Fifty years ago, the typical entrepreneur was relatively
homogenous and static. He was usually a white man, sometimes
working together with his family, who owned a small Main Street
retail shop or a local manufacturing company. He knew most of his
clients, and his company focused on local goods and services.
Today, much has changed. America's entrepreneurs are much
more diverse racially, gender-wise and age-wise, and an increasing
number are starting service businesses rather than manufacturing or
retail companies. Economists, sociologists and small-business
experts say the key trends in American entrepreneurship-growing
diversity, an aging work force, a preference for starting companies
that fit personal lifestyles, and a move into higher-value, global
industries-are only likely to accelerate in the coming years. A
decade from now, they say, the entrepreneur of the future will be
drastically different from even today's business owners.
The New Face of
Entrepreneurship
Perhaps the biggest change we'll see in the entrepreneur of the
future is that 2010's business owner is more likely to be a
woman or a minority. According to the Center for Women's
Business Research, the number of privately held women-owned
businesses in America grew by roughly 11 percent between 1997 and
2002, while privately held businesses as a whole grew only 6
percent. Similarly, the Center for Women's Business Research
found that more than half of Asian-American and African-American
women small-business owners say their firms have grown over the
past three years, a significant feat in a down economy. Indeed,
Joel Marks, executive director of the American Small Business
Alliance, an industry trade group, notes that the number of
minorities and women participating in his organization has grown
sharply in recent years.
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Several factors may explain why more women and minorities are
starting companies. Most obviously, the percentage of women and
minorities in the U.S. work force is growing as more women work and
immigration increases the population of minorities, so their
participation in business ownership is naturally rising as well.
"Entrepreneurship is still living the American Dream" and
thus appeals to recent immigrants, adds Marks.
But more complex factors also come into play. As an earlier
generation of minorities began to go into entrepreneurship in the
1970s and '80s, they provided critical role models like Magic
Johnson and Oprah Winfrey, who have sparked many more, younger
minorities to consider starting their own companies. "There
are more minority role models in entrepreneurship [today, so]
entrepreneurship is increasingly seen by minorities as an
acceptable way to go," says William Bradford, an expert on
minority-owned small businesses at the University of Washington,
Seattle.
Women and minority entrepreneurs are not only becoming more
visible, but they're also becoming more vocal. As these
entrepreneurs become more established members of the small- and
midsize business community, says Marks, they "want to take on
issues beyond the day-to-day [concerns]"-issues such as
health-care reform, for example. Marks says more women and
minorities now take part in lobbying in Washington or in their
state capitals, pushing state governments and the federal
government to address entrepreneurs' concerns.
One big concern is access to capital for minorities, who still
find it hard to obtain traditional sources of funding, such as bank
financing, SBA loans and venture capital. "The main thrust of
the VC industry is still dominated by high tech, and there are
fewer minority IT firms," Bradford says. But, he adds,
minority small businesses are getting more adept at tapping
alternative capital networks, such as debt financing and VC firms
that focus on minority companies. In the long run, Bradford says,
these alternative capital networks will provide minority
entrepreneurs with more tools to raise capital. And their future
success may convince the mainstream financing industry to invest
more heavily in minority firms.
As minority entrepreneurs fight to stand on equal footing with
non-
minority entrepreneurs, women struggle to catch up in a still
predominantly male arena. America's population of entrepreneurs
consists of 1.6 men for every 1 woman, says Heidi Neck, an
assistant professor of entrepreneurship at Babson College in
Wellesley, Massachusetts. She believes this is partly because
universities don't offer classes targeting women who are
interested in entrepreneurship.
It's clear women and minorities still have considerable
ground to make up. But as their numbers increase, the demographics
will force the business community to reassess its biases.
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