67% of Female Entrepreneurs Never Earn More Than This
If you haven't already, you may dream of turning in your two-week resignation notice. You plan to officially dive into the world of entrepreneurship and gearing up to fully dedicate yourself to your new business. Perhaps you have visions of private jets, becoming an overnight viral sensation on TikTok, and being a millionaire. But you also may have goals that are more modest, such as earning $100,000 a year and providing a comfortable life for your family.
For most business owners from historically excluded groups, the stark reality is different. Take a look at female business owners as an example. Data from the IRS and US Census shows that 67 percent of self-employed women earn less than $25,000 in revenue per year. To put that in perspective, the US Federal poverty line for a household of three people is $23,030. This meeans that more than half of self-employed women earn just a smidge above the poverty line (and that’s before paying taxes and business expenses).
Of course, most of us also know that businesses owned by Black women earn significantly less than businesses run by other women. I've been researching this for some time now because I wanted to know why so many historically-excluded business owners get stuck at a low revenue level. I've pored over revenue data issued by the US government and other sources, in addition to holding conversations with hundreds of business owners.
The rules of entrepreneurship are not the same across all groups. What works for a cis, white, straight man business owner doesn’t work for a woman, queer, Black, POC, or disabled business owner.
We need the right education if we want to successfully build high-profit businesses. But the truth is, there’s a lack of this kind of knowledge among historically-excluded communities.
As a member of a historically-excluded group, you’re less likely to have access to the kind of leaders, mentors, and role models who can teach you how to build a successful business. As stated in the Harvard Business Review:
Networking can be especially challenging for professionals of color, who may not only experience general discomfort, but also face unique challenges from not being perceived as powerful, credible, or resourceful.
If you’re a person of color, you don't need Harvard to explain this to you--you’ve lived it.
Research from Cornell and Washington State University shows that women tend to underestimate their intelligence and abilities, whereas men tend to overestimate theirs. This “Confidence Gap” impacts every single aspect of your business. Here are some examples.
Sometimes, you need an infusion of cash to get your business off the ground. But women and other underrepresented folks are less likely to get it.
Out of all the funding that venture capital investors give to small businesses each year, 90% goes to start-up companies founded by white cis men. Only 10% goes to women, people of color, and queer folks.
Don’t expect better treatment at your friendly neighborhood bank. The Senate Small Business & Entrepreneurship Committee found that “small businesses owned by women receive only 16% of all traditional small business loans” and that women “are more likely to be rejected, or have more stringent terms, than men.”
The 2021 Women in the Workplace Report shows that cis women are more burnt out, stressed, and flat-out exhausted compared to cis men colleagues. Black people in the US are twice as likely to get insufficient sleep compared to white people. When you belong to an underrepresented group, you often have to go the extra mile, work extra hours (or more than one job), and juggle multiple responsibilities on your own. No wonder we’re so tired all the time.
These are just some of the main reasons historically-excluded business owners get stuck earning $25,000 or less per year. All of these issues are frustrating.
But I strongly believe (and have experienced it for myself): ALL of these issues are fixable. These women can learn how to stop leaving money on the table — and start maximizing their earning potential.
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