Black women are leaving a footprint in all sectors of the economy — from history-making victories in politics to extraordinary leaps as entrepreneurs. But when it comes to generating revenue and building wealth, black women still lag behind their white counterparts. In fact, black women report average revenues that are less than any other demographic surveyed within the United States.
According to a 2019 report commissioned by American Express, Black female founders earn average revenue of $24,000 per firm. That equates to less than 17% of what all women-owned businesses earn. The report reveals that the average revenue for all women-owned businesses is $142,900.
The Transition to Entrepreneurship
The number of Black women-owned businesses has exponentially increased from 2014 to 2019. Motives for starting a business include creating an extra source of income or the desire to follow dreams. But there’s a large population of black women who were fed up with the inequities in the workplace.
American Express research advisor Geri Stengel points out “there are frustrations and a greater wage gap in the traditional workforce, and entrepreneurship is seen as a way of closing that gap.” Unfortunately, entrepreneurship has proven to be another hurdle for black women. Limited access to capital, experience, and resources have added to the depressing revenue numbers for most businesses.
“My advice for younger women that are starting businesses is to take advantage of all the resources that are out there and join accelerator programs,” says Stengel during an interview. “Research programs through the SBA and business centers to evaluate financing.”
The 2019 State of Women-Owned Business report estimates that four million new jobs and $981 billion in revenues would be added to the U.S. economy if more minority-owned firms were able to match revenues generated by their counterparts.
Increasing Revenue for Women-Owned Businesses
Black women are the fastest-growing group of entrepreneurs in the U.S., managing over 2.6 million businesses around the country as of 2019. Women were in charge of over 12 million businesses, with Black women accounting for 21% of firms. The report shows a total of 6.4 million minority-owned firms and 6.5 million non-minority owned firms.
“The face of entrepreneurship is evolving to include all women, regardless of demographics. Even more impressive is that women are starting businesses on their own terms – whether it be their full-time focus or part-time activity,” said Courtney Kelso, Senior Vice President of American Express, in a statement.
Last November, American Express partnered with IFundWomen of Color to surprise 100 Black women entrepreneurs with $25,000 grants. Recipients also received 100 days of resources as part of the “100 for 100” program. These grants represent more than the average revenue number for black women-owned businesses in 2019.
Although there’s still some work to do to help black women have a fair shot of boosting revenues, there are small steps business owners can take to improve their bottom line. Memphis-based event planner Cynthia Daniels generated over $2 million for Black-owned businesses during the pandemic. Daniels offers these words of wisdom to other entrepreneurs: “When faced with challenges, don’t be afraid to pivot and focus on what’s needed at the moment.”