While Black Women Are More Likely To Start A Business, Research Finds Only 3% Will Last

A recent report released by Harvard Business Review (HBR) revealed that while Black women are more likely than white men to start a business, they are less likely to succeed at the business they start than their white counterparts.

According to their research, 17 percent of all Black women in the United States are in the process of starting their own business. That is in comparison to the 10 percent of white women, and 15 percent of white men, in the same position.

But of the 17 percent of Black women who start a business, research shows that only 3 percent of them will last or ultimately run what’s called a “mature” business.

What that means is that if you’re a Black woman starting a business, you likely won’t be in business for very long.

There are a number of reasons why this is so, according to the HBR.

One reason has to do with the field in which this business is based. Health-based and beauty-based businesses, for example, have shorter shelf lives than service-based businesses in other fields.

Another reason has to do with where the capital for the business comes from.

Sixty-one percent of all Black women self-fund their startup capital — compared to their white counterparts, who do things like crowd-funding, taking out business loans, and getting working capital advances. Plus, according to the report this is in spite of the fact that less than 30 percent of all Black women make more than $75,000 a year (which would make financing their own business more affordable).

Finally, there’s the issue of racial disparity amongst resources — and not just financial ones.

“Access to key resources needed for entrepreneurship are unevenly distributed in U.S. society, reinforcing the advantage of certain groups while impeding the entry and catching-up of disadvantaged groups. This only reinforces a cycle where resource limitations reduce one’s ability to generate financial gains from entrepreneurship,” reports the Harvard Business Review. 

So, what’s the moral of this story? Support Black businesses — and specifically, support Black women in business.