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The 2018 State of Women-Owned Businesses Report, commissioned by American Express provides detailed information and statistics regarding women business owners in the United States, including minority women’s gains in entrepreneurship and challenges they continue to face.
Minority Women -Owned Businesses – Current Stats
According to the report, while the number of women-owned businesses grew 58 percent from 2007 to 2018, firms owned by women of color grew almost three times that rate at 163 percent. As of 2018, women of color comprised 47 percent of all women-owned businesses. An estimated 5,824,300 women-of color-owned businesses employ 2,230,600 people and generate $386.6 billion in revenues.
Businesses owned by Latina women and African American women grew even faster than the national number at 172 percent and 164 percent, respectively. Native Hawaiian/Pacific Islander businesses owned by women grew by 146 percent, Asian American women-owned businesses increased by 105 percent, and Native American/Alaskan businesses grew at 76 percent. These rates are slower than those of women of color in general, but faster than overall women-owned businesses.
Increase in Business Ownership Driven by Necessity Entrepreneurship
Between 2007 and 2018, the number of women-owned businesses grew 4.2 percent annually, while the number of businesses owned by women of color grew by 9 percent. Between 2017 and 2018, The number of businesses grew 6 percent for all women-owned business and 8 percent for businesses owned by women of color.
Why are we seeing a higher rate of businesses created by women of color than women in general? Women of color were impacted by the Great Recession disproportionately to other groups. Even if employed, these women often turned to entrepreneurship in order to make ends meet. According to the report, this might account for the increase in the rate of businesses started by women of color, as well as the overall decline in average revenue for women-owned businesses. This is compatible with the rise in average revenue for all businesses during this same time.
Revenue Gap
Despite the growth in the number of minority women entrepreneurs, the revenue gap is widening between the average revenue for businesses owned by women of color and those owned by non-minority women. For instance, in 2007, the average revenue for businesses owned by minority women was $84,100; this dropped to $66,400 the following year. In 2007, the average revenue for a non-minority owned business was $181,000; by 2018, this number increased to $212,300.
Helping minority women succeed as business owners, such as gaining access to capital, will only benefit the national economy. The report predicts that if revenues generated by minority women-owned firms matched those currently generated by all women-owned businesses, they would add four million new jobs and $1.2 trillion in revenues to the U.S. economy.
Read the full report here.