Small Business Ownership And Black Women

In my previous post, I mentioned the hardships that many black women suffer because of the high rate at which they are given subprime loans, which lead them to be among the minorities who suffer foreclosures at higher rates. I cited some essays published in the 2008 edition of The State Of Black America, an annual report published by the National Urban League (NUL) since 1976.

The report also focused on black women in small business, the sectors in which most small businesses owned by black women are concentrated, the amount of revenue these businesses generate and how they might generate more.

"Businesses owned by black females employed more than 23 percent of workers at black-owned businesses," Lucy J. Reuben, a visiting professor at Duke University, wrote in an essay published in The State Of Black America. "More than 45 percent of BWBEs [black women-owned enterprises] concentrate in health/social services and retail trade industries. The health/social services sector alone accounts for more than 30 percent and the retail trade sector accounts for nearly 10 percent of BWBEs."

"Although BWBEs are concentrated in sectors generating low revenues, they paid
their employees more than $3.9 billion, which is an amount that could provide the
median U.S. household income for more than 75 thousand families. At the lower level of
median black household income, BWBEs provide payroll dollars that would be adequate
to support more than 110 thousand families," Reuben wrote. "As such, businesses owned by black females provide a source of revenue for household stability as well as increases in the tax bases of numerous states and municipalities."

Reuben also noted that businesses owned by black women employ one worker for every $74,000 of revenue the business generates. In contrast, all black-owned businesses employ one worker for every $87,000 of revenue and all female-owned businesses employ one worker for every $109,000 of revenue.

So, since businesses owned by black women employ more workers with less revenue, how do businesses owned by black women start generating more revenue, leading to more jobs and boosts to the economies of their communities?

"Recommendations for building upon the strength and success of BWBEs include
increasing the share of black women-owned business in higher skilled, higher
technology sub-segments of industries in order to increase revenue streams and profit
margins and increasing microfinancing opportunities for small start-up businesses," Reuben wrote.

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March 13, 2008 at 1:06 PM Anonymous said...

As a black woman small business owner (I am an attorney with my own law practice), I can attest to the struggle we face in driving topline revenue in order to increase the bottom line. One struggle we don't have is with expense management. Much like in our personal lives historically, we have always been able to "stretch a dollar" and "make do" other words we are great at "fake it till you make it". However, as a mentor once told me, as a business owner, you can't "save" your way into prosperity. At some point, you have to increase revenues. The issue of how to increase revenues is a complex one, but starts with improving customer/client service. I think that there is a perception that black-owned businesses in general have poor customer service skills. I don't think that's true, but we have to eliminate that issue altogether by being better at it than others. Second, we need to expand our networks beyond our friends and family. It is imperative that we connect with others in order to increase referrals to our business. Our friends and family are great support when launching our businesses, but we can't depend on them to sustain them. Reaching the "critical mass" of customers/clients is important and we need a wider support network through which to do so; otherwise, we're left spending precious dollars on marketing efforts that oftentimes work, but with too high of an acquisition cost relative to the revenue generated by the client. Finally, we have got to be prepared to accept that just because we have technical expertise in a field, or a flair for fashion, that does not make us instantly ready to be CEOs. We should seek out mentors and competent professionals (CPAs, bookkeepers, etc.) to help us run our businesses and make sure compliance issues are properly addressed and our financial records are in order.

March 14, 2008 at 4:12 PM Trista Winnie said...


Thanks for sharing your perspective and experiences!

According to the Center for Women's Business Research, 81 percent of women whose businesses generate $1 million of revenue or more belong to formal business organizations, associations or networks. Of those women whose businesses earn less than $1 million of revenue, only 61 percent are members of such organizations. I think that shows that seeking out advice and knowledge from mentors and experts, as you recommend, can indeed go a long way in helping women become successful business owners.

For more facts about women-owned businesses, check out this link:

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