Despite growth and success, business owners of color face key challenges, including access to financing, business locations, and anti-Asian racism stemming from the pandemic. A series of new reports out of UW-Madison’s Community Economic Development program highlight the growth and challenges faced by business owners of color in Wisconsin. The four special reports provide a breakdown of data among Black, Latino, Asian, and Native owned business, highlighting the number and size of businesses as well as unique challenges each group faces.
“The growth and presence of diverse populations across the state makes the economic well-being of these residents, including as business owners, important to the overall performance of the economy,” says Professor Tessa Conroy who, along with Mary McDermott and Matthew Kures, authored the reports.
Among its key findings for Black-owned businesses, the report shows that while Black-owned businesses in Wisconsin nearly quadrupled in number between 1997 and 2012, Black-owned businesses are still underrepresented relative to the state’s population. In 2019, the share of Wisconsin’s population which identified as Black or African American was 6.44%, yet Black-owned businesses only made up 4.30% of the state’s businesses. Further, Black-owned businesses are generally smaller in terms of sales and employment. For example, for every dollar generated by non-Hispanic white-owned businesses with employees, Black-owned employer businesses made $0.42 on average. The performance gap results from several compounding challenges, including access to financing and the location of businesses, which are fundamentally tied to the racial-wealth gap. For complete details, view the report (PDF).
The reports also show that despite strong growth in the number of Latino-owned businesses, which nearly tripled between 1997 and 2012, Latino-owned businesses are still underrepresented. In 2019, the share of Wisconsin’s population which identified as Hispanic or Latino was 7.09%, yet Latino businesses only made up 3.12% of the state’s businesses. Latino-owned businesses are generally smaller in terms of sales and employment. For example, for every dollar generated by non-Hispanic white-owned businesses with employees, Latino-owned employer businesses made $0.46 on average. The performance gap results in part from the sector and location of Latino-owned businesses, which are linked to broader wealth disparities. For complete details, view the report (PDF).
From 1997 to 2012, the number of Asian-owned businesses in Wisconsin grew by more than 2.5 times. Asian-owned businesses are generally smaller in terms of sales and employment. For example, for every dollar generated by non-Hispanic white-owned businesses with employees, Asian-owned employer businesses made $0.62 on average. The COVID-19 pandemic uniquely impacted Asian business owners as anti-Asian sentiments negatively impacted businesses. In Wisconsin, support for Asian business owners could include attention to financing challenges for Hmong entrepreneurs specifically who have lower wealth levels on average. For complete details, view the report (PDF).
From 1997 to 2012, the number of Native-owned businesses grew modestly compared to other groups from 2,338 to 3,115. The share of Wisconsin’s population which identified as American Indian was 0.94% which is slightly greater than the Native-owned share of businesses at 0.84%. For every dollar generated by non-Hispanic white-owned businesses with employees, Native-owned employer businesses made $0.48 on average. Over half of Wisconsin’s Native population resides in rural areas, primarily on or near tribal lands. The rural location of many Native-owned businesses uniquely positions them as both remote and diverse businesses. Native entrepreneurs also face difficulty accessing financial capital which may be improved by expanding mission-driven lenders, such as CDFIs or community-specific funds. For complete details, view the report (PDF).
“We hope these reports can provide quality information on the business community and highlight opportunities to support business owners in ways that lead to a more vibrant and stronger economy,” says Conroy.
The reports are one aspect of a broad range of resources provided by UW-Madison Extension’s Community Economic Development program, which works to promote local economic well-being and quality of life in Wisconsin communities. The program works with and supports community economic development practitioners and organizations, tribal and governmental entities, and business and nonprofit organizations and help gain access to the information, research, education, and technical assistance necessary to make informed decisions.
For further information, please contact Tessa Conroy at tessa.conroy@wisc.edu or 608-265-4327.
