ABSTRACT

This article discusses differences between Black female entrepreneurs and their White female, Black male, and White male counterparts. It analyzes research that addresses/counters several common misperceptions, and looks closely at one of the primary critical success factors which differentiates these entrepreneurs—access to credit and capital. We conclude that more research must be done to determine similar/different characteristics of these types of entrepreneurs so that Black female entrepreneurs as well as other potential/novice women/minority business owners can be provided the effective types of support and assistance.
 
 

I. INTRODUCTION
 
 

Oprah Winfrey and Bill Gates are both driven, hard working people who have beaten the odds to reach the heights of entrepreneurial success in their individual fields. However, as an affluently raised, Harvard educated White male, Bill’s success is surprising only because of the field in which he has flourished. He was expected to achieve at least moderate success in whatever field he embarked, but his visionary capabilities in an industry that was still in its infancy is the aspect of his success that is definitely laudable. On the other hand, the level of success attained by Oprah was not a given, thus it is even more awe-inspiring. This poor Black daughter of divorced parents and a mother who worked as a domestic is quite amazing because of the gigantic leap that she had to make from being a "have-not" facing both gender and racial prejudice to one of the wealthiest, most competent business tycoons in the U.S.

With notable personalities like Oprah, Black women entrepreneurs recently have begun to garner some attention for their business accomplishments. Oprah was ranked number two on a Fortune magazine listing of the 50 most powerful women in American business (Sellers, 1998). Similarly, Amsale Aberra, Gail Conner, and Janice Bryant Howard were featured in the cover story of the 28^th Anniversary issue of Black Enterprise (Hayes, 1998). All four are black women entrepreneurs who have succeeded in fields as disparate as entertainment, dress design, environmental engineering, and personal services. While their individual career paths may be unique, the success of these and other Black women entrepreneurs is not.

Black women entrepreneurs contribute a significant portion of the growth in the number of businesses, revenues, and employment provided by the fast-growing segment of female- and minority-owned businesses (U.S. Department of Commerce, 1996a, b, and c; NFWBO, 1997). As of 1992, Black women owned the largest share (39% or 277,246) of all U.S. firms owned by minority women, even though their company revenues averaged the lowest of all groups of entrepreneurs. Between 1987 and 1996, the number of Black women-owned firms increased 135%. During the same time period, employment generated by Black women-owned firms increased 70%, and sales increased 55%. As of 1996, women of color owned approximately 13% of the nearly eight million female-owned U.S. businesses. Over a million minority women-owned companies employing approximately 1.7 million workers, and these firms generated annual revenues of $184.2 billion (NFWBO, 1997).

"Invisible entrepreneurs" was once an appropriate term used by Baker, et al. (1997) to connote the limited attention provided women entrepreneurs by both academic journals and the mass media. However, they have stepped into the spotlight with the creation of organizations such as the National Women’s Business Council authorized by Congress as a bi-partisan Federal government advisory panel for the President as well as the Interagency Committee on Women Business Enterprise, its public sector counterpart addressing economic issues that are important to women business owners. Today the term "invisible" more accurately applies to Black women entrepreneurs because their overall economic contributions and professional accomplishments have failed to translate into much academic interest (Walker, 1998). Most entrepreneurship research has used data sets composed of males, usually White (Jackson and Konz, 1998). Research on women entrepreneurs understandably has focused on gender, while ignoring color (cf. Berg, 1997; Buttner & Moore, 1997; Katz & Williams, 1997). Research on minority entrepreneurs, on the other hand, has ignored gender while focusing on color (Walker, 1998; cf. Dadzie & Cho, 1989; Van Fleet & Van Fleet, 1985). Two studies did examine gender and color by comparing minority and non-minority women entrepreneurs.

Dolensky, et al. (1994) compared Black women entrepreneurs with White women entrepreneurs to study the dynamics of entry into and exit from entrepreneurship. The authors focused solely on gross flows of the births and deaths of entrepreneurial enterprises. Their findings are important at the macro level, but as the authors point out, their study can only describe, not account for the differences in the rates at which Black women and White women establish entrepreneurial enterprises.

De Carlo & Lyons (1979) compared sets of minority and non-minority women entrepreneurs with women entrepreneurs and women in general. The focus of their investigation was characteristics that differentiated minority and non-minority women entrepreneurs from one another and differentiated these women from entrepreneurs and women in general. This study is valuable because it begins to describe minority women entrepreneurs. It is limited for two reasons. First, it provides only a snapshot view of the characteristics of minority women who were entrepreneurs at the time of the study. It says nothing about the entrepreneurial process: the motivations of these women, their history, the support they received, and the barriers they faced. Second, De Carlo and Lyons studied minority women entrepreneurs; they did not examine Black women specifically.

The purpose of this article is to begin to explore the entrepreneurial process as it applies to Black women. We examine those issues that are particular to Black women entrepreneurs, those issues that apply to them alone, those issues that have not been included in current entrepreneurship models. Raising these issues is important to the field of entrepreneurial research because understanding the group in question is the first step in building a model of entrepreneurial behavior (Bygrave, 1993).
 
 

II. UNIQUE CHALLENGES
 
 

Black female entrepreneurs are faced with challenges that are quite different from the typical entrepreneur in the United States who is white and male (Katz, 1992). One of the most significant differences lies in their access to capital. Another is their family exposure to entrepreneurship; their parents do not tend to have been entrepreneurs as is the case with most traditional entrepreneurs (Katz, 1992). Still another is the perception by potential lenders of the markets they will serve and their level of managerial competence as women and minority group members who are increasingly venturing into traditional female industries (Katz, 1992). Brown (1999) discovered that although these women are still flocking to publishing, they are abandoning traditional beauty salons, daycare centers and restaurants for non-traditional sectors such as construction, wholesale trade, public utilities transportation and communications. These Black women are highly educated, 35-54 years-old, usually married, and similar to their business counterparts globally, are concerned with profits, modern technology including the Internet, and access to capital and labor costs. Therefore, they are competent and not necessarily limiting themselves to minority markets.

The National Women’s Business Council (NWBC, 1997) has documented women business owners’ difficulties in accessing credit and capital and the U.S. Department of Commerce Minority Business Development Agency has commissioned a study (Harrington & Yago, 1999) that has identified problems faced by minority entrepreneurs in obtaining capital. Being members of a racial minority group as well as women, Black female entrepreneurs encounter many more obstacles than their male and white counterparts as they attempt to acquire financing for initial outlays as well as business development.

The National Foundation for Women Business Owners (1998) reports that Black women "are more likely than other women business owners to be turned down for commercial bank loans. While 20 percent Asian, 19 percent Caucasian, and 18 percent Hispanic women business owners were rejected, 29 percent of Black women were not able to get this funding." Timothy Bates (1992, 1993, 1997) has conducted studies comparing Black- and White-owned businesses testing popular perceptions of the differences. He has found that limited capital access results in discouraged Black entrepreneurs, smaller firms, and small business closures due to insufficient capitalization. Black-owned businesses start with less equity capital, are less likely to utilize borrowed funds at startup, are less likely to receive bank financing, are likely to receive smaller loans if they do so, and are more likely to access less-favorable forms of consumer credit such as credit cards and home equity loans (10.6 percent of Black borrowers versus 18.4 percent of White borrowers). Therefore, Black women entrepreneurs have been forced to attempt to succeed on limited capital. "As a result, their companies have foundered, often ending in failures due to insufficient capital." (Nivens, 1999)

For these reasons, many ethically/racially disadvantaged women business owners view themselves as uniquely socially disadvantaged while they do not see a similar obstacle for their white female counterparts (Barnett, 1999). Therefore, they do not agree with the Women’s Coalition for Access to Procurement that has recently attempted to gain a similar designation by circulating a petition calling for the federal government to grant all women the same "presumptive" socially disadvantaged status so that they can be awarded contracts that have been set aside for historically excluded firms (Barnett, 1999).
 
 

III. CONCLUSIONS
 
 

There are significant differences between Black women entrepreneurs and their Black male, White male, and even White female entrepreneurial counterparts. These women contribute much to the American economy and possess the education, sophistication, and ability to contribute even more. However, due to both their gender and race, they face discrimination and serious misperceptions by potential lenders about their capabilities. This social disadvantage creates differences in their access to markets, credit and capital.

Although the Small Business Administration, the Minority Business Development Agency and many other minority and women’s organizations have been established within the past few years to provide resources, support, and assistance to women and minorities in professional and entrepreneurial development, much more research needs to be done for such efforts to be more effectively provided. This research needs to look for both similarities and differences between Black women entrepreneurs and all of their gender, ethnic, and racial counterparts.
 
 

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