Disparities in Small Business Ownership

Small businesses lie at the core of this country. In fact, they make up 99.9% of all firms in this country. However, like with land, housing, and all other factors of wealth, ownership is what matters. Consequently, though the major disparities in the demographics of small business owners, we can begin to see who benefits from the current system and who is hurt.

Current disparities in small business ownership are significant, both across racial and gender lines. For instance, according to Pew Research in 2024, 85% of small businesses were majority white owned. This compares to only 3% Black owned and 7% Hispanic owned businesses. Across genders, 61% of small businesses were majority owned by men while only 22% were majority owned by women.

These numbers are jarring, and they represent a problem in and of themselves. However, at the same time, the causes of these disparities are systemic in nature. From inequalities in business loan denial to historical redlining, these differences in business ownership are the consequence of decades of structural racism. Similarly, when women face more difficulty accessing capital along with the challenge of caregiving, the gender gap in business ownership isn't surprising.

Understanding that these disparities are systemic in nature is critical because it pushes us to look for systemic solutions, which exist in the form of policy. Through minority and women targeted grants, policy can help close the gaps in financing access that these groups often face. The creation of affinity support groups can help businesses get off the ground, and provide knowledge along the way. Moreover, additions to entrepreneurial education in minority communities can help open doors to students who would've never known the possibility of small business ownership.