Research Summary

Women of All Races Share Entrepreneurial Spirit

Center for Women’s Business Research  ·  April 28, 1998

Women of color start businesses in record numbers

The survey, conducted by the National Foundation for Women Business Owners (NFWBO) and underwritten by AT&T with support from IBM, is the first-ever comparison of women business owners of all races Asian, Black, Caucasian, Hispanic, and Native American/Alaska Native. “While their cultures may be different, their business backgrounds, their motivations for business ownership, and their entrepreneurial challenges and rewards are quite similar,” explained Lois E. Haber, CLU, ChFC, Chair of NFWBO and President of Delaware Valley Financial Services, Inc. in Berwyn, PA.

“For women, the entrepreneurial spirit knows no race,” Haber continued. “And despite all the challenges, they’d do it over again.” This may explain why women-owned firms grew at double the overall business growth rate in the U.S. during the past decade, and minority women-owned firms grew at triple the national rate, according to a 1997 NFWBO report. One in eight of the nearly eight million women-owned businesses in the United States 1,067,000 enterprises is owned by a woman of color.

“NFWBO information on women business owners continues to be a wake-up call for policy-makers, financial institutions, corporations, and educators,” explained Esther Silver-Parker, President of the AT&T Foundation. “Rising awareness of the issues that face all women business owners will give new visibility which will ensure that these entrepreneurs have greater access to capital, technology, training, and technical assistance.”

The Common Multi-Colored Thread

Women entrepreneurs of all ethnicities have many business experiences in common:

Women business owners, regardless of color, are attracted to entrepreneurship for the same reasons. Between 70% and 80% of each ethnic group of women business owners said that improving things for themselves and their families was a strong motivation for entrepreneurship. Between 60% and 70% of each ethnic group surveyed said that they started a business to do for themselves what they had been doing for an employer. Many were also fulfilling a long-time dream of entrepreneurship;

The chief reward of business ownership for nearly half of Black women entrepreneurs and more than half of Asian, Caucasian, Hispanic and Native American/Alaska Native women entrepreneurs was being their own boss;

Approximately one-third of all ethnic groups of women business owners said that what they liked most about entrepreneurship was the feeling of independence in owning their own firm;

Most women business owners came to entrepreneurship with experience in a private-sector, for-profit business;

While the desire for flexibility was the most frequent reason women entrepreneurs left their former employment, many women of all races left due to frustrations with the “glass ceiling,” lack of challenge or being unhappy or uncomfortable;

Most women entrepreneurs ranked as important the issues of maintaining business profitability, managing cash flow, maintaining growth and keeping qualified employees;

A solid majority of each ethnic group reported that, after looking back over what they had gone through to start and grow their business, they would do it again.

“One interesting difference among the ethnic groups noted in the NFWBO report is that Black and Hispanic women business owners are more likely than other groups to cite keeping up with technology as a key concern,” noted Nancy Wagner, National Market Executive, Women-Owned Businesses, IBM. “This information improves our understanding of the unique challenges that face women business owners of all races.”

Capital Issues Challenge Some Ethnic Groups

The single area where women of color were all significantly different from Caucasian women was access to capital:

Women entrepreneurs of color were less likely than Caucasian women entrepreneurs to currently have bank credit. Fifty percent (50%) or less of women entrepreneurs of color currently had bank credit, compared to 60% of Caucasian women business owners;

Access to capital for current business needs was an issue of particular concern for Black women entrepreneurs (73% ranked it very or extremely important, compared to 61% or less for other ethnic groups);

Black entrepreneurs were the least likely to borrow capital to launch their firms (29%) compared to Asian (37%), Native American/Alaska Native (45%), Caucasian (49%) and Hispanic (51%) women business owners;

Black and Native American women business owners were more likely to have been turned down for a loan when starting their businesses.

Blacks Demonstrate Other Barriers

As a group, Black women entrepreneurs had business traits that differed to a great degree in several respects from all of the other ethnic groups surveyed. A 1997 NFWBO report sponsored by IBM showed that the growth in employment and sales in Black women-owned firms was found to lag that of Hispanic and Asian women-owned firms. “A significant reason for this may be that Black women business owners are far more likely to have started their businesses on a part-time basis while holding down another job, and far more likely to have started their business alone rather than with others,” observed NFWBO Chair Haber.

While the draw to entrepreneurship was similar for all women business owners, Black women business owners were most likely to report experiencing the impact of the “glass ceiling” (36% compared to 26% or less for other groups) or discrimination in their previous employment (18% compared to 10% or less for other groups).

Black women business owners were the most likely to have had mentors when starting their firm, and most likely to have sought out training and advice. While all women business owners have extensive support networks, Black women business owners’ networks were most likely to include a variety of business advisors and associations and were more likely to include a church or other religious organization.

Charts

Most Women, Regardless of Color, Are Motivited to Entrepreneurship to Improve...

Women of Color Less Likely to Currently Have Bank CreditsNeed for Flexibility and Challenge Are Significant MotivationsTechnology and Access to Capital Are More Problematic

The complete report, “Women Business Owners of Color: Challenges and Accomplishments,” is available from NFWBO for $90.00. (Discounts are available for NAWBO members and NFWBO corporate partners.)

The National Foundation for Women Business Owners (NFWBO) is a nonprofit research and leadership development foundation. NFWBO is recognized as the premier source of information and intelligence on women business owners and their enterprises by corporations, policy makers, financial institutions and the media. Up-to-date intelligence about women business owners and their enterprises worldwide is documented in NFWBO’s original research and analysis. The Foundation is affiliated with the National Association of Women Business Owners (NAWBO).

The major underwriter of “Women Business Owners of Color: Challenges and Accomplishments” is AT&T. A longtime corporate partner of NFWBO, AT&T has long recognized the economic impact of women-owned businesses and the need for learning more about their challenges, contributions, and differences with other businesses. AT&T is the world’s premier voice and data communications company, serving more than 90 million customers, including consumers, businesses and government. With annual revenues of more than $51 billion and some 126,000 employees, AT&T provides services to more than 280 countries and territories around the world. AT&T runs the world’s largest, most powerful long-distance network and the largest digital wireless network in North America. AT&T’s businesses are backed by the research and development capabilities of AT&T labs.

This study was also supported by IBM. Also a longtime corporate partner of NFWBO, IBM recognizes women business owners as an undeniable force in today’s economy and is dedicated to servicing the needs of this dynamic market. Reflecting this commitment, IBM has established a worldwide team focused on helping women business owners explore and embrace technology, and actively supports women-owned businesses and their associations.

Methodology Note: The survey was conducted by telephone among women business owners from a variety of sources: membership lists from women’s business associations, minority-flagged records from a new database produced by Dun & Bradstreet, and responses to posted notices on the NFWBO website and other participating sites.

The definitions of ethnic groups, as well as the terminology used in the report, come from the Census Bureau. Respondents were self-identified as one (or more) of the following groups: Asian, Black, Caucasian, Hispanic, and Native American/Alaska Native.

All told, 679 women business owners were interviewed 183 Asian, 111 Black, 201 Caucasian, 128 Hispanic and 56 Native American/Alaska Native. The sampling error for samples of this size range from ±14% to ±7.1% at the 95% level of confidence. This means that, 95 times out of 100, survey results will be within the above ranges compared to true population values.

Research Summaries by Date  ·  Research Summaries by Topic