decades, and Missouri had the fastest-growing number of employers owned by black women during that time.
To gain better insight into this group of business owners and their impact on the economy, the Federal Reserve Bank of Kansas City produced a report, “Black Women Business Startups” (PDF). The report is based on national data and a series of interviews with black women business owners and provides insight into the business owners' motivation, challenges, support and financial trends.
Characteristics of Black Women Business Owners
“Black women who own businesses are determined self-learners, who mostly are motivated to start their business because of passion and to escape challenges in the workplace,” writes Dell Gines, senior community development advisor at the Federal Reserve Bank of Kansas City’s Omaha Branch and author of the report. “They are challenged at startup by a lack of business knowledge and mentoring. Their support system is limited and they most often gain support from family and friends.”
This report identified several characteristics of black women businesses owners:
- 49% are between the ages of 35-54.
- 50% use personal or family savings to start their business.
- 38% have a firm that is three years old or less.
- 77% are a first time business owner.
Key Findings from the Report
Dell also highlighted several key findings of the report in a November presentation at the St. Louis Fed.
Dell Gines, a senior community development advisor at the Kansas City Fed, authored the report “Black Women Business Startups.” He presented findings during this Nov. 6, 2018, event.
Among them were:
- Businesses owned by black women represent 59 percent of all black-owned businesses, making black women the only women business owners with a higher share of business ownership than their male counterparts.
- Businesses owned by black women tend to be newer, smaller and more clustered in fewer industries than their male and female business-owner peers. The industries are other services; health care and social assistance; and administrative and support and waste management and remediation services. Combined, these three industries represent 68 percent of businesses owned by black women.
- Black women tend to start businesses with no capital, or use personal or family savings. Employer firms owned by black women tend to have worse outcomes in the credit market than women overall. Their greatest financial challenges have been access to credit for growth and operations.