As Boomers Retire, Minority Entrepreneurs Can Aspire
COMMENTARY

September 18, 2023by Jazzelynn Hawkins, Policy Advisor, Alliance for Entrepreneurial Equity
As Boomers Retire, Minority Entrepreneurs Can Aspire
Joe Danfield, left, and Ken Landis, right, owners of Chick's Deli, on Township Lane, a single business block between residential streets and Route 70 in Cherry Hill, New Jersey, January 16, 2019. JESSICA GRIFFIN / Staff Photographer

America is on the brink of a great wealth transfer. As Baby Boomers enter retirement, their shift of fortune could be monumental for one often-overlooked group: minority entrepreneurs.

Over half of America’s business owners are 55 or older, with 40% of small-business owners also poised to exit the workforce. Ownership in the business could be passed to the next generation.

But recent indicators suggest that inheritors of these businesses may not be interested in taking over, even though three-fourths of baby boomer-owned businesses are profitable.

There’s another way. As boomers retire, they can look to sell and increase their retirement savings — all while helping the next generation of entrepreneurs succeed. This could create an outsized opportunity for people of color. Currently, only 2% of businesses with employees are Black-owned, and 6.5% are Hispanic-owned. The ability for minority entrepreneurs to purchase thriving small businesses would increase minority business ownership and wealth and give our economy a boost.

Owning capital is a key driver of wealth that Black and female entrepreneurs have been left out of for far too long. In 2019, the median White family had $188,000 in wealth compared to just $36,000 and $24,000 for the median Hispanic and Black families, respectively. As boomers retire and sell, minority entrepreneurs have a chance at acquiring thriving businesses, obtaining higher incomes and providing job opportunities for their communities to bridge this wealth gap. 

And the benefits aren’t just limited to business owners. Black entrepreneurs have 12 times more net worth than their peers who work for an employer while also hiring significantly more people of color. 

Forty-seven percent of businesses with non-White founders reported that most of their employees were people of color, while only 13% of White founders said the same. People of color often face racial and ethnic disparities leading them to be shut out of the typical labor market, so a surge of job openings from these small businesses would be a welcome boost of equity.

More minority business ownership is good for the economy overall. One report found that small businesses accounted for 44% of U.S. economic activity. Put another way, encouraging minority entrepreneurs to buy and take over successful small businesses helps everyone. 

You may be wondering: Where are minority entrepreneurs going to get the money to acquire these businesses? It’s easier said than done.

It is well researched that minority businesses receive less capital than their counterparts. For example, while firms of color were more likely to seek financing during the pandemic era, they were less than half as likely to be fully approved on applications as their White counterparts, and twice as likely to be outright denied.

This is where the federal government can step in: Congress can respond to capital needs by improving the availability of small-principal loans. Lawmakers can also expand access to equity capital for small businesses as an alternative to debt financing.

By matching burgeoning entrepreneurs with expert business mentors — as the Small Business Administration currently does in its SCORE program — policymakers can equip entrepreneurs with the financial and human capital needed to successfully acquire transitioning firms.

Since they already have a deep understanding of running and maintaining a small business, volunteers may be able to provide information to sellers on business succession, such as how to choose a successor and how to maintain a profit when selling. Not all of us can be Logan Roy, so making sure this information is readily available can only help.

Congress can also eliminate or at least reduce fees on small 7(a) loans, allowing entrepreneurs to take home more financing and using it to assist in the acquisition of other businesses. 

As boomers transition into retirement, their businesses don’t need to retire with them. We should be helping entrepreneurs — especially minority entrepreneurs who all too often face barriers to business ownership — take over these businesses. It would extend the longevity of successful small businesses, allow business owners to recoup retirement savings, stimulate the economy and bring in a diverse group of entrepreneurs. That’s something every generation can get behind.


Jazzelynn Hawkins is a policy advisor for the Alliance for Entrepreneurial Equity, a joint effort between Third Way and the National Urban League. Hawkins can be reached at [email protected].


A+
a-

In The News

Health

Voting

September 21, 2023
by Dan McCue
New ‘Climate Corps’ Will Serve as Green Jobs Training Program

WASHINGTON — In a bid to further kick-start the green economy that is key to both his climate and economic... Read More

WASHINGTON — In a bid to further kick-start the green economy that is key to both his climate and economic plan, President Joe Biden on Wednesday used his executive powers to create the American Climate Corps, the nation’s first large-scale job training program. According to a... Read More

September 21, 2023
by Dan McCue
Problem Solvers Make Bipartisan Bid to End Funding Standoff

WASHINGTON — The House Problem Solvers Caucus late Wednesday night endorsed a bipartisan plan to prevent a government shutdown, ratcheting... Read More

WASHINGTON — The House Problem Solvers Caucus late Wednesday night endorsed a bipartisan plan to prevent a government shutdown, ratcheting up the pressure on hardcore Republicans to end the intraparty squabble that prevented a stopgap spending measure from reaching the House floor earlier this week. The... Read More

Governors, Biden Administration Push to Quadruple Efficient Heating, AC Units by 2030

A group of 25 state governors that make up the U.S. Climate Alliance and the Biden administration announced a pledge... Read More

A group of 25 state governors that make up the U.S. Climate Alliance and the Biden administration announced a pledge Thursday to quadruple the number of heat pumps in U.S. homes by 2030, from 4.7 million to 20 million. Heat pumps use little electricity, yet are able to heat... Read More

Outdated Headline Sparks Vicious Online Hate Campaign Directed at Las Vegas Newspaper

NEW YORK (AP) — A Las Vegas newspaper is being viciously attacked online for its coverage of an alleged murder of... Read More

NEW YORK (AP) — A Las Vegas newspaper is being viciously attacked online for its coverage of an alleged murder of a retired police chief, either because of a misunderstanding or a deliberate attempt to mislead. The “firehose of hatred” has led the Las Vegas Review-Journal to... Read More

Protecting Access to Hospitals Is Crucial for Rural America

Maternal health care in rural America is in crisis. Declining birth rates and shrinking populations have played a role, but this crisis... Read More

Maternal health care in rural America is in crisis. Declining birth rates and shrinking populations have played a role, but this crisis is more acute now than ever because of widespread hospital closures in rural areas. On top of that, the dozens of maternity ward closures happening across the country have... Read More

September 20, 2023
by Dan McCue
Administration to Resume Offering Free At-Home Covid Tests

WASHINGTON — Beginning Monday, Americans will once again be able to order free coronavirus tests from the U.S. government, the... Read More

WASHINGTON — Beginning Monday, Americans will once again be able to order free coronavirus tests from the U.S. government, the Department of Health and Human Services said on Wednesday afternoon. The Biden administration said it is reviving a program it put on ice in May when... Read More

News From The Well
scroll top