INSIGHTS

Our client work helps banks design, implement, and manage programs for women-owned and diverse-owned small businesses. Between 2019 and 2023 the number of women-owned businesses increased at nearly double the rate of their male counterparts, and that from 2022 to 2023, the rate of growth increased to 4.5 times. From the trillions in revenue they contribute to the economy to the millions in jobs, women-owned businesses are coming out of the pandemic stronger than they went into the pandemic, and many are thriving. It's a testament to their resiliency and the breadth and depth of support they've received from government entities, banks, corporations and philanthropic organizations that must be sustained.

Women-owned businesses with 50 or more employees, account for nearly half of women-owned businesses' employment and revenues, averaging $31.8 million in revenue and generating $1.3 trillion in aggregate revenue. If they achieved the average revenue of men-owned businesses with 50 or more employees, they would add $1.2 trillion in revenue to the U.S. economy.

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We have often seen short lists citing the challenges

women business owners face

The challenges women face are on two levels: personal and business issues. Their personal challenges (e.g., family life) are well known. Those have been overcome by several numerous women CEOs, even amid their own illnesses. While they may be passionate about their business, they do not always have – or know how to get – the resources they need. And, they do not know where to get these resources.

Generally speaking, business bankers may not be trained beyond loan procedures and good customer service. There is an excellent opportunity for banks to better understand these resources, be prepared to share them with their business banking customers and realize the potential of helping these businesses grow. Some banks have developed programs for women small business owners and women executives, few include components addressing the special needs of a diverse audience.

Women-owned small businesses were hit harder and felt particularly unsupported during COVID-19. However, they remain undeterred, and are optimistic about the future. Women-owned small business owners felt particularly powerless during COVID-19. According to the 2016 American Express State of Women-Owned Businesses Report, eight out of every 10 businesses started since 2007, were launched by women of color.

Specific Challenges Faced by

Women of Color-owned Businesses

Biases in the business world. Many Black and Hispanic business owners face a double bias due to both race and gender. This creates difficulties when it comes to obtaining funding, reaching out to potential partners and even networking.
Lack of representation. Often, women of color are the only ones in business meetings. They often strive alone in businesses and industries dominated by men. They often must prove their worth, qualifications and drive. This is especially relevant to those who are just starting out. They often find the lack of representation by women of color to be intimidating and discouraging.
Networking challenges. These events are attended by very few women of color, limiting them from making the best professional connections. Access to these networks—and having the right tools and resources to navigate them—can prevent perfectly viable businesses from surviving and thriving.

4. Lack of mentorship. Mentorship is a valuable resource that benefits many businesses, especially in the early stages. However, there tend to be fewer mentorship opportunities available to women in general. According to Inc. Magazine, 48% of female entrepreneurs lack mentors and advisors. For women of color, the gap is even wider because of bias and limited networking opportunities. This is where referrals to women-focused networks can make all the difference.

5. Lack of access to capital and funding. According to Fundera, a lender to small businesses, “…women entrepreneurs get offered smaller loans across every product, from the same groups.” Women of color entrepreneurs seeking venture capital do not seem to fare any better.

Outreach to Women of Color Small Business Owners

1. According to a recent study by McKinsey & Co., U.S. Black and Hispanics have borne a disproportionate share of the pandemic’s health and economic damage.

2. Hispanic and Black women are opening businesses at nearly six times the rate of other minorities.

3. Support women of color small business owners achieve their personal and business financial goals.

4. Targeted programs, especially those describing funding sources and how to get them, are most critical.

5. We recommend additional internal training for women and minority employees, addressing a bank’s existing DEI perspective.

Provide Solutions to Women of Color Small Business Owners

1. Focus on issues most important to Black and Hispanic women business owners

2. Access to capital and procurement opportunities

3. Cultural trust issues

4. Maintaining business creditworthiness

a. Mitigating risk

b. Responding to economic slowdown

c. Controlling cash flow

d. Fear of failure

e. Long-term business sustainability

f. Limited knowledge of financial system and credit

The SMC Marketing Project Team

SMC Marketing’s recommendations feature outreach to existing and prospective Black and Hispanic small business owners, and include customized training to bankers and employees. SMC Marketing’s Project Team includes three distinguished women of color:

1. Latina small business owner and lead research analyst at Stanford Graduate School of Business. She has a PhD, and investigates inequality within the American labor market by exploring the causes and consequences of entrepreneurship as a mobility pathway for racial minorities and historically marginalized populations. She is a public scholar and published author on Latino entrepreneurship. She is a mentor and regular facilitator of workshops and lectures for executive education courses at the Stanford GSB and in Mexico. She is bilingual;

2. Latina small business owner and author. Certified MWBE and an MBA graduate of Tuck School of Business at Dartmouth. Her expertise is in creating business development and educational programs for women of color. She, too, is bilingual. Twenty-five years of business experience with global companies;

3. Black small business owner, recipient of an MBA from Pepperdine Graziadio School of Business and prior SBA and SBDC consultant. She has over 20 years of experience in developing process improvement and training programs for diverse small business owners.

Internal Bank Recommendations

Bankers’ training

1. Map out current processes—and identified process improvements—to reach, convert and service women of color-owned small businesses

2. Address the varying needs of Black and Hispanic women-owned business owners at individual business growth levels: start-up and estab- lishing, building, growing, and recharging

3. Build relationships with women of color entrepreneurs and owners of micro- small- and medium-sized businesses

4, Engage and be relevant to this important customer business growth segment

Internal staff training can include

1. Personal development

2. Business readiness development

3. Business organizations and resources available to women of color small business owners

4. Assess system changes and necessary investments

5. Focus on bankers with clients who are female Black and Hispanic business owners. Also include women bankers and minority

employees

Marketing Components for a Women of Color-owned Business Program

1. Series of virtual learning events (bilingual)

2. Social media

3. Online / e-newsletters

4. Featured articles on bank's Business Banking Website page

5. Case studies showcasing Small Business Banking solutions

6. Staff training

Learning Event Examples

One-day and half-day Virtual Events (approximately 2-4 hours). Feature Black and Hispanic speakers talking about issues important to these women small business owners, with information aligned with a bank’s small business products and services. Topics can include:

1. Thriving in times of change

2. Negotiating from a position of strength

3. Latina business success stories

4. Business-building through networking

5. Overcoming personal fears

6. Developing sales confidence

Comprehensive Educational Series

1. A 4-, 6-, or 8-week program with curriculum targeted to women of color small business owners

2. Feature business and personal development topics

Rationale: Why Programs for Black and Hispanic Women Business Owners Are Important

1. Acquire new—and grow existing—women of color-owned small businesses

2. Women of color-owned small businesses are creating new businesses faster than others

3. Provide meaningful assistance to Hispanic and Black women small business owners that other banks are not providing

4. Establish the bank as the one that understands women of color and their small businesses and is helping them grow

5. Develop “Best-in-Class” small business banking program for women small business owners

6. Utilize customer recognition and retention tactics to improve customer loyalty and referrals among this important demographic segment

Why collaborate with SMC Marketing?

SMC Marketing, a Certified Woman-Owned Small Business, has over 25-years of expertise in designing bank customer loyalty and retention programs. The objective of this program is to strengthen relationships with women of color entrepreneurs and small business owners, so they become ongoing customers of a bank. As those businesses grow, mature and succeed, the bank will realize account growth and profitability from them. These women, in turn, can become mentors to other small business owners.

Let SMC Marketing help you take the first step.