Business revenue: Inclusive entrepreneurial ecosystems ensure people of color and women can grow successful businesses.
Insights & Analyses
- Among firms with paid employees in the five-county Bay Area, average annual revenue is around 3.8 times higher for white-owned firms than Black-owned firms and 2.8 times higher than Latinx-owned firms.
- Average annual revenue for firms with paid employees in the five-county Bay Area is more than two times higher for men-owned firms than women-owned firms.
- Although the average revenue per firm for firms with paid employees was about $3.05 million in the five-county Bay Area in 2017, there were large disparities across race/ethnicity and gender.
- San Mateo County had the highest average revenue per firm for firms with paid employees ($4.59 million), while Marin County had the lowest ($1.84 million).
Drivers of Inequity
Entrepreneurs of color are less likely than white entrepreneurs to have access to capital and contracts to start and grow a business, due in part to historical policies such as redlining that denied home loans and wealth-building opportunities to people of color. Today, Black- and Latinx-owned firms are less than half as likely as white-owned firms to be fully approved for non-emergency financing. Business owners of color also pay higher interest rates and receive lower loan and equity investments. Although creditworthiness is a factor in loan denials, this metric does not reflect how reliably individuals pay their rent. Underrepresented groups also often face barriers accessing important networks and training programs.
Strategies
Strengthen places: Policies to expand and sustain business revenue for all residents
- Increase resources for businesses owned by people of color through Minority Business Development Agency (MBDA) Business Centers, which are charged with creating sustainable jobs within businesses owned and operated by entrepreneurs of color through services focused on access to capital, contracts, and markets.
- Connect aspiring entrepreneurs to business mentoring programs through grassroots organizations and government agencies, including the SCORE association, Entrepreneurship.org, and Prosperity Now.
- Expand business opportunities through equitable procurement and contracting strategies.
- Close the racial wealth gap by increasing access to capital and government contracts for people of color.
- Implement sector-focused workforce training and placement programs that connect workers to growing industries.
Strategy in Action
Pacific Community Ventures expands entrepreneurship opportunities for women and people of color. Pacific Community Ventures (PCV) is an Oakland-based community development financial institution (CDFI) that envisions a world of thriving communities where everyone has a fair stake. Their mission is to invest in small businesses, create good jobs for working people, and make markets work for social good. They achieve their mission through a combination of fair lending, free mentorship, skilled volunteerism, social impact measurement and management tools, and field-building research. In 2022, PCV supported 2,460 small businesses, and a total of 222 living wage jobs were created as a result of the PCV Loan Program. PCV dispursed $10 million in restorative capital loans, with 92 percent of entrepreneurs who received that funding being entrepreneurs of color and women. Learn more.
Photo: PCV Advising alumni Kasa Indian Eatery - Pacific Community Ventures
In Their Own Words
“ When I first started my business, I didn't know there were so many resources available. When I became an advisor, I learned about all the resources everywhere. . . . Now, I want to make sure that all the other people who have businesses or are starting a business know.”
Helen Masamori has owned and managed an insurance business for nearly a decade. Despite initial challenges, she connected with the local Small Business Development Center, which led her to become a business advisor and co-president of the Alum Rock Business Association. Helen is driven by her passion for helping others, both through her company and her community role. She strives to provide access to business development resources, addressing the lack of initial capital investments for local entrepreneurs and the impact of San José’s high cost of living on business owners and their employees. Learn more.
Photo: Felix Uribe
Resources
- Organizations: Kapor Center, ICA Fund Good Jobs, Pacific Community Ventures
- Reports: A Policy Agenda for Closing the Racial Wage Gap; Including People of Color in the Promise of Entrepreneurship; Key Strategies to Advance Equitable Growth in Regions; The Color of Entrepreneurship
- Data: Prosperity Now Scorecard; Federal Financial Institutions Examination Council
