In today's competitive business landscape, having company insurance is more than just an additional expense. It is a strategic investment that safeguards entrepreneurs, their businesses, and their future growth. Let's take a closer look at the benefits of having insurance for Black women entrepreneurs and why this information is crucial for our entire business ecosystem:
1. Protection from Financial Loss: Unexpected events can disrupt even the most meticulously planned business strategies. Company insurance provides financial coverage for common risks such as property damage, liability claims, and business interruptions. By mitigating potential financial losses, insurance allows entrepreneurs to focus on their core operations. Businesses and partners within our ecosystem can also benefit from a network of insured entrepreneurs, reducing the financial risks associated with partnerships and collaborations.
2. Enhanced Credibility: Demonstrating that your business is adequately insured not only protects your interests but also strengthens your reputation. Clients, partners, and members of business ecosystems view insured businesses as reliable and trustworthy, which can increase one's chances of securing contracts, partnerships, and support. By cultivating a culture of insurance awareness and coverage, we enhance the overall credibility of our business ecosystem.
3. Peace of Mind and Stress Reduction: Running a business comes with its fair share of stress and uncertainties. However, having business insurance can provide Black women entrepreneurs with peace of mind, knowing that they are protected against unforeseen events. The assurance of having proper coverage in place can reduce stress levels and allow entrepreneurs to focus on their vision, innovation, and overall business growth. With insurance serving as a safety net, entrepreneurs can navigate challenges with increased confidence, knowing that they have a financial safety cushion to fall back on.
While the benefits of company insurance are clear, the hurdles to obtaining such protections and the risks of operating without them are equally important to understand. According to our 2023 State of Black Women-Owned Businesses Report® (#SOBWOB23), only 25% of Black women-owned businesses are insured. Revenue generation, or the lack thereof, plays a huge role in the accessibility of business insurance for Black women entrepreneurs.
Our data shows that as Black women entrepreneurs increase their revenue generation, they are more likely to invest in business insurance. Below, we provide valuable insights into observed correlations between revenue generation and insurance coverage for Black women entrepreneurs:
According to the 2023 State of Black Women-Owned Businesses Report®report:
More than half (57%) of all Black women entrepreneurs generated less than $5,000 in annual revenue in 2022. As such, it is not surprising that roughly 75% of Black women-owned businesses remain uninsured (as shown in Figure 1). Tactical strategies and support around revenue generation are paramount in increasing the sustainability of Black women-owned businesses. Figure 3 below shows annual revenue breakdowns for Black women entrepreneurs overall.
Two-thirds (66%) of uninsured entrepreneurs generated less than $5,000 in revenue in 2022, versus one-third (32%) of insured entrepreneurs who were in the same revenue bracket (Figures 4 and 5): This data highlights the financial challenges and barriers faced by entrepreneurs who have low revenue generation. Many times, they do not yet have the practical means to acquire such support. Even still, it is notable that a significant portion (approximately one-third) of insured entrepreneurs also made less than $5,000 in annual revenue generation - highlighting the intentional prioritization that these entrepreneurs place on risk mitigation despite suppressed cashflows.
36% of insured Black women entrepreneurs generated between $5,000-$49,000 in revenue for 2022, compared to 26% of uninsured respondents who fell in the same revenue bracket (Figures 4 and 5): There seems to be a notable inflection point beyond the $5,000 per annum in revenue generation range, where Black women entrepreneurs feel that they have more capacity to begin investing in risk management protections (like business insurance) more readily. Figure 6 (below) shows this correlation
14% of insured Black women entrepreneurs generated between $50,000-$99,000 in revenue for 2022 and another 18% generated six figures or more (Figure 5), representing about one-third of the insured population overall: Only 4% of uninsured entrepreneurs generated between $50,000-$99,000 in revenue in 2022 and merely 5% generated revenue over $100,000. These trends convey the fact that entrepreneurs are very inclined to increase risk mitigation measures to protect their businesses when their cash inflows improve. This prudent behavior underscores the importance of the work that Blaze Group and other firms are doing to urgently close racial and gender wealth gaps for Black women.
More often than not, Black women entrepreneurs are protecting the longevity and sustainability of their ventures when they have the means to do so. In Figure 6 below, is it conveyed that the absolute number of respondents with insurance consistently exceeds the number of Black women entrepreneurs without it once annual revenues surpass $50,000. If you are a Black woman entrepreneur who is considering obtaining business insurance but has not yet done so, we strongly recommend making it a priority.
The direct benefits of business insurance coverage are oftentimes clear: it provides businesses with a financial safety net in case of unexpected events, reduces financial risks associated with partnerships, strengthens a business's reputation, and creates peace of mind for business owners. However, our research also reveals an important indirect benefit that should not be overlooked: mental health. The 2023 State of Black Women-Owned Businesses Report® indicates that 31.3% of uninsured entrepreneurs have peak anxiety levels of 5 (on a scale of 1 to 5). In contrast, only 17% of insured entrepreneurs reported feeling the same way. We do denote that revenue generation has also increased in many of these cases, but the accessibility of resources in general tends to ease an entrepreneur's frame of mind. Understanding the correlation between insurance coverage and mental well-being is crucial in fostering healthy business ecosystems where entrepreneurs can thrive, innovate, and support one another.
At Blaze Group, we believe in empowering and supporting the growth of Black women entrepreneurs and the businesses, partners, and ecosystems that surround them. It is our vision to close awareness and access gaps, ensuring the success and longevity of Black women-owned businesses. By actively promoting and supporting insurance coverage for Black women-owned businesses, we can collectively enhance our entire ecosystem's financial well-being and success.
To download our annual research report, visit blazegroup.io/research.