Today Gallup released a report summarizing the key findings of a major research project, sponsored by Wells Fargo, analyzing the experiences of small-business owners by race, ethnicity, gender, veteran status and sexual orientation. This study focuses on these small-business owners' motivations to become business owners as well as the challenges they face, their definitions of success, their sources of financial advice and their attitudes about business finances. The study also seeks to better understand small-business owners' challenges with respect to sources of funding and obtaining credit -- information to help the financial community better serve their needs.
Key findings include:
Racially and Ethnically Diverse Segments (Asian, African-American and Hispanic)
- There are more similarities than differences across diverse small-business owner segments. Racially and ethnically diverse small-business owners share similar broad challenges with the general population of owners. Most diverse small-business owners say they would do it all over and become a small-business owner again if given the choice.
- Owners in diverse segments are more likely to use personal credit cards to fund their business than the general population of owners.
- Diverse owners are more likely to have ever been declined for business credit than small-business owners in general.
- African-American small-business owners report lower use of business credit and greater personal credit challenges than the general population of owners and other diverse segments.
- While a majority of respondents in all three race and ethnic segments report that being a minority-owned business has no effect on their company, African-American business owners are more likely than their Asian or Hispanic counterparts to say that their minority status makes it harder to run their business.
- Women small-business owners tend to be more highly educated than male owners, though their businesses are typically smaller in terms of annual revenue.
- Women small-business owners tend to be more credit averse (less likely to have used credit or loans) than male owners.
- Women owners are just as confident as male owners in their ability to manage the finances of their business.
- Small-business owners who identify themselves in the survey as LGBT are younger than the overall population of small-business owners, which is similar to the finding in the general population that those who identify as LGBT are younger than the overall population.
- LGBT small-business owners are more likely to use credit cards, especially personal credit cards, to fund their business than to use loans or lines of credit.
- The majority of veteran small-business owners are at least 55 years of age, and though most small businesses owned by veterans are in the growing or sustaining phase of their business life cycle, nearly one-quarter of veteran owners are winding down their business.
- Veteran small-business owners are more likely than small-business owners in general to rely on personal credit cards and personal lines of credit to fund their business.
Watch Gallup's Editor-in-Chief Frank Newport discuss additional insights from the study.