by Jeffrey McKinney
February 10, 2024
Despite financial challenges, Black women drove business formation during the pandemic.
A silver lining emerged from the devastating COVID-19 pandemic that helped Black women entrepreneurs thrive faster than some of their peers.
The 38-page report, the 2024 Wells Fargo Impact of Women-Owned Business Report, is telling as it shows how Black women can start or scale a business when presented with new opportunities. For instance, targeted grant programs during the pandemic helped them considerably grow revenue. That is potentially a game-changer for those women who have historically been largely left out of the entrepreneurial ecosystem. The aid comes amid recent pushback from those against firms that fund businesses, including Black female proprietors.
Fueled mainly by Black entrepreneurs, women-owned businesses across all sectors between 2019 and 2023 rose almost twice the rate of men-owned businesses, according to the report.
Simultaneously, the report does not gloss over problems that Black women business owners face. They include business closures, struggling with obstacles to raise enough capital, and needing to generate revenues equal to some of their other small business competitors.
While the report discloses multiple triumphs for Black women entrepreneurs, it also pinpoints where more progress is needed to help them conquer barriers and achieve future success. The following figures reflect what occurred from 2019-2023:
Despite financial challenges, Black women drove business formation during the pandemic. Black women’s businesses grew to nearly 2.1 million, representing about 15% of all women-owned businesses. Black women’s businesses were the only women’s demographic with a greater-than-majority share of businesses owned (52.1%) than their male peers. They employed 528,000 people and had a combined $98.3 billion in revenue.
Black women’s businesses rebounded better than during the financial crisis in 2008. Their revenues rose nearly 33% to $47,300 in 2023 compared to all women-owned businesses’ 11.2% rise to $192,600. Black women-owned firms were likelier to be in industries like restaurants and retail, businesses hit harder by pandemic lockdowns. Being smaller and less profitable, Black women proprietors had fewer financial resources to rely on.
Black female entrepreneurs grew revenue by nearly 50%, versus around 26% for all women-owned firms and about 24% for Black men-owned businesses. The number of Black women’s businesses rose about 13%, just under all women’s firms and a tad higher than businesses owned by Black men.
Businesses in 2023 owned by white men generated nearly 16 times ($754,000) in revenue than the average revenue Black women businesses. Interestingly, the report showed that if Black women-owned businesses could reach that revenue level, they would add an extra $1.5 trillion in revenue to the nation’s economy.
So, what’s the call to action? A perpetuation of grant programs, more contact opportunities from the private and public sector, a larger gateway to gain capital are among ways that can help Black women continue to prosper and become larger players in their space, observers contend.
The report shows the value of no cost programs helping women build networks leading to funding and partnership opportunities, including the Milestone Circles program.
Geri Stengel, founder and president of Ventureneer, whose efforts include researching problems that stymie minority and women entrepreneurs, connected with BLACK ENTERPRISE via email to discuss the report’s findings. Her firm, along with CoreWoman and Women Impacting Public Policy, partnered with Wells Fargo on the report.
BE: What are the report’s biggest takeaways – pros and cons – for Black women entrepreneurs?
Stengel: Black women face systemic disadvantages in starting and growing businesses due to the significant pay gap and limited access to financial resources and support. In 2019, women-owned businesses bounced back from the financial crisis and surpassed pre-crisis average revenue levels. However, Black/African American women-owned businesses did not see the same recovery. Yet, during the COVID-19 pandemic, when there was increased availability of capital, training, mentorship, and business development opportunities through supplier diversity programs, Black/African American women-owned businesses’ average revenues grew more than any other group.
BE: Why is there a huge gap between what Black women small business owners collect in revenue versus their white male peers?
Stengel: Black women face systemic disadvantages in starting and growing businesses due to the significant pay and wealth gap and limited access to financial resources. This increases the likelihood of being side-preneurs with lower average revenues than full-time entrepreneurs.
BE: Black women-owned businesses reportedly close at a higher rate than some of their peers? What is causing that problem and how can it be stopped?
Stengel: Limited access to capital can hinder business growth by creating operational challenges, cash flow issues, and reduced flexibility in adapting to economic changes like COVID-19. This highlights the need for addressing the racial wealth gap and providing greater support and resources to Black/African American women entrepreneurs.
BE: Gaining capital remains an ongoing challenge for Black women entrepreneurs, often forcing them to rely on personal savings and credit cards to get financing to open or expand. What programs and resources would you suggest they consider tapping into for help?
Stengel: Community Development Financial Institutions are local mission-based lenders that provide affordable loans and often technical assistance to underestimated entrepreneurs. Use the Wells Fargo Small Business Resource Navigator to find one in your area. While there are fewer grants than during the pandemic, you can keyword search on a periodic basis or set up Google alerts to let you know when there are new opportunities. Kiva is a form of crowdfunding where you can raise interest-free loans. Crowdfunding—through platforms such as IFundWomen Indiegogo and Kickstarter —is an opportunity to raise money from the crowd and to raise awareness of your product or service.
Val Jones, Wells Fargo women’s segment lead for small business, was inspired by the tremendous strides forward made by Black women when she reviewed data from the report.“Businesses helmed by Black women had an undeniably positive impact on our economy, helping the country rebound from the pandemic. It’s a testament to their resiliency and the breadth and depth of support they’ve received from government entities, banks, corporations, and philanthropic organizations that must be sustained,” she stated. “However, as impressive these accomplishments are, this by no means is an end point. Much progress still needs to be made to continue to level the playing field for Black women entrepreneurs.”
