White men are now the minority of business owners in the United States, new study finds
For the first time, white men are now the minority of business leaders in the United States thanks to a transformation driven by the rapid growth of women and Latinx-owned businesses.
This historic change has far-reaching implications for the country’s finance and innovation infrastructure.
White male-owned small businesses make up 41% of America’s 30.5 million small business owners. There are approximately 11.6 million women-owned businesses, 65% of which are owned by white women, and 6.5 million businesses are owned by men of color.
This, logically, leaves white males as a minority for the first time in history.https://t.co/jS7UfZIjrx
– News BeLatina (@be_latina) May 25, 2021
These statistics are based on a recent analysis by a venture capitalist Seth Levine and author Elizabeth macbride. Levine and MacBride conducted their study with the help of researchers at Stanford University, using two datasets from the 2017 US Census Bureau, those of employer and non-employer companies.
Jerry Porras, Lane Professor of Organizational Behavior and Change and Co-Director of the Latin American Entrepreneurship Program, said the change was a “really powerful opportunity” for the nation to become more prosperous in the future, especially during the pandemic recovery.
Porras said Forbes that this new group of owners are entrepreneurial and dedicated, but that âthe ecosystem is not conducive to supporting their successâ.
The tides are turning
Women-owned businesses have grown steadily for decades. Between 2018 and 2019, women opened more than 1,800 businesses per day.
Over the past five years, women-owned businesses have grown twice as fast as the overall population, and women of color have created businesses at 4.5 times the rate of the overall population, according to American Express State of Women-Owned Businesses.
Latinx-owned businesses have also flourished, growing two to four times the overall population since 2015, when Porra’s organization began interviewing them.
Porras estimates that there are 1 million new Latinx-owned businesses created every five years.
Porras also added some context to the numbers, suggesting that becoming a business owner is a “key part of Latin American culture” and that many Latinos in the United States are naturally drawn to entrepreneurship.
He also explained an even more relevant factor – Latinos are not always able to generate wealth in the way generally expected – going to college and climbing the corporate ladder is often not accessible to them for a long time. myriad of systemic reasons.
Hidden in plain sight
This large-scale demographic shift in the makeup of the American entrepreneurial class has been largely unrecognized, primarily because the US Census Bureau’s analysis focuses on employer businesses, where white males represent a declining proportion of owners, but still represent about 60% of all businesses. the owners.
Additionally, the stories about business owners focus primarily on a small minority of fast-growing tech companies.
But companies that employ only one founder, but are still subject to federal tax, have grown in both number and influence. Advances in technology have made it easier to run a small business without hiring staff.
And to some extent, experts say women and people of color are often excluded from the opportunity to grow their business. The option and ability to categorize their businesses helps them stay small.
But that’s not necessarily a bright spot, according to Makisha Boothe, founder and CEO of the Colorado-based company. SistahBiz, a global network that helps black women solopreneurs and microenterprises build scalable and salable businesses.
Boothe argues that assigning people in businesses of color to a category that by definition keeps them tiny only serves to keep them there.
As the regulatory burden on small businesses increases, the competitive landscape can become even more difficult. This is what her organization helps businesses owned by black women. For example, SistahBiz runs Black girl therapy gatherings and spend a lot of time preparing women of color for successful bank loan applications.
Locked out of assistance
Research revealed that people of color have a harder time receiving bank loans and other forms of financing.
During recent group chat along with Senator John Hickenlooper and US Representative Joe Neguse, Boothe said his clients “are put in the solopreneur zone.”
âIt’s linked to access to capital. They just don’t have the budget for the bureaucracy and they don’t have the seed money to go from solopreneur to boutique agency, âshe said.
The problem of ignoring this demographic shift in the vast landscape that includes the smallest and youngest businesses, prevents systems from evolving so they can grow, and hinders the economy of the United States and others. country to reap the fruits of this growth and creativity.
âSome business, academics and government leaders only see traditional payroll companies as ‘real’ businesses, adopting a ‘go big or come home’ mindset. They tend to believe that only companies that fit into a specific framework deserve significant attention and resources, âsaid Elaine Pofeldt, author of Single Person Million-Dollar Business.
Long Pettine, founder of San-Diego-based Ad Astra Ventures, which runs workshops for women entrepreneurs, said the system is in desperate need of adaptation to support these business owners.
For example, Pettine told Forbes, that on average, male and female business owners have very different attitudes about risk. Men tend to define it only along financial lines, while women will view risk in more ways, including their relationships or their business missions.
Women are forced to conform to patriarchal financial worlds which primarily reward abilities to sell and project confidence, which can lead many women to be hesitant when approaching venture capitalists.
âThey may not appear to be genuine in the pitches,â Pettine said.
It’s time to adapt
As for Latinx-owned businesses, many suffered in the early months of the pandemic, in large part due to the lack of federal help they received. The programs were designed for small businesses that already had relationships with banks.
Here’s how minority-owned businesses are likely to be REFUSED from PPP loans:
Owned by Blacks: 95%
Latin American ownership: 91%
Owned by Native Hawaiians or Pacific Islanders: 91%
Asian ownership: 75%
This is not what a fair COVID-19 response looks like. I am working to fix it.
– Vice President Kamala Harris (@VP) May 5, 2020
But for many of today’s founders – over 80% – receive no external funding. Their exclusion from established financing systems correlates with historical patterns of business creation and structural racism.
âThe pandemic has demonstrated the main realities. 28% of white-owned businesses have obtained PPP loans. 18% of Latin American businesses have secured them, âPorras said.
It’s unclear how much potential is lost when entrepreneurs who don’t fit the mold are unable to climb the ladder of success, due to convoluted economic barriers.
It is likely that the nation has missed out on many innovations and job creation because the systems have not yet adapted. So many families have lost their chance to build generational wealth and the sense of freedom and health that comes with financial security.