Lack of data undermines support for women- and minority-owned businesses
“It’s just incredibly hard to hire people right now,” says Bethany Ramsey of Puff Apothecary. (Photo by Stephen Starr)
For many Dayton small business owners, the ability to pivot has been key to surviving the pandemic.
• Women and entrepreneurs of color help shrink race and gender wealth gaps
• Providing them with timely and targeted support is critical
By Stephen Starr, Elevate Dayton
June 6, 2022
(Editor's note: For clarity, we have changed two words in statements attributed to KeAnna Daniels that appeared in an earlier version of this story.)
When Bethany Ramsey went looking to hire two natural hair stylists in January for Puff Apothecary, her Oregon District-based salon and boutique, she was greeted with the sound of crickets.
“It’s just incredibly hard to hire people,” she says.
A major by-product of the pandemic has been the difficulty many entrepreneurs and small business owners have had finding staff amid record numbers of dissatisfied workers quitting their jobs, a phenomenon commonly referred to as the “Great Resignation.”
But Ramsey and colleagues have adapted to this challenge in a unique way: by offering a 26-week training apprenticeship and licensing certification alongside the positions. Since then, Ramsey hired two people who began servicing clients in early June, and she will be seeking applications for new apprentices in the fall (updates can be found at www.puffapothecary.com). She’s confident the apprenticeship has been a smart route to pursue.
“I think that is our solution.”
Offering additional perks such as on-the-job training is just one way entrepreneurs have adapted and pivoted during the pandemic. A study from the International Journal of Disaster Reduction found that 63% of U.S. small businesses surveyed in May 2021 had changed how they served customers, 56% had changed how they procure supplies, 49% had increased their business social media presence and 41% had shifted to online sales.
Take Mutt’s Sauce owner Charlynda Scales, whose business was recently profiled in the Dayton Daily News. Prior to the pandemic, Mutt’s Sauce, headquartered in Beavercreek and packaged in Dayton, was almost entirely reliant on events and in-person sales. When COVID eviscerated her business model, the Air Force veteran shifted into start-up mode, returning to early-stage strategies such as focusing heavily on growth and marketing. Today, Mutt’s Sauce is primarily an e-commerce enterprise.
Exhibit from “COVID-19’s effort on minority-owned small businesses in the United States”, May 2020, McKinsey & Company. Copyright (c) 2022 McKinsey & Company. All rights reserved. Reprinted by permission.
Accurate, timely data needed
Small businesses are often referred to as the backbone of the U.S. economy. They benefit communities by providing local jobs, increasing the tax base, fostering community involvement, and providing diverse, locally sourced/made products and services. They are invested in their communities and improve local median household income. An increasing number of these businesses are founded by women and entrepreneurs of color, helping to shrink the race and gender wealth gaps, reduce income and wealth inequality, and increase social mobility.
Tracking how these businesses are faring depends on having timely and accurate data. But, as we discovered, such information can be hard to come by, especially on the local level
Neither the Ohio Secretary of State’s Office nor the Department of Development track business ownership based on sex, ethnicity, race or veteran status. Nor are such records kept at the county or city level, by the Dayton Development Coalition or by the Dayton Area Chamber of Commerce except as it relates to businesses who have been certified as Minority Business Enterprises (MBE) or EDGE (Encouraging Diversity, Growth, and Equity) businesses.
The U.S. Small Business Administration conducts a weekly Small Business Pulse Survey to gauge how businesses are doing in the wake of the Coronavirus pandemic, but the data is only available for each state and the 50 largest metropolitan areas, which does not include Dayton. Post-pandemic survey information concerning women-, minority- and veteran-owned businesses is only available at the national level.
So while we know that an undetermined number of small businesses in Dayton were forced to close in the last two years, we don’t know exactly how many were owned by women, veterans or people of color. Nor do we know why those businesses closed or what interventions might have changed their trajectory. That lack of data makes it harder to support those businesses still hanging on.
“If we were aware of trends in the creation and sustainment of minority-, woman-, or veteran-owned businesses, we could be more proactive about reaching out to businesses that may need resources,” said Matt Shimp, manager of research and analytics for the Dayton Development Coalition.
Growing entrepreneur ecosystem
Getting these businesses timely and targeted support is critical, especially when you consider that they make up an increasingly important part of the local and national economies and that they have suffered disproportionately due to COVID.
Between 1996 and 2020, the combined percentage of entrepreneurs in the U.S. who are Latino, Asian and Black nearly doubled from 21.7% to 41.5%, while the percentage of White entrepreneurs declined from 77.1% to 55.6%, according to an April 2021 report from the Ewing Marion Kauffman Foundation about diversity of new entrepreneurs.
Women are also starting new businesses in record numbers – 1,817 per day between 2018 and 2019 – and in almost every category, women of color are driving that growth, according to a report on women-owned businesses commissioned by American Express. Women of color represent 39% of the total female population in the U.S. but accounted for 89% of the net new women-owned businesses in 2019. While the number of women-owned businesses grew 21% from 2014 to 2019, firms owned by women of color grew by 43% and African American women-owned firms grew even faster at 50%.
In Ohio, small businesses made up 99.6% of all businesses and employed 44.6% of all Ohio workers in 2018, according to U.S. Census Bureau data released in 2021. Of those small businesses, 41.4% were owned by women, 9.1% by Blacks or African Americans, 3% by Asians, 2.3% by Hispanics and 87.6% by Whites. Veterans owned 7.2% of Ohio small businesses in 2018.
Tellingly, the seismic changes of the past two years haven’t discouraged people from starting new businesses. Quite the opposite.
Across Ohio, the number of new business applications continues to skyrocket. In 2021, 197,010 new business applications were filed with the Ohio Secretary of State’s Office, breaking 2020’s record numbers by more than 25,000 filings. In the first three months of 2022, 50,396 new business applications were filed.
While records of the exact number of new small businesses are not kept on a county or city level, the Dayton-based Entrepreneurs’ Center has increased its staff from three people in 2015 to around 24 this year in order to keep up with the growth in new clients. In the last two years alone, the number of new businesses the Center serves has doubled to 1,000 and about 50% of them are led by a woman, veteran or a person from an underserved community, according to Center President Scott Koorndyk.
“The Great Resignation and also the furloughs and layoffs have presented people with an amazing opportunity to take the leap into entrepreneurship and to bet on themselves,” says KeAnna Daniels, program manager at Parallax Advanced Research, a Dayton nonprofit that performs applied scientific research and development and tackles global challenges by accelerating innovation, and developing technology and solutions through strategic partnerships. “The goal now is to make sure these businesses are able to grow in scale.”
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All the while, the number of business support networks and organizations has mushroomed. Established organizations such as the Dayton Chamber of Commerce, Minority Business Assistance Centers and the Dayton Development Coalition have been joined in recent years by Launch Dayton, the Hub at the Dayton Arcade, the Greater West Dayton Incubator and a host of others focused on meeting the needs of an expanding and diverse entrepreneur ecosystem.
Women and business owners of color face the same challenges as other entrepreneurs – developing a sound business plan, understanding the market and competition, and creating products and services that customers need. But discrimination and persistent disparities limit their access to capital, skills, networks, and markets in ways that do not impact their White, male counterparts.
For instance, recent research conducted by the National Community Reinvestment Coalition (NCRC) shows financial institutions in Washington D.C. and later in Los Angeles were less likely to provide information on business-saving lending avenues—assistance such as the Paycheck Protection Program (PPP) for example—to Black- and Hispanic-owned businesses than those run by White Americans.
In each case, NCRC sent mystery shoppers or “testers” with nearly identical business profiles and strong credit histories to inquire about a small business loan to maintain their business during the COVID-19 pandemic. Lenders not only discouraged the Black and Hispanic testers from applying for a loan, but simultaneously encouraged similarly situated White testers to apply for one or more loan products, the Washington, DC-based non-profit found. “This ‘double impact’ on minority applicants, discouragement and failure to provide complete information, not only limits minority access to credit, it also damages the credibility of the small business lending community.”
From Surviving to Thriving
Encouragingly, reports suggest that minority-owned businesses have proved more resilient than others to the ruptures of the pandemic. An April 2021 Yelp Economic Average Diverse Business Report found that, “Among businesses that were open at the start of the pandemic and that closed and reopened at least once, roughly 29% of businesses owned by women, Black people, and Latinx people reopened twice or more — notably higher than the share among other businesses.”
Experts who study business survival in the wake of climate disasters say resilience often results from making adjustments that add value and position your business to survive the next shock.
“As an entrepreneur I got hit from every possible angle, but I’m very grateful.” —Jazline Gomez, owner of Pepe's Mexican Flavors
For Jazline Gomez, who in 2019 opened Pepe’s Mexican Flavors in Huber Heights at the age of 21, the pandemic has presented enormous challenges. Not only did Gomez, whose family immigrated from Michoacán in Mexico, find herself dealing with keeping her staff and customers safe, she has been studying for a degree in psychology and Spanish at Wright State University.
“There was a time (during the pandemic) when I was trying to attend an online class and run the restaurant,” she says. “As an entrepreneur I got hit from every possible angle, but I’m very grateful.”
Gomez adapted by paying her entire staff’s COVID-19 health and safety training—both to keep them safe and to give them peace of mind while at work—and pivoting from on-site dining to a business run almost entirely through phone orders.
Gomez’s restaurant, named after her entrepreneur father, is unique in the region in that it focuses on Mexican street food – tamales, menudo, sopes and more – rather than the sit-down menus more typically associated with Mexican-themed eateries in the U.S.
Now that a majority of pandemic-era health and safety restrictions are being lifted, she wants to build a dedicated buffet space, as well as get a locally commissioned mural done to brighten up the restaurant space.
Her bigger goal?
“I’d like to open a second branch, in downtown Dayton,” she says.
One way minority-owned businesses can go from a state of surviving to thriving is to band together, says Daniels of Parallax Advanced Research. “One thing that we’ve been talking about in the entrepreneurial ecosystem here in Dayton is the opportunity to co-found and to do joint ventures. Particularly in the Black and Brown communities, we have a lot of sole ownership,” she says. “I would encourage entrepreneurs to talk about who else is in your industry, who is doing something similar and complementary that you could merge with and provide added value to target customers.”
As for all of those would-be entrepreneurs looking to start a business, Daniels has some advice.
“Be smart but follow your gut. The pandemic has given people that ability to do that,” suggests Daniels. “Stay in the mode of being as idle and flexible and being able to pivot. That’s something that the pandemic has taught us.”