New Data from the Capital One Insights Center Uncovers a New Understanding of the Conditions Required for Business Ownership to Serve as a Vehicle of Personal Wealth Creation
MCLEAN, VIRGINIA—The Capital One Insights Center has released new research that sheds light on how business ownership can drive personal wealth creation for Black and Hispanic entrepreneurs and their communities—and ultimately close the racial wealth gap.
“For many Black and Hispanic entrepreneurs, owning a business can be a tremendous opportunity to build wealth and narrow the racial wealth gap,” says Shena Ashley, president, Capital One Insights Center and vice president, community impact and investment. “In Richmond, about 35% of Black and Hispanic business owners saw at least $188,000 in personal wealth growth over the course of their business ownership, the same as the median wealth for white U.S. households. With the support of a coordinated business ecosystem, sustained funding and educational resources, these businesses were able to make a real difference in closing the racial wealth gap for themselves.”
The study, conducted in partnership with Boston Consulting Group (BCG), includes a survey of more than 1,000 business owners and residents in Richmond, Virginia, along with 21 interviews with community organizations, and finds that unlocking wealth is possible—albeit under the right conditions.
The report’s key findings include:
Based on these findings, the research highlights potential levers that could help entrepreneurs, financial institutions, business and community organizations, and policymakers close the racial wealth gap.
“Working to level the playing field for all small businesses in Richmond requires a multifaceted and long-term strategy that consists of dedicated investments, available resources, and policy,” says Andy Navarette, executive vice president, head of external affairs, Capital One. “Public, private, nonprofit, and government sectors must come together to explore innovative ways to increase Black and Hispanic entrepreneurs’ access to capital and make concerted, harmonized efforts to level the playing field for diverse business owners, in Richmond and around the country.”
In order to unlock personal wealth creation for Black and Hispanic entrepreneurs at scale, the report recommends: 1) continued exploration of innovative ways to increase capital; 2) public, private, and nonprofit support; 3) financial management and digital tools; 4) collaboration among organizations within the business ecosystem; and 5) trust-building between funders and communities of color.
“Being a small business owner in any community is a challenge. When it comes to minority small business owners and closing the staggering racial wealth gap, challenges such as unequal access to capital and business support systems often make their journey even tougher,” says Kedra Newsom Reeves, managing director and partner at BCG and co-lead for the firm’s North America Center for Inclusion and Equity. “This research makes clear that while wealth growth through business ownership is achievable, public and private organizations play an integral role in supporting underserved communities and the budding entrepreneurs within them.”
Media Contacts:
Priya Madrecki, Communications & PR Lead, Corporate Communications
priya.madrecki@capitalone.com
Joseph Martelli, Media Relations Manager, Boston Consulting Group
martelli.joseph@bcg.com
Methodology:
From August to October 2022, we surveyed 1,015 current and former business owners and residents of Richmond, Virginia, and conducted interviews with 21 community organizations that provide support to local business owners. We focused on businesses in Richmond, Virginia, using wealth creation rather than longevity as a measure of success.
Our survey covered current and past business owners from Black or Hispanic backgrounds against the general population in Richmond. Responses include active businesses started between 1970 and 2021; former businesses started between 1974 and 2022; businesses up to $10 million in annual revenue, with a sample average revenue of $2.9 million; and businesses from service, retail, and manufacturing industries. Nearly all the owners surveyed launched their business before 2020, meaning they survived the economic impact of the pandemic.
The Capital One Insights Center combines Capital One research and partnerships to produce insights that advance equity and inclusion. As a nascent platform for data and dialogue, the Center strives to help changemakers create an inclusive society, build thriving communities, and develop financial tools that enrich lives. The Center draws on Capital One’s deep market expertise and legacy of revolutionizing the credit system through the application of data, information, and technology.
Learn more about the Insights Center here.
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