With the right resources and support, minority entrepreneurs can play a large role in our economy. According to the National Minority Supplier Development Council, minority businesses produce more than $400 billion in annual revenue and contribute close to $49 billion in local, state and federal tax revenues. These are major numbers leading to a positive impact.
However, while the American population is becoming more diverse, the diversity makeup of entrepreneurs is not reflecting those changes. Minorities own half as many businesses as non-minorities do. Their businesses tend to start smaller and they stay smaller, too. This leaves gaps in the market which isn’t great for the United States economy over all.
According to the Kauffman Foundation and the State of Entrepreneurship 2017 Report, these gaps are costing the country. The report states that if minorities started and owned businesses at the same rate as non-minorities do, the United States would have more than 1 million additional employer businesses and approximately an extra 9.5 million jobs in the economy.
Research does show us that there are demographic, socioeconomic and geographic barriers that may prevent minority entrepreneurs from reaching their full success potential today. Here are some interesting facts according to the report:
While the average size of mature non-minority owned businesses is $2.3 million in annual revenue, the average size of minority-owned businesses is only $1.6 million at the same age.
Regardless of race, women are half as likely as men to own employer businesses. Though not a new trend, the persistent gender business gap costs the United States 1.7 million additional businesses.
Sixteen percent of minority-owned businesses report profits being negatively impacted by lack of access to and cost of capital, compared to only about 10 percent of non minority-owned businesses in the same period.
The good news is that almost 40 percent of the newest of the new entrepreneurs are from racially diverse backgrounds, up from 23 percent in 1996. With minority entrepreneurs being one of the fastest growing segments of small business, it will only benefit the United States economy in general if barriers, such as access to training, mentoring and capital, are addressed directly.
At LiftFund, we have resources for all business owners that include:
- Financial, Management Planning and Budgeting
- Legal Structure, Start-Up and Growth Planning
- Credit Report Review and Planning
Visit our Services page for more information and to contact us for an individual consultation