Fighting Inequality with Entrepreneurship

Racism and sexism hurt female minority entrepreneurs in the United States. Helping them succeed could combat both bias and economic inequality.

Candice Helfand-Rogers By Candice Helfand-Rogers

Editor’s Note: This is the conclusion of a series on female entrepreneurs of color. Read the rest of it here.

Credit: Jason Devaun, Flickr

Credit: Jason Devaun, Flickr

A Tense Time in American History

Strained race relations are dominating headlines and driving important, impassioned conversations throughout the United States. Before much of the nation was focused on the June 17 terrorist attack at Emanuel A.M.E. Church in Charleston, S.C., in which nine African-American Bible study attendees were killed, the city of Baltimore was in the spotlight following the death of Freddie Gray (an African-American man who lost his life while in police custody).

The morning after riots tore through Baltimore on April 27 (following days of peaceful protests), real-estate entrepreneur Don Peebles was interviewed by CNBC. He discussed the frustrations of the people involved in the civil unrest, then suggested a way to address some of the city’s significant income inequality issues: entrepreneurship.

Baltimore is the oceanside home to approximately 42,000 businesses, 37 percent of which are owned by women and roughly 43 percent by people of color, according to Census data. It’s a diverse business community that Peebles wants to see expand. “Locally based, minority-owned businesses will actually hire minority residents,” he told CNBC. “This is a long-term solution for a problem that’s been long coming.”

Research backs his claim — a 2008 Massachusetts Institute of Technology study on the subject found that “minority firms in the United States hire more than 4.7 million employees, a disproportionate share of them minorities … and many of these jobs are located in disadvantaged communities.”

Women business owners of color are especially energized and prolific. “Growth in the number of [firms owned by women of color] since 1997 surpasses the growth in the number of non-minority women-owned firms several-fold,” according to an American Express OPEN Forum report. It calls this influx of entrepreneurial diversity “one of the most remarkable trends of the past decade.”

CloutChart

Credit: American Express OPEN Forum

Yet while there are many merits to business ownership for people of color and their communities — not the least of them profits and jobs — the path to entrepreneurship, particularly for female minorities, can be hard to traverse.

A Problem with Strong Roots and Branches

Over the course of the past two months, The Story Exchange had been engaged in candid, insightful conversations with individuals and organizational representatives who have observed — and lived — the challenges and joys of starting and growing businesses as women of color. We also coordinated a query with the Public Insight Network that solicited minority businesswomen’s input and undertook a significant amount of research.

Through all of this, we saw notable glimmers of hope. Encouragingly, women business owners of color often find strength within their racial and ethnic communities. Entrepreneur Tina Aldatz, a Latina woman who has founded multiple successful ventures, said that her “socioeconomically disadvantaged” upbringing built character and taught her how to persevere in the face of difficulties. She said of her heritage, “That culture of determination and Latino work ethic is ingrained in our DNA.”

Yet we also saw that racial and gender inequality are alive and well in the entrepreneurial world. Simply put, women business owners of color face a unique set of challenges, and they face those challenges more often and more severely than entrepreneurs who are male or white.

One of the greatest difficulties is access to vital education and funding. Research bears this out (see our introduction to this project for more). For example, the MIT study finds that “the relative lack of success among black-owned businesses [in particular] is attributable in part to owners who have less startup capital, disadvantaged family backgrounds, and less education.”

Another study from the Jon M. Huntsman School of Business at Utah State University found that people of color are, at times, subjected to overt displays of racism, such as during interviews and loan meetings. The University of New Hampshire’s Center for Venture Research similarly found that people of color were less likely to get money from angel investors.

Indeed, when we examined funding issues in depth, we saw that women of color had a tougher time accessing necessary startup capital through almost every conceivable route — from bootstrapping and small business loans to friends-and-family contributions and venture capital.

The women we spoke with gave context to those statistics. Cassandra Allen-Brown, owner of the Yarn Shoppe Studio in Denver told us that, while she has found success, she is frequently questioned by skeptical members of her community about how she financed her store.

Moreover, living in a country that continues to suffer from systemic racism has influenced how minority women manage and market their businesses. Funlayo Alabi of Shea Radiance in Maryland says she had to change her packaging and brand messaging because “‘non-black’ potential customers looked at … Shea butter and the fact that the owner is black, and assumed the product was not for them.”

It’s a problem that reveals itself even during events intended to empower and enlighten. Natasha Clark, founder of Springfield, Mass.-based The Lioness Group, told us that “while women are finally starting to get a seat at major entrepreneurial events and the attention of venture capitalists, women of color are still a long, long way from getting that recognition and those same seats — look at any major headlining bill of speakers, and you will see a lack of representation.”

ProjectDianeKathryn Finney of digitalundivided, who spoke with us about the issues facing female minority tech entrepreneurs, often noticed that she was the only black woman at conferences she attended earlier in her career  — sometimes even the only black person. “Statistically, it didn’t make any sense, and that really sort of stuck with me,” she says.

Even when race isn’t an issue, gender biases still loom. Krittika Khandelal of accessories maker Soothi in Atlanta says, “Race comes into play when people see my name on paper and create assumptions. Those assumptions are quickly shattered [upon meeting me], but they are then replaced with the barriers of being a woman.”

Working on Tomorrow

So how do we solve this significant, multi-layered problem? How do we make progress? What can we do — individually and together — to ensure that women business owners of color have a fair shot?

Some of our contributors offered answers. Seeking out and soliciting these women’s ventures and crowdfunding campaigns was a popular suggestion, one that can help foster a positive, supportive entrepreneurial community for female minority entrepreneurs.

Additionally, efforts like Finney’s planned documentary, “#RewriteTheCode: Intersection of Gender & Tech,” aim to take on the issues of a weak pipeline of future entrepreneurs and poor minority female representation — both crucial problems to overcome.

When we started this project, we discussed the notion of intersectionality — the need to examine how multiple, intersecting identities interact in our society and affect the lives of its citizens. Of course, it isn’t always easy to see problems that way. The effects of racism can be insidious, ranging from harder-to-spot microaggressions and small differences in experiences to more blatant verbal and physical attacks. Sexism, too, shows itself in numerous ways.

America in 2015 is a complicated place, full of promise for community and prosperity that has not yet been realized in part because of entrenched biases. Places like Baltimore serve as microcosms that show how the lives of minorities are affected by such biases, and their impact on entrepreneurial aspirations.

But awareness is certainly growing. Perhaps next year we will be able to report that entrepreneurship has been part of a solution — and about a more diverse business landscape that is supportive of anyone with the drive and smarts to succeed.

Posted: June 29, 2015

Candice Helfand-RogersFighting Inequality with Entrepreneurship