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Women of Color in Entrepreneurship: New SBO Data and What it Means for the Economy

Kauffman researcher Emily Fetsch explores new SBO data and the representation of women of color as business owners.

While Kauffman research shows that both women and people of color are underrepresented in entrepreneurship, the U.S. Census Bureau’s recent Survey of Business Owners highlights the growth of women of color in business. 

Thirty-six percent of all non-farm and non-publicly held businesses are owned by women. When broken down by race, the SBO finds that women of color are more likely to own businesses than women overall.

  • 59 percent of black-owned businesses are owned by women.
  • 44 percent of Hispanic-owned businesses are owned by women.
  • 39 percent of Asian-owned businesses are owned by women.

Businesses owned by women of color are increasing at much higher rates than their male counterparts, according to the SBO results.

The number of black women-owned businesses has increased nearly 3.5 times the rate of increase compared to black men-owned businesses (68 percent and 19 percent respectively).

Hispanic women-owned businesses are also making gains at more than double the rate of Hispanic men-owned businesses (87 percent and 39 percent respectively).

Finally, while Asian women-owned businesses have increased by 44 percent since 2007, Asian men-owned businesses have only increased by 25 percent.

Women Business Owners Less Likely to be Employers

However, women business owners are still less likely to be employers. Nearly nine out of ten (89 percent) women-owned businesses are sole proprietorships.

For black and Hispanic women-owned businesses, the numbers are even higher (97 and 95 percent respectively). Asian women-owned businesses are 83 percent non-employer firms.

Businesses that have employees tend to bring in more receipts[1]. While the average receipts of a non-employer firm with women ownership is $20,564, an employer firm has an average receipt that is 63 times more than the non-employer firm ($1.3 million).

As most women-owned firms are sole proprietorships, women business owners are falling behind in producing revenue, which lessens their economic impact. Women-owned businesses only make 4.8 percent of overall receipts. 

While women are making gains in business ownership, there are still many changes facing women, especially in creating high-gross businesses with employees. 

For women of color, despite making great gains between 2007 and 2012, they are still underrepresented in terms of revenue, receipts, and sheer number of businesses.

Policymakers should examine how to help this growing demographic in order to expand their economic impact for the benefit of both the owners and the entire economy.