Arkansas Women of Color Face Barriers to Entrepreneurship, Study Finds

Participants cited access to capital and racial bias as their biggest obstacles.

Women of Color Entrepreneur Study

Starting a business has its challenges, including not knowing where to access financial or educational resources. Teneicia Roundtree, owner of Treehouse Cleaning Service in Conway, says people in power can make information more accessible to women of color starting or growing a business by being more transparent about where the knowledge is.

“Oftentimes people such as myself, we’re picking and choosing where our information is coming from because we don’t have the blessing of having generational knowledge coming to us,” Roundtree says.

This knowledge gap is just one barrier facing women entrepreneurs, according to a new study from the Women’s Foundation of Arkansas. Women of Color Business Owners and Entrepreneurs in Arkansas is a multimedia report of a new study exploring the opportunities, barriers and resource gaps for the state’s women of color business owners.

WFA commissioned the study in partnership with the University of Central Arkansas to build on its previous research identifying entrepreneurship as a key driver of women’s economic mobility in Arkansas, especially among Black women. According to that 2018 study, Black women in Arkansas own 60 percent of all Black-owned businesses, and the highest concentration of women-owned businesses are in the state’s poorest counties.

Principal investigator Kristy Carter is the director of marketing for the Division of Outreach and Community Engagement at UCA. She’s also a founding member of the university’s Minority Vendor Partnership Initiative. The primary goal of the new report was to amplify the voices of women of color, Carter says.

“We also wanted to look at the entrepreneurial ecosystem and those support organizations within that ecosystem, and what services and gaps needed to be filled,” she says. 

For this study, researchers conducted six virtual focus groups with 44 women of color and collected 108 surveys from additional participants. Through these conversations, researchers discovered the biggest perceived barrier to starting a business is access to capital. This supports other studies that have found that entrepreneurs of color start their businesses with nearly three times less in overall capital compared to their white counterparts. While women of color have been able to start businesses without this additional financial support, Carter says it can be a difficult model to sustain.

“They can start the businesses, but the problem comes in when they use all of their own money to do it,” Carter says. “They completely wipe out their savings accounts and then they’re left destitute, them and their families, because they put all they had into a business that now can’t scale up and thrive.” 

Access to financial services is something the white business community takes for granted, says Anna Beth Gorman, executive director of the Women’s Foundation of Arkansas. Study participants cited accounting or financial management as well as creditworthiness as major barriers to starting a business. Not having those relationships with professional service providers has proven harmful to entrepreneurs of color, especially during the COVID-19 pandemic. 

“Businesses that didn’t have those relationships, those are who missed out on federal funding because it was accountants and bankers that walked their clients through the process,” Gorman says. 

Forty-five women in the study received supplemental COVID-19 support through loans or grants, while 63 participants did not. Thirty-two percent of women reported the pandemic had a somewhat negative impact on their business operation.

Another major barrier for women of color, according to the report, is racial bias or discrimination, which Carter says can be a difficult issue to overcome.

“Creditworthiness and accounting and financial management, even an adequate credit score are all things that these women, if they work on them and they know where the resources are to help them, that can change,” Carter says. “But it’s hard to change someone’s mind about you when they have a set of ideas about a specific group of people that makes them illegitimate and unworthy of being patronized.”

In addition to exploring barriers to entrepreneurship, the WFA study examined if business owners used entrepreneurial support organizations like universities, chambers of commerce or accelerators as a resource. Forty-nine percent of participants didn’t access any of the organizations listed and instead received support from informal networks. 

Participants also indicated they were neither satisfied nor dissatisfied with entrepreneurial support services because they had no idea the resources existed. Entrepreneurial support organizations provide programs and services to help entrepreneurs and are part of the solution, Carter says. 

“Closing the knowledge gap for all entrepreneurs and all the actors within the entrepreneurial ecosystem is imperative for our state to thrive,” she says. 

To help bridge that gap, the Women’s Foundation of Arkansas has launched the Arkansas Women’s Economic Mobility Hub. It’s one of nine regional hubs developed by a national cohort of women’s and girl’s funds and foundations, as well as gender equity funders. The Arkansas hub will focus on women of color business owners in order to intentionally address gender and racial wealth gaps in the state, WFA executive director Anna Beth Gorman says.

“The knowledge gap that we want to address is the knowledge gap for the organizations that aren’t stepping up to the plate to do what they need to do for the women business owners,” Gorman says. 

The new report can be read in its entirety here

Antoinette Grajeda
Antoinette Grajeda

Antoinette Grajeda is Editor-in-Chief of Arkansas Soul, the host of the Affirmative Action podcast and a Northwest Arkansas-based journalist. She has covered race, culture, politics, health, education and the arts in Arkansas for nearly 15 years.