This brief examines the liquid wealth of typical small business owners and shows that there is no significant reduction in the liquid wealth gap available to black, Latino, and white small business owners. Other studies have found that black business owners have greater wealth than non-business owners (Association for Enterprise Opportunity 201), and that wealth mobility among black business owners is similar to that of white business owners (Bradford 201). This summary shows that, among a sample of business owners, the gap persists during the first few years of ownership of a company. It may sound surprising, but nearly a third of all small business owners never made it past high school.
This can offer reassurances to young people who are worried that they will not achieve anything without going to college. Only 18% of small business owners have a master's degree, while 4% achieved a doctorate. The richest 10% of Americans now own 89% of all U.S. stocks held by households, a record highlighting the role of the stock market in increasing wealth inequality.
Do you have any confidential news? We want to hear from you. Get this delivered to your inbox and learn more about our products and services. It does not include all assets that contribute to total equity, including investment accounts or tangible assets, such as personal or commercial property. In a survey conducted by Guidant Financial on the most popular industries for small businesses, 12% of respondents were in the food and restaurant business.
According to entrepreneurship data, 32% of small business owners have only taken a couple of business classes, while the majority (46%) have no business education whatsoever. In fact, a large number of business owners rely on loans to keep the company operational and often have to use their personal funds to tie up some loose ends. Most of the people included in the Forbes 400 list did not inherit the family business, but instead made their own fortune. I know a lot of rich people who technically, and for tax purposes, are directors of corporations or companies that don't really engage in trading of any kind on a regular basis.
However, when it comes to business-related education, 17% have a bachelor's degree, 18% have a master's degree, and 4% have a doctorate in business. Even among companies that survive four years, owning a small business alone does not suggest a narrowing of the liquid wealth gap between the typical black and white small business owner. Figure 1 shows the median liquid wealth in each of the first four years of business, with the condition that the company survives at least four years, including the average liquid wealth of black, latino and white small business owners. The overwhelming majority of small business owners aren't millionaires, and the vast majority of millionaires don't make their millions from small businesses.
For the first time, Forbes thoroughly analyzed how many members of Forbes 400 founded their own businesses and at what age they did so. Although the typical small business owner in year 4 has more liquid wealth than the typical small business owner in year 1, the magnitude of the difference does not suggest a substantial accumulation of wealth. Entrepreneurship has a positive effect on the national economy, as more than half of net new jobs come from these small businesses. If business ownership did indeed close the wealth gaps, then you would expect to see that part of the liquid wealth gap between the typical black, Latino and white small business owner dissipates as the company matures.