Business owners of color are a large and growing share of the business community in Wisconsin, but they still face many barriers to growth, according to a series of new reports out of the University of Wisconsin–Madison’s Community Economic Development program.
The four special reports, one each for Black-, Latino-, Asian-, and Native-owned businesses, highlight the number and size of businesses as well as unique challenges each group faces, including access to financing, business locations, and anti-Asian racism stemming from the pandemic.
The reports show remarkable growth in minority businesses during the pre-pandemic period, including the 15-year period from 1997 to 2012, a timeframe which included two recessions. “We saw that American Indian-owned businesses grew by about one-third, Asian-owned businesses doubled during that time period, Latino-owned ventures tripled during that period, and Black-owned businesses roughly quadrupled,” said UW–Madison professor Tessa Conroy, who along with research analyst Mary McDermott and community development specialist Matthew Kures, authored the reports.
Yet each business demographic was still underrepresented relative to the state’s population. As the pandemic approached (2019), the share of Wisconsin’s population which identified as Black or African American was 6.44%, yet Black-owned businesses only made up 4.3% of the state’s businesses.
An even more telling reality is that minority-owned ventures are generally smaller in terms of sales and employment. “On average, businesses owned by people of color are smaller,” Conway said. “With the Black-owned businesses, we see that in particular, they are more likely to own a non-employer business and that’s a business without any paid employees. More than 90% of businesses owned by Black business owners fall into this category.”
At the conclusion of each report, the authors include recommendations for improvement, especially capital formation. The recommendations are aimed at decision–makers, Conroy said.
Other findings from the reports include:
- For every dollar generated by non-Hispanic, white-owned businesses with employees, Black-owned employer businesses made $0.42 on average.
- The share of Wisconsin’s population which identified as Hispanic or Latino was 7.09% in 2019, yet Latino businesses only made up 3.12% of the state’s businesses.
- For every dollar generated by non-Hispanic, white-owned businesses with employees, Latino-owned employer businesses made $0.46 on average.
- From 1997 to 2012, the number of Native-owned businesses grew modestly compared to other groups — from 2,338 to 3,115 — and for every dollar generated by non-Hispanic, white-owned businesses with employees, Native-owned employer businesses made $0.48 on average.
Source: UW–Madison’s Community Economic Development program
