Diverse-Owned Businesses Eye Growth in 2023

Small business confidence heading into 2023

Bank of America’s 2022 Women & Minority Business Owner Spotlight, a survey of 1,308 US small business owners fielded by Ipsos in July and August 2022, found that 66% expected revenue to increase over the following twelve months — a seven-year high — and 52% planned to expand, up from 37% that spring. Among women business owners the figures were 63% and 47%, and 77% of owners overall said their business was equipped to survive a recession.

That confidence extended to diverse-owned businesses, which make up a large share of the small business population and often supply niche capabilities that larger vendors do not carry.

Momentum and growth

“In fact, 63% of our women business owners are telling us that they expect revenues to increase over the course of the next 12 months. And that includes our minority business owners,” said Carol Lee Mitchell, senior vice president at Bank of America.

That expectation builds on a longer trend. JP Morgan reports that Black women own nearly 2.7 million businesses across the United States, making them the fastest-growing group of entrepreneurs nationwide, and that businesses owned by Black women grew 50% between 2014 and 2019 — the highest growth rate of any female demographic.

Inflation response

Owners were not ignoring the conditions around them. 88% said inflation was affecting their business, the same share as in spring 2022, and they were responding by raising prices (57%), reevaluating cash flow and spending (41%), and reducing business costs (33%). Prices went up by more than 9% on average. Against labor shortages, 49% of owners were working more hours themselves and 31% had raised the wages they offer staff.

Recession-proofing through community ties

One reliable way to trade through hard conditions is closer community ties. The same Bank of America spotlight found that 87% of Black business owners are committed to driving social change through their business, and those with pledges to social causes report increased sales (61%), deepened ties to the community (40%), and a larger customer base (34%). Among Hispanic-Latino business owners, 88% give back to their communities — by donating products or services (54%), volunteering (46%), sponsoring local events and teams (36%), and sourcing local supplies (33%).

A strategic sourcing approach that incorporates diverse suppliers, and community programs that align to corporate mission, is a proven way to drive growth whatever the year brings.

Why buyer readiness matters

Confidence from suppliers only converts into contracts if buyers are ready to work with them. Enterprise buyers that operationalize supplier diversity — certification checking, Tier 2 reporting, and spend classification inside every sourcing event — are better positioned to partner with that growth.

Three practices separate buyers that capture this growth from buyers that miss it:

• Certification checking. Verifying a supplier’s diversity certification at the point of qualification, not after the fact, keeps the qualified bidder pool accurate and defensible.
• Tier 2 reporting. Tracking diverse spend that flows through prime contractors, not just direct suppliers, gives a fuller picture of where diverse dollars actually go.
• Spend classification. Tagging spend by diversity category as it happens, rather than reconciling it at year-end, turns supplier diversity from a compliance report into a sourcing input.

Buyers that build these three practices into every RFx event, rather than treating them as an annual audit, are the ones positioned to benefit when diverse suppliers are ready to grow.