Distinct Reasons Entrepreneurs of Color Own Businesses

The top two reasons people start a business are to make a greater income and to be their own boss, but people of color tend to start businesses for a wider set of reasons. The Annual Business Survey, conducted by the US Census Bureau, specifically explores the reasons entrepreneurs owned their business across a dozen different categories. The Census numbers show some notable gaps between white owners and owners of color.¹

People of color are more likely to own a business to balance work and family.

Black and Hispanic entrepreneurs are about 12 percentage points more likely to start a business to balance work and family than their white counterparts (69% to 57%).  The same holds true for American Indian and Alaska Natives as well as Asian business owners, though to a lesser extent (65% and 59% respectively).

People of color are more likely to own a business to help their community.

People of color are also significantly more likely to start a business to serve their community. 45% of Black entrepreneurs see it as a significant reason, along with 37% of Hispanic owners, 33% of American Indian and Alaska Native owners, and 34% of Asian owners. In comparison, 24% of white owners feel the same.

People of color are more likely to own a business because they couldn’t find a job.

Overall, 9.2% of business owners started their business because they couldn’t find a job, but entrepreneurs of color are more likely to do so than their white counterparts. 13% of Black and Hispanic owners found themselves in this position, but the largest gap is between Asian and white owners (15% of Asian and 7% of white). While these businesses stem from an unfortunate situation, they highlight how entrepreneurship can serve as a path out of challenging economic conditions.²