It can be tough starting a viable business. Turns out it’s even tougher for Black founders according to new data from Intuit.
The financial management platform commissioned a survey of 1,000 Black business owners to share their small business struggles and successes. One key finding revealed that at startup, on average, it cost Black respondents approximately $21,000 to start their businesses—$6,000 more than the average amount (roughly $16,000) needed for their non-Black peers.
The top reason for the disparity? Lack of financial awareness.
Additionally, the survey found that nearly eight in ten (79%) Black business owners say they’ve had to pay expenses or employees with personal funds at least once in the last two years and are experiencing greater cash flow problems than non-Black-owned businesses.
As Brookings Institute pointed out, according to the Federal Reserve in 2019, the median net worth of white families was $188,200—7.8 times that of their Black peers, at $24,100. That wealth gap translates to many other disparities, including in business ownership, which is heavily influenced by individual and family wealth. In 2019, there were a total of 5,771,292 employer firms (businesses with more than one employee), of which only 2.3% (134,567) were Black-owned, even though Black people comprise 14.2% of the country’s population.
Additionally, Brookings reported that 46% of Black business owners shared having concerns about their personal credit scores or loss of personal assets because of late payments—the highest share among owner groups by race.