The number of minority owned businesses increased to 45%. The number of small businesses collectively owned by minorities is on the rise up over 200% in three years, according to a survey from Guidant Financial, a leader in small business financing.


BELLEVUE, WASH. (PRWEB) AUGUST 07, 2018
Given the changing demographics of America, the number of small businesses collectively owned by minorities is on the rise up over 200% in three years, according to a survey from Guidant Financial, a leader in small business financing. The company surveyed more than 2,600 small business owners and aspiring entrepreneurs nationwide and found that 45 percent of business owners were minorities: African American, Asian, Hispanic, and Native American. To compare, in 2015 the total percentage of minorities was just 15 percent. The largest minority group of respondents were African American at 19 percent, followed by Hispanic at 14%, Asian at 8% and Native American at 4%.

“It is exciting to see the growth in minority-owned small businesses, a trend that has steadily been rising since we began our survey in 2015,” said David Nilssen, CEO of Guidant Financial. “Growth amongst all minorities including women is promising in America as small business ownership becomes more favorable and easier to attain. We anticipate and hope to see a continued increase as the impact of tax reform and economic growth shape small business ownership moving forward.”

Highlighted findings in the Minority 2018 Small Business Trends survey for the two largest minority groups in the survey, African American, and Hispanic yielded the following results.

African American- top three answers for each category 
Reason 
Data showed that “Pursue my passion,” ranked as the top reason African American’s pursued business ownership in 2017, cited by 62 percent followed by “ready to be my own boss” at 53%, and “Opportunity presented itself” at 30%.

Challenges 
The number one challenge of running a business in the last year for 80 percent of respondents was lack of capital/cash, followed by marketing/advertising at 31% and time management at 23%.

Type of business 
The leading industry was indicated as Other with 28 percent, followed by Business Services at 13% and Health/Beauty/Fitness at 9%. 59 percent own a new independent business, 33% an existing independent business and 6% a new or existing franchise. 46 percent report “just me” for the number of employees, followed by 2-5 at 41% and 6-10 at 7%.

Education 
It turns out that African Americans don't depend on higher education before starting their own business. 32 percent have a high school diploma/GED, 26% an associate’s degree and 21% a Bachelor’s degree.

Outlook 
On a scale of ten being the highest, African Americans ranked their happiness at being a business owner an 8 and ranked their confidence in the current state of small business as a more neutral 7.

Financing/Cost 
African Americans overwhelmingly fund their businesses using “cash” at 70 percent, followed by friends and family 23%, and by 401(k) business financing” [formally known as Rollovers as Business Startups (ROBS)] at 11%. ROBS funding allows anyone with rollable retirement funds to fund a business using some or all of that money without incurring tax penalties or getting a loan. With the only requirement being a $50,000 minimum in a rollable retirement account, ROBS is often much easier funding to obtain without credit score or collateral requirements.

Total acquisition cost for 65 percent of respondents was less than 50k. 19% came in at $50,000-$100k and 6% $100,000-$175k. If they had more capital, 61 percent would spend it on equipment, 54% on marketing/advertising and 50% on expansion.

African American Trends 
● Growth- 66 percent are looking to grow their current location. 
● Demographics – The largest age group of respondents were 40-49 with 28 percent followed by 50-59 at 25%, 30-39 at 22%, 60-69 at 16%, 18-29 at 6% and 3% 70+. 61 percent were male, 38% female. 
● Longevity: The greatest percentage of owners, 25 percent have been in business two-three years, followed by 10+ years at 21%, and 16% zero-one year. 
● Geography – Texas topped the list regarding the highest volume of African American entrepreneurs, followed by Georgia, California, Florida, and North Carolina. 
● Profitability- 57 percent of all African American respondents said their business was currently profitable.
The largest increase amongst minority groups business ownership with a year-over-year 400% increase in the number of African American owned small businesses.

Hispanic- top three answers for each category 
Reason 
Data showed that “Ready to be my own boss,” ranked as the top reason Hispanics pursued business ownership, cited by 51 percent, followed by “Wanted to pursue my passion” at 47%, and “Opportunity presented itself” at 32%.

Challenges 
The number one challenge of running a business in the last year for 63 percent of respondents was lack of capital/cash, followed by a tie with administrative work and marketing/advertising at 27%.

Type of business 
The leading industry was indicated as Other with 38 percent, followed by Business Services at 11% and Restaurant/food at 11%. 59 percent own a new independent business, 33% an existing independent business and 6% a new or existing franchise. 51 percent have 2-5 employees, 26% just themselves and 14% 6-10 employees.

Education 
Hispanics like African Americans don't depend on higher education before starting their own business. 43 percent have a high school diploma/GED, 24% a Bachelor’s degree and 19% an associate’s degree.

Outlook 
On a scale of ten being the highest, Hispanics ranked their happiness at being a business owner an 9 and ranked their confidence in the current state of small business as a more neutral 7.

Financing/Cost 
Hispanics overwhelmingly fund their businesses using cash at 62 percent, followed by friends and family at 26%, and a line of credit at 21%. 11% use“401(k) business financing” [formally known as Rollovers as Business Startups (ROBS).
Total acquisition cost for 53 percent of respondents was less than 50k. 21% came in at $50,000-$100k and 11% $100,000-$175k. If they had more capital, 57 percent would spend it on expansion, 53% on equipment and 44% on marketing/advertising.

Hispanic Trends 
● Growth- 63 percent are looking to grow their current location. 
● Demographics – The largest age group of respondents were 40-49 with 33 percent followed by 50-59 at 28%, 30-39 at 21%, 60-69 at 8%, 18-29 at 8% and 2% 70+. 77 percent were male, 23% female. 
● Longevity: The greatest percentage of owners, 28 percent have been in business 10+, followed by 22% from 2-3 years, and 19% 0-1 year. 
● Geography – California topped the list in terms of the highest volume of Hispanic entrepreneurs, followed by Florida, Texas, Arizona, and New York. 
● Profitability- 81 percent of all Hispanic respondents said their business was currently profitable.
Guidant Financial is committed to helping individuals secure money to start or buy a business. They’ve helped over 16,000 individuals secure over $4.2 billion in small business funding.

Accompanying Infographics about Hispanic and African American respondents can be found [url=https://www.guidantfinancial.com/learning-center/infographics/]here.[/url]

Methodology 
Between November 28, 2017, and December 1, 2017, Guidant Financial conducted an email survey of more than 2,600 male and female small business owners and aspiring entrepreneurs from the continental U.S., Alaska, and Hawaii. Ages of respondents ranged from 18 to over 70.

About Guidant Financial 
Guidant Financial helps business owners secure financing to start, buy or grow a business. An industry leader in innovative business and franchise financing, Guidant works with new and existing entrepreneurs to identify, evaluate and deploy customized financing solutions. Their services include, but are not limited to, 401(k) business funding, SBA loans, unsecured credit and portfolio loans. Visit Guidant on the web at guidantfinancial.com.