You’re dreaming of handing over your two weeks notice — if you haven’t done so already.
You’re officially diving into the world of entrepreneurship and getting geared up to dedicate yourself fully to your new business.
You might have visions of private jets, becoming an overnight viral sensation on TikTok, and millions in the bank.
Or, you may have goals that are more modest, like earning $100,000 a year and providing a comfortable life for your family.
But for most business owners from historically excluded groups, the reality is starkly different.
Let’s look at women business owners as an example. Data from the IRS and US Census shows that 67% of self-employed women earn $0 to $25,000 in revenue per year.
To put that in perspective, the US Federal poverty line for a household of three people is $23,030. Meaning, more than half of self-employed women earn just a smidge above the poverty line (and that’s before paying taxes and business expenses).
For the last ten years, I’ve investigated to find out:
“Why do so many historically excluded business owners get stuck at a low revenue level? What exactly is going on here?”
My team and I have pored over revenue data issued by the US government and other sources. We’ve had conversations with thousands of business owners.
And we’ve identified a set of common reasons why these entrepreneurs tend to hit the $25k revenue wall.
1. Lack of Business Education
The rules of entrepreneurship are not the same across all groups. What works for a cis, white, straight man business owner doesn’t work for a woman, queer, Black, POC, or disabled business owner.
We need the right education if we want to successfully build high-profit businesses. But the truth is, there’s a lack of this kind of knowledge among historically excluded communities.
2. Lack of Network
As a member of a historically excluded group, you’re less likely to have access to the kind of leaders, mentors, and role models who can teach you how to build a successful business.
“Networking can be especially challenging for professionals of color, who may not only experience general discomfort, but also face unique challenges from not being perceived as powerful, credible, or resourceful.”
(If you’re a person of color, you don't need Harvard to explain this to you. You’ve lived it.)
3. Lack of Confidence
Research from Cornell and Washington State University shows that women tend to underestimate their intelligence and abilities, whereas men tend to overestimate theirs.
This “Confidence Gap” impacts every single aspect of your business. Here are some examples.
You might be severely undercharging for your products or services because you don’t feel confident in the results you provide, or that people would be willing to pay more for what you offer.
You might be keeping yourself occupied with busy-work behind the scenes (fiddling with your website design for the 100th time, or trying to come up with a cute, catchy slogan for your business) instead of doing the work that actually generates income (reaching out to a potential client and inviting them to hire you, for instance).
4. Lack of Funding
Sometimes, you need an infusion of cash to get your business off the ground. But women and other underrepresented folks are less likely to get it.
Out of all the funding that venture capital investors give to small businesses each year, 90% goes to start-up companies founded by white cis men. Only 10% goes to women, people of color, and queer folks.
Don’t expect better treatment at your friendly neighborhood bank. The Senate Small Business & Entrepreneurship Committee found that “small businesses owned by women receive only 16% of all traditional small business loans” and that women “are more likely to be rejected, or have more stringent terms, than men.”
5. Lack of Energy
The 2021 Women in the Workplace Report shows that cis women are more burnt out, stressed, and flat-out exhausted compared to cis men colleagues.
I also wrote about this recently in a previous Bulletin post — Black people in the US are twice as likely to get insufficient sleep compared to white people.
When you belong to an underrepresented group, you often have to go the extra mile, work extra hours (or more than one job), and juggle multiple responsibilities on your own.
No wonder we’re so effing tired all the time.
These are just some of the main reasons historically excluded business owners get stuck earning $25,000 or less per year.
All of these issues are frustrating.
But I strongly believe (and have experienced it for myself): all of these issues are fixable.
When you join The Club, we help you address all of those issues.
That business education you’ve been missing? It’s in The Club.
A network of business owners who look and sound like you? You can find it in The Club.
Coaching sessions geared toward your current revenue level? Yup, we got that in The Club, too!
In The Club, you learn how to stop leaving money on the table — and start maximizing your earning potential.
You want to break past the $25k ceiling, and then $50k, $100k, and beyond? You can. Let us show you how.