There’s no shortage of news about the evolution of women-owned businesses in the past few decades. More women are diving into entrepreneurship and earning a bigger piece of the financial pie that keeps the economy moving. According to the 2018 State of Women-Owned Business Report, commissioned by American Express, the number of women-owned businesses increased by nearly 3,000% since 1972. The report examines trends in women businesses, including black women-owned businesses, based on the 2012 Survey of Business owners and annual gross domestic product estimates.
In an exclusive interview with American Express research advisor Geri Stengel, we examine the trends in women-owned businesses and how black women have contributed to that growth:
Women-owned businesses are growing much faster than all businesses. From 2007 to 2018, women-owned businesses have grown by 58% in terms of number of firms and 46% in terms of revenue,” reports Stengel. “What’s driving these numbers are women of color. Women of color over that same period of time are starting businesses at a much faster rate. The number of firms owned by African-American women has grown by 164% since 2007.
Stengel emphasizes the importance of this research to support women’s advocacy and spark dialogues that celebrate progress and acknowledge opportunities. “What gets measured gets managed. For the past 8 years, American Express has been focusing everyone’s attention on women entrepreneurs. For the first time this year, we defined age, race, and ethnicity.”
The report also shows African American women are turning to entrepreneurship at a much younger age than other populations. Approximately 39% of African American women business owners are in the millennial age group or younger. “There are cultural influences that need to be taken into account. Cultural traits such as competitiveness, assertiveness, ambition, and accumulation of wealth are driving African-American women to start businesses at a younger age,” says Stengel.
African American women are also hitting barriers to advance in the traditional workforce. Stengel’s research finds that “there are frustrations and a greater wage gap in the traditional workforce, and entrepreneurship is seen as a way of closing that gap.”
African American women are now running into another pothole as entrepreneurs: the revenue gap. The downside of starting businesses when you’re younger is that you don’t have business experience, networks or financial resources
. As of 2018, African American women-owned businesses earned average revenues that equate to poverty levels within the United States, producing a meager annual revenue of $24,700 vs. $143,100 among all women-owned businesses. The annual average revenue gap between African American women-owned businesses and all women-owned businesses is the widest.
“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. Research programs through the SBA and business centers to evaluate financing,” says Stengel.
Despite the slow revenue progress, Stengel is optimistic about the future. African American women started an average of 541 new businesses per day in the U.S. between 2017 and 2018. “The outlook is tremendous for women-owned businesses. I see so much energy around entrepreneurship. If the economy continues to be good, we are going to see more women who are opportunity-oriented. In a good economy, people turn to entrepreneurship because they see a hole in the marketplace.”