In recent years Wisconsin has seen massive spikes in business ownership among nonwhite entrepreneurs yet the state continues to have an overall low number of businesses owned by people of color.
Wisconsin ranks 50th for the rate of business ownership among minorities. Businesses owned by people of color represent 10.9% of total businesses despite people of color representing 19.2% of the state’s total population. Underrepresentation in business ownership is especially acute for Black and Latino owners.
Wisconsin is missing out on additional economic benefits from businesses owned by people of color because of this underrepresentation. Wisconsin is following a nationwide trend of a small but growing number of diverse business owners. This recent growth suggests a promising and economically important future for diverse business owners who need support to address the significant challenges they face.
These findings are among those compiled in a new report “Business Owners of Color in Wisconsin: Representation, Profitability, and Growth,” which is part of the Wisconsin Economy Series of reports from Extension’s Community Economic Development Program. The report was produced by the Economic Development Administration University Center.
“Owning a business is one of the proven tools for economic advancement,” said Tessa Conroy, Extension Community Development Specialist and Associate Professor in the Department of Agricultural and Applied Economics at UW–Madison. “These disparities show us that barriers still exist around entrepreneurship for people of color, and our state’s overall business activity is being significantly constrained as a result. Communities across Wisconsin can build wealth, sustain jobs, and attract residents with strategies to boost entrepreneurship and business ownership.”
Conroy is one of the report’s authors along with Mary McDermott, Economic Community Development Research Analyst in the UW–Madison Department of Agricultural and Applied Economics, and Matt Kures, Distinguished Community Economic Development Specialist in Extension’s Community Development Institute.
Other findings from the Business Owners of Color in Wisconsin report include:
- Over 48,000 of Wisconsin’s businesses are owned by people of color. They employ nearly 55,000 workers and contribute over $1,600,000,000 in payroll receipts.
- Wisconsin follows the nationwide trend of a relatively small yet growing number of diverse business owners. In Wisconsin, from 1997 to 2012, American Indian business ownership grew by 33.2% while Asian ownership more than doubled, Latino ownership nearly tripled, and Black ownership virtually quadrupled. For comparison, nonminority-owned businesses grew by 10.7% during the same period. From 2012 to 2020, businesses owned by people of color that have reached the important growth stage of hiring paid employees grew by 27.1%.
- Despite substantial growth in the last few decades, Wisconsin may be missing out on additional economic benefits from businesses owned by people of color because they remain underrepresented. Businesses owned by people of color represented 10.9% of total businesses in 2019, despite people of color representing 19.2% of the state’s total population at the time. Across states, Wisconsin ranks 50th for the rate of business ownership among minorities.
Business owners of color face challenges due to access to capital, sectoral distribution, physical location, as well as the size and maturity of their businesses, among other factors. Research suggests that business owners of color can be supported through strategies that address funding and financing, supply chain diversification, as well as education and mentorship.
To read the full report and related policy brief, visit https://economicdevelopment.extension.wisc.edu/articles/business-owners-of-color-in-wisconsin-representation-profitability-and-growth