If you’re a serious minded Black Business Woman, I’m sure that when you saw the term Business-Savvy Barrier in the title of this post, you raised your eyebrows and thought, “What the what?” But the numbers representing our success and progress compared to women in other races are startling. Black women business owners have come a long way in the past 20 years, but we still have a way to go.
Despite the growth of Black women entrepreneurs, there are multiple challenges, specifically regarding the income disparity experienced in the entrepreneurial sector. According to the U.S. Bureau of Labor Statistics, although Black female business ownership is up 59% since 2002, we only generate a little more than 3% of the gross sales receipts of the $1.2 billion dollars of all women-owned small business firms.
These are the demographics of the top three women-owned small business firms by race: White (72%); black (12%); and Asian (7%). While there are approximately 388,759 more Black women business owners than Asian women, they generate $51 million dollars more in annual gross sales receipts. Conversely, Black men with small businesses earn an average of $103,310 annually, compared to Black women business owners who earn an annual average of $43,000. This is disturbing and ladies, we must do better!
This suggests that Black men are somehow more successful in charting their ascent up the business ladder, being their own bosses, and spearheading their own economic futures. This may also indicate that Black female entrepreneurs have significant hurdles to overcome outside the corporate setting without access to capital, economic resources, angel investors, and eminent business advisors with “real-world” experience to help navigate the rough business terrain.
This should be an eye-opener for Black women business owners collectively. If, as the data indicates, we are struggling with disparity in gross sales receipts, what will it take to change the numbers? How can we enhance our Earning Power? I’ve already pointed out several barriers that we must overcome, but there are also other major obstacles such as lack of market expansion. Studies have also shown that Black women tend to network and sell to “our own people”, because we perceive that they are most interested in our products and services. But by far, the most substantial hurdle has to do with being Business-Savvy.
Is the research pointing to a legitimate short-coming? Is there a Business-Savvy Barrier for Black women entrepreneurs? Strong Business Acumen (the term I prefer) involves having solid business management skills such as, financial acumen, driving strategy and innovation, critical thinking, and the ability to build strategic relationships. This goes beyond technical skill and the depth of knowledge that you may have regarding your industry. So, for Black women, the missing element of the success and financial profitability equation is Business Acumen.
Black women have brilliant business ideas, but we have to shift our focus to learning how to become “Masters in Business Acumen”. Our businesses have the potential to get us a much bigger piece of the revenue pie. So how can Black women bridge the financial gap and greatly enhance our gross receipts over the next several years? Here are four steps that I suggest:
- Become More Business-Savvy: This means cultivate a deeper understanding of the business behind your business. From a business portfolio perspective, you must be cognizant of the primary functions that impact the bottom-line of your small business: Cash Flow (i.e. days of cash on hand and speed of cash generation), Customers (acquiring, serving and retaining them), Growth (achieved through new or enhanced products or services, reaching new customers, or moving into new markets), and Return (as a function of margin and velocity).
- Develop Financial Acumen: Don’t relegate this to a bookkeeper and then glance at the numbers when you get your reports. You must learn how to interpret the story that the numbers tell and take the appropriate action (strategic and/or tactical) in response to that story. This means knowing exactly what your company's financial numbers mean and their implications.
- Constantly Focus on Business Strategy: The business arena is all about change, all the time, no matter what industry you’re in—and that's more evident now than ever before. Your business strategy must do three things effectively: gain customer preference, create a sustainable competitive advantage, and leave money in the bank. To avoid the red zone of failure or to move from just breaking even, you must operate more strategically.
- Understand the Power of Positioning: Whether you are a new business owner or seasoned, you wear the mantle of a business leader. Innovation and strategy within your business will be driven by your great ideas and your ability to execute and implement those ideas. Understand your current position in the marketplace, see where your industry is heading and then take a LEAD position – get in the front of the line and deliver!
To know how closely you fit in the statistics, ask yourself this question: Based upon your tax return from 2011, would your accountant say that you have a “business” or a “hobby”? I would love to hear your thoughts on this topic.
I have a new virtual service coming on October 16, 2012 that can help you enhance your Business Acumen. Take a look at this e-Brochure to learn more. If you are serious about becoming a Business-Savvy Black Woman and want to increase your earning potential, the MBA Center for Women can help you! If you would like more information or want to sign-up for the MBACW mailing list, please visit http://www.moniquestoner.com/the-mba-center-for-women/. The MBACW website and virtual training services can be previewed live on October 9, 2012 at www.mbacenterforwomen.com.