Diversity and New Business Owners

Diversity and New Business Owners

June 30, 2014 by Andrew Rogerson in Buy a business, Management and Planning

Earlier this year, BizBuySell.com released a report on the dramatic change in diversity of new business owners. The statistics are staggering. If you are thinking of buying or selling a business or if you simply have an interest in the change in age, sex or race and the demographics behind small business ownership, here are items to include in your thinking.

The demographic of race

The report from BizBuySell includes interviewing just on 2,000 business owners and prospective business owners and the results of its survey identified:

1. 74 percent of business owners identify themselves as Caucasian.  Interestingly, this corresponds to the 2012 US Census where 77.9% of the US population see themselves as Caucasian.
2. Asian/Pacific Islanders accounted for 12 per cent of the business buyer community which is interesting as they only represent 5.1% of the population in the Census.
3. Within the demographic of being a natural born citizen
4. 79 per cent of Caucasians identify as a natural born citizen.
5. 70 per cent of African Americans identify as natural born citizens
6. 40 per cent of Hispanics identify as natural born citizens
7. Less than 10 per cent of Asians identify as natural born citizens while 52 per cent identify as naturalized citizens.

The demographics of buyers

Those who buy a business will create a totally different demographic at the moment they make a purchase.  This diversity will impact a number of demographics, including the following.

1. Caucasians that want to buy a business tend to be on the older side with 48 per cent listing themselves as 50 to 64 years old.  Another 8 per cent were 65 or older.  Only 3 per cent of Caucasians have an interest to buy a business between 18 and 29 years old.
2. Of those African Americans that want to buy a business, 58 per cent fell into the age group of 30 to 49 years of age.
3. This was the same for Asians, that is, 58 per cent of the 30 to 49 years of age want to buy a business while for Hispanics it was 53 per cent.
4. Small business ownership remains a male dominated career path but the desire to own a business is growing among women especially for minorities.  Up to 39 per cent of African American buyers have an interest in business ownership while in the Asian community there was only an interest of 23 per cent.

What are the types of businesses they wish to buy?

If you own a business and are thinking of selling, here are the businesses of interest to buyers.

1. Restaurants were the most popular category to all ethnicities with at least 20 per cent of buyers having an interest in this type of business with Hispanics at 35 per cent the highest number.
2. 22 per cent of Caucasians have an interest in the manufacturing sector.
3. 21 per cent of Caucasians have an interest in a bar or tavern while 24 per cent of Hispanics have the same interest.
4. 17 per cent of Hispanics have an interest in a beauty salon or barber shop
5. For the Asian community, 40 per cent have an interest in convenience stores, 36 per cent in gas stations, and 22 per cent in liquor stores.

There were no statistics to suggest which ethnicity or age group were successful at closing the sale of a business or indeed what ingredients were necessary for that to occur.  It would be my experience that race, age or sex simply do not matter as ultimately a business will sell if the purchase price is reasonable, finance is available and the business has potential.

If you would like more information about selling, buying or starting a business you are welcome to visit my website Rogerson Business Services.