This is a link to the website I created for my final project. Minority Business
Minority Entrepreneurship In America
For hundreds of years in America and throughout the world, business success has been one of the best ways to measure overall wellbeing as a society. In our world today, racial minorities have not had the opportunity to achieve the kind of success as business owners needed to truly prosper. Because of factors that in many instances are almost entirely out of their control, these groups of people are under-equipped to enter into business ownership, and because they don’t have the necessary skills, they have little impetus to try and improve themselves. The major factors that prevent more minorities from becoming entrepreneurs and that limits the ones who do own businesses from being more successful are a lack of education and training for the skills needed to own a business, limited access to some of the different sources of financial assistance that are needed to successfully get a business off the ground, and the inability of prospective minority business owners to create meaningful and helpful networking connections that can be vital in the success of a new business.
The extent to which minorities in America are underrepresented in business ownership is significantly under-realized by the general population. According to the Minority Business Development Agency, a government agency operating as part of the Department of Commerce, there are 27,626,360 businesses total in the United States today, of which only 7,952,386 are owned by racial minorities. This comes out to only about 28.8% of American businesses are minority-owned. According to the U.S. Census Bureau, 37.9% of Americans are classified as non-White minorities. This means that just on the surface, it is already clear that minorities are underrepresented based on the general U.S. population demographics. The problem isn’t just that minorities own far fewer businesses than one would expect based on the overall population, it is also that their businesses tend to be far less successful than the businesses owned by non-minorities. The average revenue for a minority-owned business in 2012 was $173,552, while average revenues for a non-minority firm was more than three times that amount, at $552,079 (MBDA). Businesses not owned by minorities also employ far more people and create many more jobs than minorities do. Non-minority businesses have roughly 2.5 employees per business, while minorities only employ about .9 people per business (MBDA). The MBDA also keeps track of what these statistics would look like if they were actually on par with the total overall population. If minorities owned businesses at rates equal to the general American population, the total number would increase from just under 8 million to over 9.9 million firms, and the total number of employees at minority businesses would almost triple from 7.2 million to 20.4 million employees. Additionally, the total gross revenues of businesses owned by racial minorities would more than triple from $1.4 trillion to $4.3 trillion. On the bright side, minority businesses are growing at a rate much higher than the national average. From 2007-2012, the number of minority businesses grew 38%, the total revenues grew 35%, and the number of employees at these businesses grew by 23%. For context, non-minority businesses actually saw both their total number of businesses and employees go down over this same time period. This shows that, while the problem is still present, it is definitely getting better as time moves on.
Many business owners share similar characteristics that help them to be successful. Minority entrepreneurs tend to share these traits, with additional qualities added to make them unique. The first characteristics that minority business owners share is the reasons that they made the decision to become entrepreneurs. According to a study done by Robert D. Hisrich and Candida Brush, “[a]chievement, opportunity, and job satisfaction were the motivations listed most often” for why these people decided to start a business. Additionally, most of these business owners claim that they are not motivated by power and status, and instead want to gain less material rewards like feelings of self-fulfillment or accomplishment” (Hisrich & Brush 4). This particular statement stood out to me when I was reading this article, because in my experience in business classes and also knowing many of the popular stereotypes about people in business being greedy, I would have expected these results to be the opposite of what they turned out to be. Many minority entrepreneurs possess similar skill sets that help them to operate their businesses as well. The surveyed business owners claimed to be “most adept at idea generation, product innovation, and dealing with people; average in marketing and business operations; and weak in finance” (Hisrich & Brush 5). These results aren’t all that surprising to me, because as I will point out later on, most minorities don’t have the formal education and training needed to be proficient at more technical tasks like marketing, operations, or finance. However, the areas they do claim to be skilled at, like idea generation, innovation, and people skills, are just as crucial as the more technical skills but require far less training and tend to come more naturally to the kind of creative people who tend to be entrepreneurs.
The biggest reason why minority entrepreneurship is lacking in America today is because the American education system is failing its minority students. According to a study done by the National Center for Education Statistics, the majority of minority students lag far behind non-minority students in almost every area at every level of school. The only racial group to be as successful or more successful than white students is Asian-Americans, due to the fact that they are the only racial minority group to be financially well off. The other racial groups, Black, Hispanic, Hawaiian/Pacific Islander, and American Indian, all fare significantly worse in school. The NCES gave tests to 4 year olds to test their letter and shape recognition, and in these tests, the four groups listed in the last sentence all scored lower on their tests than White students did. Additionally, tests were also given to 4th graders, 8th graders, and high school seniors to help test their reading and mathematics skills, and in all three age groups a vast majority of Black, Hispanic, Hawaiian/Pacific Islander, and American Indian students are considered to not be at a suitable level for the level they are at in school. A large part of these educational problems are the fault of the schools themselves. A report released by the U.S. Department of Education in 2014 found that the American public school system does a poor job in offering quality preschool programs for it’s students, especially the minorities who tend to live in lower-income areas. Also in the report is a section stating that racial minorities have significantly more restricted access to many of the Advanced Placement courses that are essential in preparing students to advance their academic careers (Department of Education). Both of these findings are very problematic because they show that for the most part, minorities do not have an equal chance to receive a quality education, which puts them at a disadvantage as early as the age of 4. This disadvantage is even more clear when comparing success in the previously mentioned Advanced Placement courses. When comparing scores for the main examination in these AP courses, scored on a 1-5 scale, on average Black, Hispanic, and American Indian students were not even .4 points away from the overall average score (Department of Education. In most subjects, students from these three groups only successfully passed these tests roughly 30% of the time, compared to roughly 60% for White and Asian-American students (Department of Education). As could likely be expected Black, Hispanic, and American Indian students also score significantly lower on the SAT and ACT tests as well (Department of Education). This in turn leads to significantly fewer minorities being enrolled in college, where the majority of business skills are actually learned. Many people might say that it is up to the individual to take responsibility for their own education. I would disagree with that assertion in this instance for two reasons. The first reason is that we can’t expect our children to know what is best for their future and hold them accountable for that. The reason that schools exist is to help them prepare to be successful when they do finally reach an age where they can be responsible for themselves, which leads me to my second point. America has not given these children a fair shot to put themselves in a position where maybe they would be able to eventually either go to college and continue their education or to go into the real world and have the skills needed to be successful. Once people go out on their own and aren’t equipped to be successful, it becomes much more difficult to be motivated enough to want to better themselves, so it is essential to do this in elementary, middle, and high schools. The best way to fix this problem is just to increase awareness that there is a problem here. I knew just from general knowledge that the public school system, especially in lower income areas, is not up to the standard that it should be, but I never knew the extent to which it damages the students attending these schools. As seen in a few of the sources cited in this paragraph, the federal government knows that there are problems, and seems to be attempting to address these issues, but, as seen in many different issues ranging across almost every area of interest, the most effective way to make things change is to get public support behind an issue. If more people knew that these kids aren’t even receiving a fair shot at bettering themselves, I fully believe that society would be able to enact some kind of positive change to at least get the ball rolling in the right direction for America’s youth.
Another reason that minorities are less successful as business owners is because they don’t have the assets or the access to those who do have the assets needed to be successful. As seen in the infographic that is in this paper, minority businesses in total only receive 43% of the funding that non-minority businesses do. There are multiple different sources of financing for a business, and minorities trail in their ability to receive funds from all of these sources. The most common source of funding for a new business is from the entrepreneur themselves, and since minorities on average have lower annual salaries than non-minorities, prospective entrepreneurs are much less likely to have the financial resources needed to start their business. The next main source for business funding is reaching out to friends and family, and again, since minorities make much less money, friends and family are far less likely to have the money needed either. This leads to minority businesses being much more likely to go bankrupt eventually. According to Rafael Efrat, who did a study on business owners who had filed for bankruptcy, “[t]he household income of minority bankruptcy petitioners was almost a quarter less than their White counterparts in the bankruptcy sample. While minority petitioners had substantially lower household incomes, they also had significantly higher numbers of dependents to support. Similarly, minority petitioners reported significantly less ownership of capital. For example, the homeownership rate among minority petitioners was almost half the rate of that among White petitioners” (Efrat 112). This quote shows that the lower incomes of minorities has a direct impact on their ability to be successful, and is a factor in the downfall of those businesses that do fail. Minority entrepreneurs also have a much more difficult time securing outside funding as well. Bank loans are definitely the most popular form of outside business investment, and minorities have a much more difficult time successfully gaining business loans. According to a report done by Robert W. Fairlie and Alicia M. Robb for the Minority Business Development Agency, only 17% of minority-owned businesses received loans, compared to 23% of non-minority firms. This problem is accentuated even further when looking at the denial rates for loan applications. Non-minority businesses were only denied loans 16% of the time, while minority denial rates were almost triple that amount, at 42%. The problem isn’t just in being able to receive a loan though. The average monetary amount for a non-minority loan was roughly $310,000, while minority loans were less than half that amount, at about $149,000. Additionally, minorities also paid higher interest rates on the loans that they did receive, with an average rate of 7.8%, compared to only 6.4% for non-minorities. These statistics help paint the picture of a large problem. If minority entrepreneurs have fewer personal assets to use, and their families and friends also don’t have the required amounts of funding to help businesses, then the next place that they will turn to is bank loans, and as shown above, this avenue is also one that doesn’t provide them with the necessary funding to help these entrepreneurs make their business viable. According to a report done by the University of New Hampshire’s Center for Venture Research about the angel investing market, in 2014 only 24% of the businesses making pitches for angel investment were minority-owned, and only 16% of those businesses were successful in gaining funding, which is below the industry average of about a 19.2% success rate. Additionally, in the lucrative but highly exclusive world of venture capital, 87% of the entrepreneurs to receive venture capital funding are White, and 12% are Asian, leaving only roughly 1% of entrepreneurs to belong to the other, less successful minority groups. Even the minority companies that do obtain venture capital funding receive on average about ½ to 1/3 of the money that White and Asian companies receive. Fortunately, however, steps are being taken to try and fix these systematic problems. For example, there is an organization called PowerMoves that is dedicated to bringing together some of the top emerging minority entrepreneurs together for programs designed to expose them to capital and valuable business connections. Additionally, multiple different agencies in the U.S. government, like the MBDA or the Small Business Administration, and corporations like Intel, Comcast, and AOL have funds specifically designed to fund minority-owned businesses, so there are certainly steps being taken to help minority entrepreneurs overcome the financial hurdles of operating a startup.
The next major problem that minority entrepreneurs face is a lack of business connections and networking opportunities that can be very helpful during the process of starting a business. Having valuable connections can open many doors, like providing funding opportunities, receiving useful advice and help from those who have successfully launched a business, or being able to work together for potentially lucrative partnerships with more experienced and successful companies. In a paper written for the Brookings Institute, a prestigious Washington D.C. think tank, Michael Barr writes that “[b]usiness networks can help any firm to build its customer and supplier base, improve access to debt and equity finance, and provide useful advice and support. Such networks can be especially beneficial for new and smaller firms, which because of their size often have a narrower range of contacts. Moreover, peer networks may be particularly valuable for entrepreneurs facing similar problems, or located in the same communities. Women- and minority-owned businesses often cannot effectively access business networks even though they might benefit the most from them” (Barr 6). This quote shows the importance of having connections in the business world, and so the fact that many minority entrepreneurs don’t have these valuable connections is very detrimental to their chances of being successful. There are many ways that the business community is trying to fix these networking problems. As mentioned above, PowerMoves is doing a great job of connecting up and coming entrepreneurs with established, successful business owners to create just the type of connections that can prove to be so valuable. Another way to fix this problem is just to raise awareness that minority business owners are out there and attempting to find people to help them. The general American population has never heard of some of the best emerging entrepreneurs across the country, and so promoting them and getting more people to learn about the outstanding ideas that these people have could only be a positive thing in the long run.
When I decided to look into using this subject for my research paper, I knew that there were problems in the world of minority-owned businesses. However, I wasn’t really aware of why these problems existed. Through the process of formulating and writing this paper, I have become much more knowledgeable about the problems that are facing minority entrepreneurs in America today. Ultimately, one of the best ways to fix this problem is to educate more people about the real problems facing millions of American entrepreneurs, because public awareness has shown throughout time to be one of the most effective ways to get things done, and fixing this problem is without a doubt in the best interest of every American. A diverse and integrated business society can only bring good things with it, because having numerous people from different backgrounds can make the whole world a healthier and more productive place.
Barr, Michael S. “Minority and Women Entrepreneurs: Building Capital, Networks, and Skills.” The Hamilton Project. Brookings Institute, Mar. 2015. Web. 14 Apr. 2016.
Efrat, Rafael. “Minority Entrepreneurs In Bankruptcy.” Georgetown Journal On Poverty Law & Policy 15.1 (2008): 95-128. Academic Search Premier. Web. 13 Apr. 2016.
Fairlie, Robert W., and Alicia M. Robb. “Disparities in Capital Access between Minority and Non-Minority-Owned Businesses.” Minority Business Development Agency. Minority Business Development Agency, Jan. 2010. Web. 19 Apr. 2016.
Hisrich, Robert D., and Candida Brush. “Characteristics of the Minority Entrepreneur.” Journal of Small Business Management 24.4 (1986): 1. ProQuest. Web. 13 Apr. 2016.
“Population Estimates, July 1, 2015, (V2015).” UNITED STATES QuickFacts from the US Census Bureau. U.S. Census Bureau, 2015. Web. 14 Apr. 2016.
“Power Through Opportunity.” PowerMoves.NOLA. PowerMoves.NOLA, n.d. Web. 15 Apr. 2016.
Sohl, Jeffrey. “The Angel Investor Market in 2014: A Market Correction in Deal Size”, Center for Venture Research. 14 May. 2015.
United States of America. Department of Education. Expansive Survey of America’s Public Schools Reveals Troubling Racial Disparities. U.S. Department of Education, 21 Mar. 2014. Web. 14 Apr. 2016.
United States of America. Minority Business Development Agency. U.S. Minority-Owned Firms. Minority Business Development Agency, Jan. 2016. Web. 15 Apr. 2016.
United States of America. National Center for Education Statistics. Status and Trends in the Education of Racial and Ethnic Minorities. Institute of Education Sciences, n.d. Web. 14 Apr. 2016.
“Venture Capital Demographics – 87% of VC-Backed Founders Are White; All-Asian Teams Raise Largest Funding Rounds.” CB Insights Blog. CB Insights, 03 Aug. 2010. Web. 15 Apr. 2016.
My research paper, which will be about minority entrepreneurship and why there is such a lack of it in America today, matters because it helps to represent our society as a whole. For this reason, the subject of minority entrepreneurship should appeal to vast and numerous different groups in society. For obvious reasons, racial minorities should care about this, because business success has long been one of the key components in the overall well being of any group of people. If more minorities become business owners, and all of those business owners start to become more successful, it will lift up their whole community through the numerous jobs that are created. Once people have jobs, they then have more money to spend in their community, which creates a positive upward cycle that would hopefully improve the quality of life for everyone in society. Another group that should care about the success of minority entrepreneurs is consumers as a whole. If more racial minorities own and successfully operate businesses, this will help to create more diversity in the marketplace, which in turn will provide consumers with more options in the things they choose to spend their money on. Racial minorities come from vastly different places and are part of different cultures, and so if there are more minorities owning and operating businesses, it increases the options for everyone. Another little talked about, but still important, aspect is that whenever there are more businesses operating in the world, it makes the fight to be successful more competitive, which forces every business to become better at what they do which works out well for society as a whole.
In my opinion, there are multiple reasons that racial minorities in America own businesses at far lower rates than non-minorities do. These reasons vary pretty widely in their scope, but they all directly impact the ability of the people affected by them’s ability to start and successfully own a business. The first major reason for the lack of minority entrepreneurship is education. Traditionally, racial minorities tend to live in impoverished areas and attend schools that do not have the money and resources to teach their students and equip them with necessary life skills. This lack of skills means that students are less likely to further their education, and when they go out in the real world, are completely unprepared to handle the rigors of life, especially in the fast paced and always growing world of business. The second big reason that minorities are less likely to be entrepreneurs is because, in most cases, they do not have the financial resources to start and operate a business. In many ways, this reason comes back to the first reason given, since minorities are less likely to have skills needed to succeed, they are much more likely to be working low income jobs, if they have jobs at all. Starting a business requires significant amounts of capital, and most minorities do not have the amounts needed to become entrepreneurs. The final main reason that very few minorities own their own businesses is because they don’t have the kind of networks that encourage people to start a business. Most business owners know other entrepreneurs through various areas, like from school, previous jobs, or business organizations designed to encourage networking, and since minorities have long been lagging behind in these areas, they are less likely to gain the contacts that are very useful in entrepreneurship, which has created a vicious cycle that has long proven difficult to get out of.
For this assignment, I went back to the annotated bibliography that we completed earlier in the semester. I found three of the articles that I had included as part of that bibliography and found the arguments that each of them made and now I am ready to discuss each of those arguments.
The first article that I chose is “Minority Entrepreneurs In Bankruptcy”. In this article, the author, Rafael Efrat, argues that minority entrepreneurs go bankrupt more often than non-minorities because they are less skilled, have less access to outside funding, and tend to operate in much lower value industries. Efrat’s theories of why these problems exist is useful because it helps bring attention to one of the biggest issues that minority entrepreneurs face in society today. I tend to agree with Efrat, because each of those reasons are generally accepted facts, and put together they help to explain these problems.
The next article that I chose to write about is “Characteristics of the Minority Entrepreneur” by Robert D. Hisrich and Candida Brush. Hisrich and Brush assert that minority entrepreneurs have a specific set of traits and characteristics that define them, for example, they list achievement, opportunity and job satisfaction as being the primary reasons for these people deciding to become entrepreneurs. They also claim that financial rewards were not key motivators for these minorities to start their own businesses. While I believe that the authors are right in their claims about achievement, opportunity, and job satisfaction being key reasons for wanting to start a business, I disagree with their assertion that financial rewards do not play a big factor in that decision. It is human nature to be motivated by money, and I believe that these minority entrepreneurs are no different.
The third and final article I chose for this assignment is “The Solution That Could Help More Minority Entrepreneurs Get Funding” by Adriana Lopez. She states that minority-owned businesses receive significantly less angel funding than non-minority businesses. Lopez then asserts that the reason for this problem is that, in general, minorities come from backgrounds and communities that have lower incomes than average neighborhoods, and therefore their family and friends, who typically are the main sources of business funding, have much less money to give. I agree with Lopez, because it is true that minority neighborhoods are lower income, so this reasoning seems to be accurate.
My infographic, which can be seen below, relates to my research question, which is “Why are there so few minority entrepreneurs, and what is holding more of them back from starting their own businesses?” This infographic brings in some statistics that I compiled from a few different sources that are some of the most reputable and well respected leaders for research in this area, like the Minority Business Development Agency, the National Poverty Center, and the Kauffman Foundation. My main strategy in creating this infographic was to keep it relatively simple for two reasons. The first reason is that I am not really artistically gifted and had never used Piktochart before, so I didn’t want to try to create some kind of amazing visual which I would probably end up just making worse. The second reason I tried to keep my infographic simple is because I didn’t want to take away from the information that I was providing, because that is the most important part of the infographic and shouldn’t be overshadowed by the visual aspect of it. I chose this research topic because it is something that I am passionate about, so I wanted to make sure that the real substance of the research was the main focus, and not just trying to make it look good. While I was attempting to keep my infographic pretty straightforward visually, I did try to incorporate some visually appealing and interesting aspects into it. I added some touches to it, like backgrounds for each section, and some banners and things to highlight some of the more important areas of the infographic. I also consciously made the decision to have each section of my infographic be a different color. I did this because my topic was all about minorities, who are groups of people of all different races and colors, so in the spirit of that topic, I actively tried to embrace as many colors as possible just to have a little subtle symbolism in the background of my infographic. The main point I tried to make in this infographic is that there is a problem in America because racial minorities are majorly underrepresented in the world of entrepreneurship and business ownership, however, although this is still a large problem, it is getting somewhat better and there are ways to fix it. I wanted to show, as I will with the rest of my research project as well, that even though this problem still remains, there is a bright side that we should focus on and continue to accentuate moving forward in addressing this issue. I set my infographic up to illustrate this strategy. I started by showing the problem, that minorities own businesses at a much lower rate than non-minorities, and then listed some of the reasons that this problem exists. I also included a chart that illustrates one of these reasons, that a lack of funding has somewhat crippled minority businesses because they don’t have the resources to get their business off the ground. I then showed a statistic that illustrates that the number of minority business owners is beginning to grow and catch up to the national population. I finished by giving a few suggestions that I believe would be useful in helping to remedy this problem as America moves into the future.
For this assignment, I set out to find statistics and information related to my research topic that can be used in an infographic that will be in my final presentation. Many of the sources I had found so far were mainly articles profiling things like characteristics about minority entrepreneurs, so I had to find new sources that would provide statistics to use. I then went to the website of the Minority Business Development Agency because I knew that they have done numerous studies about minority entrepreneurs. I found a fact sheet they published in January at U.S. Business Fact Sheets, and the first statistic that I found was a graph that compared the growth of minority firms and non-minority firms. This graph showed that although there are still vastly more non-minority firms, the number of minority owned businesses has grown at a much higher rate, with the total number increasing by 38% from 2007-2012, compared to the number of non-minority businesses actually going down by 6% over the same period. They are also employing many more people, with the total number of employees increasing by 23% over this 5 year span. The next statistics that I found showed a comparison of firms owned by members of different ethnic groups. This table showed that businesses owned by non-minorities are significantly more successful than minority businesses. The average gross receipts for minority businesses is $173,552, while the number for non-minority businesses is over 3 times that amount at $552,079. These numbers show me that while the number of minority businesses is growing, there is still quite a ways to go in getting them to be as successful.
For my research question, “why are there so few minority entrepreneurs, and what is holding back more of them from starting their own businesses?”, numerous types of infographics can be useful to help me illustrate and expand on the points I am trying to make and the research I am attempting to present. After reading the list infographic types at 8 types of infographics: which is right for you?, I found 3 main types of infographics that I believe would be the most useful for me because they allow me to present the types of information I have for my project. The first type in the article that would be most helpful for my research topic is a Versus Infographic. I believe this would be good for my question, because it would allow me to directly compare minority entrepreneurs and non-minorities in various areas, like personality characteristics and statistics about them. The next type of infographic that I found to be very interesting and appealing for my research topic is Number Porn. Obviously, my research question necessitates the use of statistics to illustrate the lack of minority entrepreneurs, so the use of this type of infographic would be great for me to use to be able to utilize a large amount of numbers to prove my point. The final type of infographic that I would be interested in using for my research project is a Data Vis infographic. I liked the Data Vis infographic because it also allows me to present a large amount of data, but it is also very visually appealing, which would provide some entertainment in my presentation.
For this project, I am attempting to find out why minorities tend to start and own businesses at significantly lower rates than non-minorities. There have been numerous studies done by different groups and agencies that reveal that there are much fewer businesses owned by people considered to be minorities, and that the minorities who are business owners tend to be much less successful than their non-minority counterparts. My goal is to discover why this is, and what factors contribute to this trend.
I have compiled research done by various writers and researchers to help shape my argument for this project. I have collected articles written explaining what characteristics successful minority business owners possess, and some articles that try to come up with ways to fix many of the problems that they face. I also plan to utilize research done by agencies like the U.S. Census or the Minority Business Development Agency that has statistics regarding minority businesses. There are also private groups who do research on these types of subjects that I would like to utilize, like the Kaufmann Foundation.
Aplin Jr., John C., and Greg A. Leveto. “Factors That Influence The Business Success Of Minority Entrepreneurs.” American Journal Of Small Business 1.2 (1976): 30-36. Business Source Premier. Web. 27 Feb. 2016.
In the article “Factors That Influence The Business Success Of Minority Entrepreneurs”, written by John C. Aplin Jr. and Greg A. Leveto for the American Journal Of Small Business, the authors attempt to discover what aspects affect the success of minority owned businesses. They point out that “Numerous studies have attempted to isolate factors that correlate with eventual business performance. Unfortunately, the results of these studies have been inconclusive, contradictory, and frequently misleading” (Aplin and Leveto 30). They claim that their goal is to create some sort of framework that can be used across numerous industries to help predict whether a business and its owner will be successful. Aplin and Leveto then go on to cite statistics about how minority entrepreneurship is growing, but that research about minority entrepreneurs has not increased, and that “The absence of any major research in the area of minority enterprise has left a void, which if filled could provide a basis for solutions to problems that exist in the development of minority small business enterprise” (Aplin and Leveto 32). The authors then attempt to create a template for the framework they wrote about, utilizing not only a traditional psychological profile, but also taking into account their technical experience and the characteristics of the company itself. Aplin and Leveto assert that these factors are just as important in predicting success as evaluating individual character traits, even though they traditionally are not factored in when evaluating entrepreneurs. They finish the article by stating that more research is needed to continue improving the framework that they have created and improve its effectiveness in the future.
Efrat, Rafael. “Minority Entrepreneurs In Bankruptcy.” Georgetown Journal On Poverty Law & Policy 15.1 (2008): 95-128. Academic Search Premier. Web. 27 Feb. 2016
In the article “Minority Entrepreneurs In Bankruptcy”, written in the Georgetown Journal On Poverty Law & Policy, the author, Rafael Efrat, writes about an area of business he states is underrepresented in research: what happens once a business reaches bankruptcy, particularly for a minority. Efrat writes a lengthy introduction about minority entrepreneurship as a whole before bringing up the failures of minority businesses. He states that the reasons that minority businesses fail at a higher than average rate are inferior human capital (less education, less experience, etc.), less access to lines of credit, limited economic potential in their ethnic markets, their smaller size, and that there are far fewer minority businesses in high value industries. Efrat then states the methodology for his test. He distributed surveys to business owners filing for bankruptcy, and asked questions on the survey that were designed to learn information like ethnicity, education, cause of bankruptcy, and other information about their businesses. The results of the study showed that minorities as whole aren’t overrepresented in the total bankruptcy population, but the ones in bankruptcy are clearly disadvantaged compared to their non-minority counterparts. The study shows that minorities in bankruptcy received less government assistance, fewer had access to legal aid, and were in much worse financial conditions than non-minorities. Efrat states that “The household income of minority bankruptcy petitioners was almost a quarter less than their White counterparts in the bankruptcy sample. While minority petitioners had substantially lower household incomes, they also had significantly higher numbers of dependents to support. Similarly, minority petitioners reported significantly less ownership of capital. For example, the homeownership rate among minority petitioners was almost half the rate of that among White petitioners. Among the homeowners in the bankruptcy sample, White petitioners reported somewhat higher (but not statistically significant) home values than the minority petitioners” (Efrat 112). Efrat then goes on to conclude that even though the results of the study showed that minorities aren’t overrepresented in bankruptcy, they are significantly more financially vulnerable than the population as a whole.
Hisrich, Robert D., and Candida Brush. “Characteristics of the Minority Entrepreneur.” Journal of Small Business Management 24.4 (1986): 1. ProQuest. Web. 27 Feb. 2016.
In the article “Characteristics of the Minority Entrepreneur”, written in Journal of Small Business Management, the authors, Robert D. Hisrich and Candida Brush, write about what key characteristics and attributes most minority entrepreneurs have. The authors assert that most people in this category become entrepreneurs for very similar reasons, many consider themselves to have the same skill sets, and that they all generally run into the same problems in operating their businesses. The first claim that Hisrich and Brush make is that “Achievement, opportunity, and job satisfaction were the motivations listed most often” (Hisrich & Brush 4) as to why these minorities decided to become entrepreneurs. They also assert that the desire for things like power or status was the least prevalent reason given for starting a business, because the desire for “more intrinsic rewards (e.g., self-fulfillment and accomplishment) are bigger motivators than material rewards” (Hisrich & Brush 4). The next major claim that the authors make is about how minority entrepreneurs tend to have the same skill sets. Hisrich and Brush state that people in this category “considered themselves most adept at idea generation, product innovation, and dealing with people; average in marketing and business operations; and weak in finance” (Hisrich & Brush 5). They assert that the reason for this is because many people have previous experience in their field, and are thus more skilled in areas relating to the field, and not related to business operations or finance, as they tend to have little experience or training in these areas. The final major claim that the authors make is that most minority entrepreneurs face the same problems in starting their companies. Hisrich and Brush argue that “The biggest problems during start-up were lack of business training and obtaining lines of credit” (Hisrich & Brush 5). They claim that this is due the fact that most of these people don’t have business backgrounds, and therefore have had no previous interest in business training, and that it is difficult to obtain credit due to discriminatory reasons because they are minorities.
Lopez, Adriana. “The Solution That Could Help More Minority Entrepreneurs Get Funding.” Forbes. Forbes, 26 June 2014. Web. 27 Feb. 2016.
In “The Solution That Could Help More Minority Entrepreneurs Get Funding”, Adriana Lopez writes for Forbes about how minority entrepreneurs have trouble gaining access to funding for their ventures, and she also presents a possible solution to solve this problem and increase minority access to different types of funding. Lopez begins by telling a story from the TV show Silicon Valley that shows that minorities are as a whole underrepresented in entrepreneurship. She then gives a statistic about how “minority groups are both underrepresented and underserved when it comes to tech startups in the United States. An even smaller number of those succeed at actually getting any angel funding. Seven percent of those pitching for angel funding in 2013 were minority-led businesses, with only about 13% of those actually receiving funding” (Lopez 1). Lopez then cites statistics from the University of New Hampshire that show that the 13% of minorities who turn their pitches into angel funding is significantly less than the 21.6% of businesses as a whole who are able to do the same. This sets up the problem she is trying to fix, and then Lopez gives reasons why minorities receive such a lower amount of funding. She states that generally, minorities come from communities with lower wealth than non-minorities and are therefore far less likely to receive the funding they need to get their businesses off the ground in the early stages. Lopez also states that minorities tend to have fewer connections in business. Having high level business contacts with resources of their own and additional contacts is crucial to being able to get angel funding for a business, and minorities don’t have the access to these types of people. Lopez then introduces an initiative designed to change this pattern called PowerMoves.NOLA. Lopez writes about how PowerMoves.NOLA plans to change minority entrepreneurship by selecting some of the top minority business owners in the country and bringing them together for a weekend filled with business training, a pitch competition, and access to some of the top minority businessmen in the nation. Lopez shows that ideas like PowerMoves.NOLA are innovative ways to help those who would normally have trouble getting their venture off the ground.
Russell, Cheryl. “The Minority Entrepreneur.” American Demographics 3.6 (1981): 18. ProQuest. Web. 27 Feb. 2016.
The article “The Minority Entrepreneur”, written by Cheryl Russell for American Demographics, is about some of the problems that minority entrepreneurs face in operating and growing their businesses. Russell writes about how the lack of financing is the biggest problem that minority business owners face, and that this problem limits the potential for success that they have. She also states that the majority of minority owned businesses are the types of businesses that have low start-up costs, but also how very little growth potential. Russell also asserts that many minority businesses are confined into neighborhoods filled mainly with other minorities, and because studies show that minorities as a whole tend to have lower incomes, the businesses in these neighborhoods are not able to have the kind of success that other businesses have the opportunity to achieve. Russell also writes about how the government has implemented programs to help both small businesses and minority owned businesses. The two main organizations designed to help these businesses are the Small Business Administration and the Minority Business Development Agency, and these agencies help the businesses they are responsible for by giving grants and promoting programs designed to stimulate their business. Russell also writes about how California and Texas have the largest share of minority businesses, which could be due to the fact that they are both historically places that Hispanics tend to flock to, skewing their demographics compared to the rest of the country. Russell finishes by stating that minority businesses as a whole face many more difficulties than non-minority businesses.
For this assignment, I chose to write about an article I found using the Business Source Premier database through the Oklahoma State Library website. The article that I found is titled “Why Entrepreneurs Often Experience Low, Not High, Levels of Stress: The Joint Effects of Selection and Psychological Capital” and is written by Robert A. Baron, Rebecca J. Franklin, and Keith M. Hmieleski. It can be found in the March 2016 edition of Journal of Management. In this article, the authors argue that entrepreneurs starting a business actually experience low amounts of stress, as opposed to common opinion that states that they should always be stressed out because of the unpredictable and generally uncontrollable nature of their jobs. According to the authors, “persons who are attracted by, selected into, and persist in entrepreneurship may be relatively high in the capacity to tolerate or effectively manage stress. In contrast, persons who are relatively low in this capacity tend to exit from entrepreneurship either voluntarily or involuntarily” (Baron, Franklin & Hmieleski 742). Basically what the authors are asserting is that people who enter entrepreneurship are naturally more capable of adapting to stress because they know the rigors of the profession. This is pointed out later on in when the authors state that “environmental and self-selective factors combine to produce a population of founding entrepreneurs who are above average in their capacity to deal effectively with or tolerate stress. Persons who are relatively low on this dimension, in contrast, exit from the field” (Baron et al. 745).
Baron, Robert A., Rebecca J. Franklin, and Keith M. Hmieleski. “Why Entrepreneurs Often Experience Low, Not High, Levels Of Stress.” Journal Of Management 42.3 (2016): 742-768. Business Source Premier. Web. 16 Feb. 2016.