How did this happen? According to the Center for Women’s Business Research, majority women-owned firms grew at a rate of 42% between 1997 and 2006, nearly double the rate of businesses overall. All indicators point to an even stronger increase in the immediate future, though both the short- and long-term impacts of the current recession have yet to be factored in.
But recessions are an unavoidable fact of the economic cycle — as unavoidable as progress has been in minority business development. Consider the following:
- The number of minority-owned firms grew annually between 1982 and 1997 at a rate of 8.5% — three times that of U.S. businesses overall.
- Revenues from minority-owned firms rose between 1987 and 1997 by 22.5%.
- Minority-owned firms have increased their employment capabilities by 23% over the same ten-year period.
Now, however, with a widening of private-sector market opportunities, enhanced managerial skills, and a wealth of organizations dedicated to the advancement of women- and minority-owned businesses, the profile of business owners and investors has changed in ways few would have imagined possible just a decade ago.
Many have attributed the rise of women and minorities in business to the fact that more executive level positions are being filled by professionals from diverse backgrounds. Case in point: PepsiCo named Indra K. Nooyi its company CEO and chair in 2006. Nooyi’s position has made her a formidable figure in the business world, earning her a spot at number five on the Forbes 2007 list of the world’s 100 most powerful women, a list including such names as Melinda Gates, Oprah Winfrey, and Hillary Clinton. Fortune magazine ranked Nooyi number one on its most powerful women in business lists for 2006 and 2007. And, whatever her individual achievements have been, Nooyi’s success now paves the way for other women and minorities to assume prominent positions in the business world.
To be sure, there are still many challenges ahead. Minority businesses may be multiplying by the week, but they continue to lack certain capabilities, especially in terms of size and scale. A common feature of modern American life is the local Chinese restaurant, typically owned and operated by a family which does all the cooking, waiting, bussing, and bookkeeping. Can they compete with large national chains offering similar (if decidedly watered-down) cuisine? The short answer is no, because despite offering superior food, financial logistics and marketing constraints will always make such restaurants a less frequented option.
There is the further issue that minority business success levels vary considerably across demographic lines: Asian Americans make up only 3.6% of the national population and just over 12% of the minority population, yet businesses owned by Asian and Pacific Islanders account for 4.4% of all U.S. businesses and 30% of minority firms. African Americans, meanwhile, account for 40% of the minority population, yet own only 26% of minority businesses. Why the disparity? Clearly, something is discouraging certain groups from starting their own businesses while others feel more comfortable with the market.
A common stereotype encountered by women entrepreneurs is the assumption that they will — inevitably — fail. Georgette Pascale, who founded her own successful public relations firm after spending years in the industry, recounts that when she first started out on her own, a large part of the struggle was simply to be taken seriously in the market. “While I had an unbelievable amount of support, there were still people (both men and women) who would comment on my endeavor [by] saying things such as “that is a cute idea” or “try not to get eaten alive.” To me, comments such as those [were] insinuations that I was going to fail. In fact, I have even turned down business from a potential client who scrutinized me as a female business owner and said they would hire me as a “favor,” thinking I desperately needed the help.”
Pascale and others like her have taken advantage of their unique position in the industry and done what lawmakers and corporations have been dismally unwilling to do: created workplace environments mindful of the needs of working mothers. Whether this means outsourcing day care, working from home, or simply being more flexible with schedules, many women-owned businesses have taken the initiative in taking care of their employees, which in turn helps take care of the bottom line. After all, as most managers will readily affirm, a happy employee is usually a diligent one.
The rise of minorities and women in business may also be a straightforward consequence of changing demographics. Projections by the U.S. Census Bureau estimate that major ethnic minority groups — including African Americans, Asian Americans, Hispanics, and Native Americans — will make up 40% of the U.S. population by 2050. The presence of hitherto excluded groups and individuals in all realms of American society — financial, social, and political — will bring about challenges and opportunities which have collectively never been considered. Thus, the questions naturally arise: Will their integration into the mainstream be a smooth or jittery process? And will the forces (and potential dominance) of foreign economic markets affect the way Americans engage in and influence the business sector?
