After a series of
layoffs from teaching, Betty Sue King knew she wasn’t returning to the
formal classroom. Instead, she devoted her life to a business incorporating
her deep interest in art and beauty. A wholesaler of pearls, she enjoys
sharing her passion leading workshops at trade shows. At a recent San
Francisco forum, “Accelerating the Growth of Businesses Owned by Women of
Color,” a groundbreaking initiative, King addressed the obstacles she faces
as a businesswoman of color. “Some of the challenges involved financing. I
went to many banks for a loan. Even though I had property, an equity line
was hard to get,” said King.
Finally, the Security Pacific Bank
(now Bank of America) granted a loan for only half of what she had
originally asked for. But over the years, King proved she was a viable
businessperson. She is part of an explosion in the number of women of color
entrepreneurs starting businesses — at a rate five times the national
average. However, despite many success stories, most are grappling with why
they haven’t reached full potential.
A project by the Washington,
D.C.-based Center for Women’s Business Research (CWBR) and their academic
partner Babson College may help zero in on the challenges endured by women like
King. “When we looked at the research, we saw that women of color start
businesses at a higher rate within their ethnic and racial groups [compared to
Caucasian women]. But when we looked at how much money they are generating or
how many people they employ, we don’t see a corresponding rate of growth,” said
Gwen Martin, CWBR’s Managing Director and Director of Research. The cutting edge
initiative will compile the experiences of women of color entrepreneurs,
engaging them in discussions about factors holding back business growth. The
heart of the project is five regional forums that bring women of color together
to discuss crucial problems.
At
San Francisco’s forum last month, Donna Stoddard, associate professor at Babson
College, struck a chord with participants with the example of three
African-American women bankers who took matters into their own hands. Angered by
the lack of capital for people within their community, they launched their own
bank in Milwaukee, WI. She also presented other case studies at the forum,
exposing barriers women of color entrepreneurs face within their own
communities. The typical way that majority businesses get funding is through
family loans, such as they may be in a family that has a history of
entrepreneurship. If relatives have their own businesses, they are more willing
to invest in one’s enterprise. In communities of color that is not the case.
“Relatives may have worked for a living but not tried to create something on
their own. Therefore, they are less inclined to risk money or simply don’t have
the resources to spare,” Stoddard said.
In
addition, large banks are leery of offering a jump-start. They would rather have
one raise their own initial capital and then just add more to the pot later.
“People are more willing to invest when it appears that [the business] is
growing,” she said.
Women of
color often identify access to capital and the generation of sufficient revenue
as two of the largest barriers to growth, said Martin. They can also be plagued
by perceptions that they lack financial savvy, which can put off lenders and
investors. While money issues and gender stereotypes may affect all women, women
of color must also deal with negative racial and ethnic stereotypes.
Despite the impediments,
unequal salaries and lack of acceptance in corporate America have led to more
women of color entrepreneurs. According to CWBR, women of color own about 1.4
million firms, employ nearly 1.3 million people and generate a total of $147
billion in sales, as of 2004. The Office of Advocacy at the Small Business
Administration (SBA) reports that within ethnic groups, a larger proportion of
women of color own firms than Caucasian women.
Major banks, eyeing new
markets for credit lines, are aware of these figures. Wells Fargo, a co-sponsor
of the research, has divisions on women, Latino, African American and Asian
entrepreneurs. In 1995, the bank created the Women’s Business Services Program
for education and outreach to help with access to capital and other financial
services. Tracy Curtis, market president of Wells Fargo East Bay, welcomes new
research to more effectively assist women of color entrepreneurs. “If we can’t
help people put together documents and business plans, we partner with
nonprofits who can help them.”
The remaining two forums will
occur in Dallas, TX in September and Chicago, Illinois next January. All
research findings will be presented at a national conference in Washington D.C.
in May 2008. For more information, go to
www.cfwbr.org/womenofcolor.
This article first appeared in the
Bay Area Business Woman Newspaper (
http://www.babwn.com )
Erica Bridgman is a writer and radio producer. Contact her at
bridgewalker99@yahoo.com.
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