As more and more people in the U.S. are launching and growing small businesses, small business ownership is becoming even more diverse. In this overview, you’ll learn about the increasing diversity among small business owners in the U.S., ongoing challenges, and initiatives to increase access, resources, and more for women- and minority-owned businesses.
What does it mean to be a women or minority-owned business?
While women-owned businesses include any business where the majority (51% or more) of ownership is women, the grouping of “minority-owned businesses” sometimes depends on the agency or organization offering certifications, loans, or contract opportunities.
For example, according to the National Minority Supplier Development Council, to be a minority-owned business, you must be a U.S. citizen “who is Asian-Indian, Asian-Pacific, Black, Hispanic, or Native American.” However, some agencies and organizations define “minority” as a bit broader.
Regardless of the definition used, when more small businesses are launched with minority or women owners, it’s a positive trend.
Why does owner diversity matter?
Small businesses make up more than 99% of businesses operating in the U.S. today. Among them, ownership by minority entrepreneurs grew from 9% in 2019, to 15% in 2022, while women make up more than 44% of small business owners.
Women- and minority-owned businesses often operate for the benefit of their communities, including geographic, cultural, ethnic, and racial. While many of these businesses are in the early phases, there are signs that minority business owners will go a long way toward closing the wealth gap in the U.S. This also creates essential jobs in your communities and further builds economic prosperity.
What are the challenges for women- and minority-owned businesses?
Although the statistics show growth in women- and minority-owned enterprises, there are still ongoing challenges, including many women and minority business owners experiencing difficulties accessing financing. Here are some other challenges:
- Cultural and language barriers: Especially for New American entrepreneurs, navigating cultural and language barriers in the U.S. is a challenge. This can make understanding regulations, applying for permits, or accessing resources hard.
- Access to diverse business networks and mentors: Professional networks and mentors can be critical to small business success, but often, minority entrepreneurs don’t have the same level of resources and connections that their non-minority peers have. For example, networking events and industry groups are not always inclusive, and some entrepreneurs may feel unwelcome in predominantly white- or male-dominated spaces.
- Discrimination and bias: Unfortunately, discrimination persists, and it’s a problem for women and minorities alike. For entrepreneurs, this can impact everything from your ability to secure fair financing to securing leases.
- Balancing family responsibilities: Cultural and societal norms often make it hard to grow a business while caring for a family, especially for women entrepreneurs. In this case, more support through local agencies and government policies can help your entrepreneurial success by alleviating some logistical problems and pressures.
Overcoming the challenges is possible – with the right policies and initiatives, nearly all of these and more can be reduced or eliminated.
Where can you find more equitable opportunities?
There’s a lot of good news for women- and minority-owned small businesses beyond increases in ownership. For example, women-owned businesses secured almost 20% more venture capital financing in 2023 than in 2022. Here are examples of additional initiatives that are positively impacting growth in women- and minority-owned businesses:
- Agencies like the U.S. Small Business Administration (SBA) and the Minority Business Development Agency (MBDA) of the U.S. Department of Commerce are creating access to resources and conducting outreach to engage more people with entrepreneurship.
- Special initiatives created by the private sector are increasing support for diversity in business ownership, from ownership and management training programs to financing resources. Some examples include JP Morgan Chase’s $30 million commitment to building racial equity and Goldman Sachs’ 10,000 Small Businesses program for small businesses in diverse communities.
- Corporate and government supplier diversity programs help women- and minority-owned small businessescompete for significant contracts as vendors, contractors, and subcontractors. You can apply for MWBE (minority and women-owned business enterprise) certification to help open the door to government and corporate contracts.
Still, many eligible small businesses don’t have the necessary certifications to qualify for these programs, so expanding access and engagement to certification programs is essential for greater impact. - Small business loan programs offered through non-profit, mission-driven lenders allow more women- and minority-owned businesses to secure financing that may be out of reach through traditional lenders, like banks.
- Small business grants are extremely beneficial but relatively rare and highly competitive. Still, if your business is eligible, it’s worth applying because you can benefit from those awarded by corporations, non-profit foundations, government agencies, and others.
- E-commerce has created significant opportunities for women- and minority-owned businesses to expand their reach beyond traditional local markets. Online platforms like Amazon’s Black Business Accelerator give you the chance to reach national and international audiences.
Although there’s a long way to go before women- and minority-owned businesses fully represent the U.S. population, progress can continue with the right support and policies.
Pursuit helps all small business owners achieve their potential
Pursuit understands the challenges women- and minority-owned businesses face, and we work to overcome them with you. As a mission-driven, non-profit lender, we help small business owners discover how the right financing from the right lender supports success.
We offer more than 15 small business loans and a line of credit, from $10,000 to $5.5 million, for working capital, equipment, commercial real estate, and more. We serve small businesses in New York, New Jersey, Pennsylvania, Connecticut, Nevada, Illinois, and Washington.
Contact us to learn more.
