She's a Business, Man: New Study Confirms Black Women Are More Entrepreneurial Than Their White Counterparts

·3 min read

Here at The Glow Up, we’ve been clued in to Black women’s entrepreneurial prowess for a while now—it’s one of the reasons this vertical exists. That said, the rest of the world is still catching up to the fact that Black women, widely reported to be the most educated demographic in the United States, are also among the most enterprising, outpacing both their while male and female counterparts in starting new businesses. That is, according to a new study by professors at Babson College in partnership with the Global Entrepreneurship Monitor, published Tuesday in the Harvard Business Review.

From Fortune magazine:

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In the U.S., 17% of Black women are in the process of starting or running a new business, compared with 10% of white women and 15% of white men, found the study, which was based on data from a survey of 12,000 people.

At the same time, only 3% of Black women surveyed were running a “mature” business more than three and a half years old.

The ingenuity is clearly there, so why the disparity? That requires more study, says Babson College Assistant Professor of Entrepreneurship Angela Randolph, who co-authored the study. That said, one obvious reason is that 61 percent of Black women entrepreneurs are providing their own start-up capital, largely without the benefit of generational wealth, with existing educational debt, and with a lower approval rate for small business loans. It’s also worth noting that Black women are still typically only paid 62 cents for every dollar made by their white male counterparts. These collective disparities were painfully demonstrated and further exacerbated by the economic fallout of the pandemic, in which Black and Latina women have also suffered the largest job losses; a dynamic Randolph indicates predates the pandemic.

“If 61 percent of Black women start with their own funding, and Black women in particular start with more debt and less equity, they’re starting with a smaller amount,” she told Fortune.

Randolph’s coauthor in the study, Babson Entrepreneurship Professor Donna Kelley also pointed out that the industry sectors Black women most often gravitate towards—retail, health, and education—“tend to have lower returns and low barriers to entry, which means more competition.” Additionally and perhaps due to the unemployment rate plaguing Black women, they are more inclined to attempt entrepreneurship earlier in their professional careers, striking out on their own between the ages of 25 and 34 as opposed to the more seasoned 35 to 44 years of their white counterparts.

“If you’re facing bias in employment and getting employment, or possibly promotions, and job prospects are not as attractive, creating and having more power over your career through entrepreneurship might be a better option,” said Kelley.

So, is there a solution in sight? Aside from advising more study, Randolph said the results indicate a need to “reexamine how entrepreneurs can get access to resources,” reports Fortune.

“A lot of programs focus on starting entrepreneurship,” she said. “There’s not enough that focus on how we help them sustain and grow.”