The opinions expressed by Entrepreneur members are their own.
As a black female entrepreneur, I have successfully run a Diversity, Equity and Inclusion (DEI) consultancy for the past six years. But I promise it wasn’t easy. For me, becoming an entrepreneur was like earning a PhD in organizational leadership and paving the way for my own business. Despite the years I have dedicated to my entrepreneurial journey, I have still benefited from a level of privilege that many do not share when it comes to entrepreneurship.
I’ve been talking for years about how black women don’t get the support or mentoring they need in the workplace to succeed, and about the many ways black entrepreneurs struggle in this area. But we must speak of the privilege that those of us who do succeed in business to have. We also need to talk about the reasons why people in marginalized communities start businesses from the beginning and how their entrepreneurial efforts can be long-term and successful.
The complexities of privilege in entrepreneurship are enormous, but worth discussing. We must peel back the layers to see how more entrepreneurs from marginalized communities can lift themselves out of poverty and into prosperity.
RELATED: 18 Business Leaders on Creating an Inclusive and Fair Society
1. Having seed funding is a privilege
How will I finance my business? This question worries many entrepreneurs. When 66% of them use their own money to start a business, and the other 33% start with less than $5,000, that’s a perfectly valid concern. This means that, unless they were born with a silver spoon in their mouth, some people have to look beyond their personal bank accounts to start a business.
Venture capitalists, friends, family, or bank loans are funding options, but most come with serious conditions. First of all, having access to these resources is a privilege, but in general, having to ask can seem overwhelming. Knowing that the loan you used to start your business will double, triple, or quadruple your personal debt is a daunting realization.
I was lucky that when I started advising DEI, I didn’t have to fight for funding. I had the privilege of having a husband who was ahead of me in his entrepreneurial journey. His business ventures gave me the freedom to develop my consulting business without having to contribute to our family’s income. Not everyone has this opportunity. Equal access to business finance is not easy to come by, and each entrepreneur falls into a different spot on the spectrum of privilege and oppression when it comes to funding.
Connected: 6 Ways to Propose Collaboration to Black Entrepreneurs
2. It’s a privilege to have other entrepreneurs to look up to.
Whether it’s a parent, grandparent, aunt or uncle, having someone in the family who is an entrepreneur helps make the dream of starting your own business more achievable.
I didn’t have an entrepreneur in my family, but my husband did. His father was an example that inspired entrepreneurs in the family. Seeing his family members start, grow and scale the business was an inspiring testimonial. As we all know, representation matters. Watching entrepreneurs like us go through the ups and downs of business helps us realize that our dreams are achievable.
However, if we have never seen entrepreneurs like us, it is more difficult to imagine how it would be possible to start and grow our business. For some of us, having access to a successful entrepreneur in our lives is a privilege that will likely affect the success of the business we hope to create.
3. Having a college degree before starting a business is a privilege.
As someone with a PhD, I’m in the minority of entrepreneurs: 62% entrepreneurs have at least a bachelor’s degree, and 7% have a PhD or other degree. I am also reaping additional financial benefits as a result of my educational franchise. It turns out entrepreneurs with doctoral degrees earn 35% more than those with higher education.
But not all entrepreneurs have the opportunity to go to college. Many people choose entrepreneurship because of the seemingly unlimited earning potential it promises even for those with only a high school diploma. For many marginalized people who did not have access to a college or university, entrepreneurship may seem like the only way to break out of their economic situation and have a brighter future.
4. Having a business that lasts more than three years is a privilege.
Even though black women are one of the fast growing demographic data of entrepreneurs in the United States, according to CNBC. eight out of 10 black-owned businesses failure in the first 18 months. Having a great business idea and some funding to promote your journey will help; however, maintaining a business for more than five years is rare. Around 49% women-owned enterprises for less than five years, and as the window approaches six to ten years, this number drops to 17.5%.
There are many reasons why the privilege of business longevity is not available to everyone. Funding runs out, a business emergency suddenly arises, or the entrepreneur simply changes his mind about his venture. Whatever the reason, having a business that lasts for decades is a privilege that some marginalized entrepreneurs can only dream of.
Connected: 10 reasons why 7 out of 10 companies fail within 10 years
5. You can actually start your own business create privilege
In light of the recent layoffs across the country in many industries, now is one of the best times to try your hand at entrepreneurship. The main motivations for becoming an entrepreneur are the many ways we can grow and expand our financial and personal future. Research shows that women who start their own businesses do so because they are willing to pursue their passions and work for themselves.
Entrepreneurs of color start their businesses for the same reasons. Dissatisfaction with their boss and the lack of diversity, fairness, and inclusion in corporate America drives many to start their own businesses.
Most importantly, for many entrepreneurs, their salary ambitions can reach whole new heights. While the average woman earns 82 cents For every dollar a man earns, the average female entrepreneur earns. 91 cents. While a one-to-one income ratio would be the best scenario, it is clear that for many women, starting their own business helps close the pay gap.
The lifestyle and flexibility benefits of entrepreneurship cannot be overemphasized either, such as working from home during hours that fit your schedule. Being able to be a parent or guardian to someone you love, or simply being able to avoid micro-aggressions, pay inequality, and unequal treatment at work are all new perks that come with starting your own business. For many marginalized people, such economic and personal freedom is a dream that can only become a reality through entrepreneurship.
Connected: Why is paying women equal wages helpful and not harmful?
Final Thoughts
While the marginalized are weighing the pros and cons of becoming an entrepreneur, those of us who are already successful in this field should ask ourselves: what can we do to raise more entrepreneurs from marginalized communities? How can we use our privilege and power to be sensitive to the challenges new entrepreneurs face? How can we finance and support them in the most important stages of their business?
In my opinion, successful entrepreneurs have a responsibility to share their privileges with others and help more people enter the entrepreneurial space with confidence. Name the new entrepreneurs in important rooms. Offer a loan or donate capital to entrepreneurs in marginalized communities. Mentor new entrepreneurs and flatten their learning curve so they are more likely to succeed after the five year milestone.
By sharing entrepreneurial wisdom and offering resources when available, you can help more women, people with disabilities, gay people, and people of color achieve entrepreneurial success and develop their careers beyond imagination.