Black women are becoming the fastest-growing group of entrepreneurs, ditching their corporate 9 to 5 jobs to build their own flourishing brands. But what’s behind the rising demographic? All signs point to the pandemic.
According to the National Women’s Law Center, Black women felt the brunt of the economic crisis in 2020 and 2021. The unemployment rate among the group reached 16.6% at the peak of the pandemic. Sadly, it remained in the double digits for six months. In a survey conducted by the organization, 19% of women said they lost or quit their job during the pandemic. While 31% said their employer reduced their hours as a result of the COVID-19 crisis.
Black women are becoming entrepreneurs to find better work opportunities
Job stability isn’t the only thing fueling the rise of Black female entrepreneurs. In the same study, 23% of respondents said they changed fields completely to find a better opportunity and a workplace environment where they could utilize more of their skills.
The case appeared to ring true for Jennifer Walton, who, in 2021, left her cushy role as an associate vice president of marketing for the Nationwide Retirement Institute “to find greater impact in her work.” Walton briefly worked as a marketing director for Central Ohio Transit Authority following her exit, but the buzzing entrepreneur told Dispatch, that she still felt stifled in her ability to impact her clients’ lives. After months of careful planning, the passionate entrepreneur decided to launch her own consulting company called SKY Nile, which offers marketing and brand strategy to clients in need.
“I wanted flexibility in my life,” the 38-year-old said. “I wanted to maximize my earning potential. I wanted to maximize my talent. And I wanted my values to align with my work. And I knew that if I needed to check those four boxes, I could only get it for myself.”
While the job market appears to be slowly recovering in 2022, new challenges present another threat to financial stability for Black women. Soaring inflation has caused housing and gas prices to skyrocket over the last year. Unfortunately, even today, employment growth remains stagnant for Black women. At 5.3%, the unemployment rate for the group in July 2022 was still about 1.7 times higher than the unemployment rate for white men (3.1%), the NWLC noted.
Black women are doubling down on entrepreneurship to help make ends meet during this difficult period. Deonna Barnett, a business consultant at Aventi Enterprises said she’s had an influx of Black women come to her firm asking for help to scale and expand their businesses.
“They’re leaving (their jobs) because they can make more money doing it themselves,” said Barnett. “Some of them can stay home, which is helpful for caretakers and parents.”
According to the State of Women-Owned Business Report by American Express, companies owned by women of color soared to 43% between 2014 to 2019. While Black women-led businesses climbed to an astonishing rate of 50%. The number could continue to climb. According to Harvard Business Review, 17% of Black women are in the process of starting a new business, compared to 10% of White women and 15% of White men.
Some are looking to escape common microaggressions from the workforce
Tenesha Hartgrove, an accountant in Grandview, left her senior tax accountant job to launch her own firm. She wanted to offer more financial services to clients. Before taking the leap of faith, Hartgrove said she felt like she didn’t have enough knowledge to start her own business, even though she was highly certified. It wasn’t until she saw people offering incorrect tax advice online, that she decided to take the leap of faith. “I know I could do better than some of the stuff that I was seeing,” she added to Dispatch. “I just felt like if all these people are doing it and they don’t have the level of education that I’ve pursued, I can definitely do it.”
Hartgrove’s story of hesitancy is a feeling far too many Black women can resonate with. Microaggressions in the office and a lack of workplace advancement opportunities can make some women feel less confident in pursuing new career goals or opportunities. A Study by LeanIn.org found that Black women “are more likely to have their judgment and competence questioned at work.”
Funding for Black women-led businesses can be challenging
Entrepreneurship could be the answer for many Black women looking to escape from some of the inequalities of the workforce, but business funding remains a challenge for women of color.
In a report, J.P. Morgan noted that Black female business owners who apply for funding have a rejection rate that is “three times higher than that of White business owners.” Access to credit is also a challenge. 61% of Black women self-fund their startup capital as an alternative, but most of the time, it isn’t enough to withstand the economic challenges that can occur with running a business. Now, some big financial institutions like J.P. Morgan and Master Card are pledging billions to help Black women and other entrepreneurs of color access the capital they need to scale.
Last year, Chase announced that they would be allocating $30 billion over the next five years to advance racial equity and provide economic opportunity to underserved communities, with a focus on Black and Hispanic communities. The financial titan said that some of the capital would be used to increase lending and technical assistance for entrepreneurs of color. Similarly, Mastercard pledged $500 million to help close the racial wealth and opportunity gap for Black communities and businesses across America.
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