How to Support Minority-Owned Businesses and Why It Matters

Starting a small business is almost synonymous with the American dream for many people. While starting a business comes with inherent challenges for anyone, it can be especially daunting for minority entrepreneurs. Individuals in minority groups might struggle to obtain startup capital, get guidance from mentors, or overcome social prejudices. This guide takes a quick look at the positive impact that minority-owned businesses have had in the U.S. and ways that people can help support these enterprises. 

Statistics About Small Businesses Owned by Minorities

Here are some key statistics that provide perspective on the number of businesses owned by minority individuals, as well as some overarching trends. 

• In 2022, among small businesses that are employer firms, 1.3 million were minority-owned businesses. Over 270,000 were veteran-owned businesses, and another 1.3 million were owned by women.
• In that same survey, the U.S. Census Bureau reported lucrative total receipts for the year for different minority groups:
  • Veteran-owned businesses: $884.5 billion in receipts
  • Women-owned businesses: $2.1 trillion in receipts
  • Asian small business owners: $1.2 trillion in receipts
  • Black small business owners: $211.8 billion in receipts
  • Hispanic small business owners: $653.5 billion in receipts
• Together, the above businesses employed more than 20 million employees.

It’s clear that the number of businesses owned by minority individuals is on the rise, and this demographic is looking to start businesses all over the US. There’s been noticeable growth throughout the 21st century, and as the minority population continues to increase, they’re likely to be an even bigger force in the future.

Women-owned business enterprises account for a growing share of small businesses. And women of color are becoming increasingly interested in starting their own businesses. There’s also been significant growth in the number of African Americans and Hispanics becoming entrepreneurs. However, without proper support, many of these individuals face an uphill battle. Resources for female entrepreneurs are available at many stages of the business formation process, but community support and public education can still go further to fuel their success and swell their ranks.

Why Minority Entrepreneurs Matter

Nearly a quarter of all Americans now work in the gig economy — meaning they are earning at least some share of their income through self-employment. However, it’s one thing for a person to work independently; it’s another to get an employer identification number (EIN) and provide jobs for others in the community. Minority entrepreneurs play a vital role in economic growth and community development not only because they are productive members of the economy, but because they help extend the same opportunity to others by creating jobs. These businesses often provide needed or wanted goods to their communities that may not exist otherwise. 

New Americans, in particular, are behind this trend: immigrants are twice as likely as native-born Americans to start a business. This is especially critical in impoverished areas with high unemployment rates where amenities are lacking. These individuals can act as a catalyst for positive change that strengthens the local economy and creates a better quality of life for everyone.  

Minority small business owners also have unique perspectives and experiences to bring to their businesses. They may come from a variety of different backgrounds, which is ideal for creating new processes and products and can help revitalize stagnating industries. Given that the U.S. is a nation of immigrants and a cultural melting pot, one could argue that diversity has been a big part of historical success. When minority entrepreneurs thrive, it trickles down and has a positive impact on the country as a whole. 

Finally, successful minority owners of local businesses can help encourage other minority entrepreneurs. The experience that minority entrepreneurs gain tends to make them perfect mentors for others looking to pursue their own small business ventures. 

How to Support Minority Entrepreneurs

It’s important, as an entrepreneur and as a patron, to support these businesses. Here are some specific ways that small business owners can encourage and empower minority business owners.  

Assist aspiring entrepreneurs

Getting started as an entrepreneur often comes with many challenges. Small business owners of any ethnic background can provide business development advice and guidance for aspiring entrepreneurs, which can be huge. An established business owner can point these entrepreneurs to business opportunities they’re aware of, including places to get business funding and grants, tools and software for staying organized, marketing hacks, and more. They could also offer advice about mistakes to avoid as a startup.

Offer to become a mentor for a business development program

Getting direction from someone with experience can make a big difference for a fledgling startup. Having a mentor provides new entrepreneurs with the input they need when getting their business off the ground and ensures they have someone to turn to when they run into obstacles.

That’s where established entrepreneurs can help. A business owner can offer their mentorship services to a local business development program. These programs exist to help connect minority business owners with resources and mentorship to succeed, and it’s a bit easier for a business owner to find these new opportunities through their network. It’s also possible for an established business to connect directly with other start-up owners if they prefer to keep things a bit more informal.

Encourage supplier diversity in business practices

 If a business owner wants to be truly committed to supporting minority-owned businesses, they can help out by integrating those businesses into their supply chain by hiring them as suppliers. For example, if a company manufactures specialty furniture, the owner of the shop could invest in a minority-owned business by hiring it as a supplier for metal hardware or lumber. Granted, these opportunities won’t always exist, but it can be a great way to participate in that business’s success through a mutually beneficial arrangement. Every dollar spent at that minority-owned business could be a huge boost to their profits, helping them stay afloat.

Patronize local business enterprises owned by minority groups

When given the choice between making a purchase from a local minority-owned business and a major chain, a business owner can choose the former whenever possible.

Then they can take it a step further by recommending positive experiences to friends and family (remember, word-of-mouth advertising is still extremely powerful). Writing positive reviews on sites like Google, the brand’s website, or Yelp can be another way to help out without spending any extra money.

The takeaway: even small gestures to build rapport with minority entrepreneurs can help strengthen relationships and build a tighter community.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. For specific questions about any of these topics, seek the counsel of a licensed professional.