JPMorgan study: Minority small businesses fare worse than white counterparts via YahooFinance
Small businesses located in black and Hispanic communities are less profitable, and have less liquidity than comparable establishments in white neighborhoods, according to a new report from the JPMorgan Chase Institute.
Chris Wheat, the study’s author and the institute’s director of research, told Yahoo Finance that it was surprising that so many small businesses had managed to achieve profitability — especially with “relatively small” cash buffers. What’s more, he said, liquidity figures are “consistently low.” “In over 88 percent of majority black or Hispanic communities, the median profit margin is 15 percent or less,” the research found. “Only 35 percent of majority White communities have median profit margins below this threshold.”
Wheat said the reasons why aren’t clear. However, he underscored minority business owners have the same “exit” rates as those in white neighborhoods, meaning they close at the same frequency as small businesses with fewer financial challenges. “A lot of small businesses hire locally,” Wheat explained. And small businesses also spend locally, which contributes to local economies. But how to improve the financial health of small businesses that might be struggling?
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