Women Of Color Are The Fastest-Growing Group Among New Business Owners But A Report Has Revealed Some Shocking Truths

The US is experiencing a boom in entrepreneurship, and women of color are the fastest-growing group among new business owners. A recent report from Wells Fargo shows that Black-owned businesses nosedived by more than 40% in April 2020, more than other racial and ethnic groups.

However, the number of Black-owned businesses has since come back strong, currently at about 30% above pre-pandemic levels.

Women of color in general have been driving new business growth during the pandemic, and overall, a record number of people are looking to start their own ventures, according to the White House.

And while this is amazing – a new report from Meta found that compared to last year, businesses run by underrepresented founders were 14% more likely to report lower sales than other businesses.

Meta’s report on the global state of small business — which surveyed 5,324 small-business leaders in the US (and more than 24,000 globally) — cited the same disparity in its findings from the previous year, which were released in June. 

According to Nicola Mendelsohn, the vice president of Meta’s global business group, underrepresented business owners have faced greater hardships recovering from pandemic-related setbacks.

The report found that 51% of Black-owned businesses were experiencing record-low sales compared to January 2021, versus 36% of all US businesses. Black-owned businesses were also the most likely group to report closing in the past year.

Meta has initiatives to funnel education, funding, and business tools to underrepresented founders, including its Elevate program, which trains and mentors Black and Latino business owners in digital marketing strategies.

But Mendelsohn told Insider that while slower months — January and February in particular — are to be expected in retail, Porter said media coverage and social-media traffic petered out as early as the first quarter of 2021.

This year, she also saw a drop-off in engagement on Instagram and Facebook as algorithm changes made it increasingly difficult to reach customers. “It’s really hard to keep up with the algorithm,” Porter said. “A post that would have gotten 200 likes last year or the year before is getting a fraction of that now.”