For Minority Women in Business, Social Capital Counts as Much as Financial Capitalby
When Quisha King found a way to attach a favorite teething toy to her infant daughter’s wrist so it wouldn’t fall to the floor, she knew she’d hit on a great idea. Like many inventors, she thought there might be a market for it.
But unlike most inventors, King is African American, working full-time, and a single mother in Jacksonville, Fla. Black women in her community are more likely to run restaurants or beauty salons than online startups like her company, TeetherTops, she says. “I tried to find other minority moms who’ve invented baby products, but I couldn’t,” says King, 32. “It would be great to have someone like that in my life.”
The number of minority women business owners is growing, with American Express OPEN reporting that they’ve more than doubled in the U.S. since 1997, to 2.93 million in 2014. But minority, female-owned businesses also tend to be far smaller, less lucrative, and slower-growing than companies owned by white women or men.
Women of color in business face the familiar challenges common to all entrepreneurs, such as a lack of financial capital. They also contend with occasional outright racism or sexism. And they face more subtle obstacles as well: lack of mentors and role models, difficulty finding good professional partners, and indifference—or even hostility—from business networks. Together it adds up to a lack of social capital that means entrepreneurs like King may never get the crucial introduction, the benefit of the doubt from a financier, or the valuable guidance of a mentor that propels their businesses forward.
“It’s not just that these women—who have a double minority problem—don’t have the right network, but that the network bypasses them and extends itself to other people,” says Michel Martin, who has reported on minority women in business and technology as host of NPR’s Tell Me More radio program. (The show is slated for cancellation at the end of the month.) Combine that with what is sometimes called the “black tax”—family and community demands put on successful African Americans that few white professionals face—and the struggles begin to make sense.
A dearth of role models and networking opportunities are not the only barriers. Finding concerned professionals—bankers, lawyers, accountants, and other advisers important to business success—can be tricky, too.
Ramona Streit grew up in a traditional Hispanic household in Southern California and got married at 19 because her family worried she would “be a spinster,” she says. After she divorced, went to college, and had a career in aerospace, she decided to buy a Homewatch CareGivers franchise, which last year brought in $1.5 million in revenue.
But the 53-year-old Streit says she struggled to find diligent advisers. “I started out with males, but I didn’t feel like they were giving me the attention that I needed. When I switched to a female banker, she told me I didn’t need to pay for overdraft protection because I had a line of credit,” she says. A woman CPA explained that she should not use her company debit card to make personal cash withdrawals—something her male accountant had never bothered to mention.
Despite the challenges, the barriers to entrepreneurship are falling and minority women who are driven to succeed can do so, says Kathryn Finney, founder of The Budget Fashionista, and of digitalundivided, a social enterprise aimed at increasing minority women’s participation in tech.
She boosts her networking skills using bridge-building strategies she learned as a black teenager growing up in Minneapolis. And she has found male and female mentors of all races, says Finney, who was named a Champion of Change by the White House. “Standing out is very difficult, and if [minority women] fail, the failure is not just on ourselves; it reflects on our family and our whole community,” she says. “But at some point we have to get out in front of people. You may think you’re protecting yourself by shrinking, but that doesn’t serve you well in the long run.”