Is Small Business Ownership the Great Equalizer?

I recently posted on a study we did comparing the demographic and motivational differences between traditional small business owners and high growth-entrepreneurs. 

Another part of that study looked at the competitiveness and success differences between different types of small business. 

Our focus was to better understand how women and minority owned small businesses compared with small businesses owned by white men.  We also looked at how education correlated with small business success. 

The analysis was based on data from the Small Business Success Index (SBSI) produced by the University of Maryland and Network Solutions. 

The SBSI data comes from a survey of existing small businesses with relatively long operating histories.  The median survey respondent's company has been in business roughly 9 years.  The data is collected from firms with 2-99 employees.   

Our analysis of the SBSI data shows that established small businesses owned by women and minorities perform roughly the same (no statistically significant difference) in terms of competitiveness as small businesses owned by white men. 

That's not to say that women and minorities don't face significantly more hurdles than white men when trying to start a business - a wide variety of research shows they do.  What's more, small business failure rates during the early years of operation are also higher than average for these demographic groups. 

But the SBSI data shows that once the initial startup hurdles are overcome and the business becomes established, women and minority owned small businesses are on equal competitiveness footing with firms owned by white men. 

We also found that there were no statistically significant differences between small business competitiveness and the education level of the small business owner. 

So why are firms owned by women, minorities and those with lesser levels of education able to compete so effectively? 

Our belief is once a business owner gets past the challenging early and mid-stage years and builds a viable company, educational background, ethnicity, race and gender differences have little impact on their firm's ability to compete.  These factors are outweighed by the inherent difficulties of running a small business and the core abilities of the owner. 

For policy makers this data shows that small businesses run by underrepresented demographic groups are equally competitive once they survive the early startup stages.  Programs and policies that provide early and especially mid-stage stage support and education could improve small business ownership outcomes for these groups.

And for existing and potential small business owners, the data shows something else: that small business ownership provides a potential path to career success regardless of of formal educational attainment, gender or ethnic background.

Comments

[Halo Web Design]

If only all small businesses have good online presence, it would really help improve and promote any starting/growing businesses to be exposed to potential clients or customers.

[Guaranteed Signups]

Why do you suppose small business failure rates are higher among that demographic group than others?

[yourforkliftcertificationhq.com]

Do you have any examples of some of the early stage policies that might provide the support needed for minority or women owned business start-ups?

I would be interested to hear some ideas.

[forkliftcertificationguide.org]

Interesting info. I envision a day when women and minorities in business will not be measured against men and non-minorities, but rather will be "businesses", plain and simple.

[RobRyan]

Great piece! Similar coaching by small business professional, Donna Price.http://www.bizology.biz/

[Letter]

I agree with you,once the early start up stages are crossed everything falls in place.Thanks for sharing the information.I like the post.