Generational wealth is a hot topic these days. From investing in real estate, the stock market and cryptocurrency, there are many ways to stack your coins and create a path for future generations. But how are you supposed to create wealth, increase your net worth and put more money in the bank?
Entrepreneurship just might be the way you can create generational wealth in your lifetime and beyond.
The power of entrepreneurship
As a business coach and former 9-5er, I’ve helped women of color create unlimited income on their own terms. I’ve walked into meeting rooms where I’ve been the only woman who looked like me and I’ve coached women who have been the first in their families to start their own businesses.
I’ve felt a deeper impact after starting my business and coaching other women of color to do the same. I saw my clients grow their bank accounts and sense of purpose while providing more stability for their families. Many of my clients have dreams of hiring family members and creating legacies for their children. This is all possible through entrepreneurship.
I believe that all women can benefit from starting their own businesses. Entrepreneurship creates resilience, strength and offers a lifestyle of flexibility and stability. In a world often plagued with racism, sexism and discrimination, entrepreneurship can be especially liberating for women of color. Building your own business is also one of the keys to building wealth for future generations.
My business started as a “side hustle,” working in my off-hours and balancing motherhood with my ambitions. My goal was simple, to make $2,000 extra a month to help with my daughter’s after-school activities and to have a little play money.
I also felt that adding another income stream was a smart move to grow more wealth within our family. I remember seeing the money that women who looked like me were making in their businesses and how they used that income to invest, save and pave the way for their families.
Now, I plan to reinvest profit from my business into stocks and have a long-term plan to add real estate as an additional income stream once my children are in elementary school.
Barriers to generational wealth for WOC
I came from a startup/corporate setting where the only people making multiple six figures and accumulating real wealth looked nothing like me.
The truth is that traditional workplace settings aren’t built for women of color. The cost of climbing the corporate ladder and pressure to assimilate can lead to burnout and workplace-inflicted trauma. We’re often faced with microaggressions and gaslighting that wear on our mental health and halt our ability to move up in the company.
Talkspace describes racial trauma in the workplace as micro and macroaggressions that “can happen over email; they can be nonverbal or verbal; they can manifest in the form of harassment, [and] a lack of career advancement opportunities, such as promotions.”
Fewer promotions and pay increases mean less generational wealth. And we haven’t even mentioned the pay gap for Black and Brown women…
Historically, there have been many barriers to generational wealth for women of color, specifically Black women. According to the Washington Post, “The typical black family has just 1/10th the wealth of the typical white one.”
From slavery to redlining and loan denial, the US has upheld a history of institutionalized racism that has prevented Black and Brown families from owning homes and accumulating wealth. The result of these systems has meant fewer opportunities for Black and Brown people.
While the system of white supremacy and racism has created barriers for BIPOC, there are glimmers of hope in entrepreneurship. The average millionaire has seven streams of income, and more women of color are starting their own businesses than ever.
According to Inc.com, “Minority women control 44 percent of women-owned businesses in the United States.” The rate at which Black and Hispanic women opened their businesses grew 518% and 452% in 2019. This means there’s room for more economic growth and a chance to pass down wealth to future generations.
What entrepreneurship can mean for WOC
Put money back into our communities
When women and femmes of color start our own businesses, we have an opportunity to put our dollars back into our community and support other small women-owned businesses. The dollar is powerful, and it becomes even more personal when we support others like ourselves.
Even if you don’t have children of your own, entrepreneurship helps build your cash reserve and puts more dollars back into communities that need aid.
More modeling of alternative careers
We’re seeing a shift in the variety of career paths available, but entrepreneurship has become more popular due to the flexibility of owning a business. Women of color are now building more wealth because there’s a growing number of visible successful business owners who share similar backgrounds.
Previously, working a 9-5 job until the end of time was the only career path that could offer stability. But now, there are alternative careers that add more flexibility and time with family.
Multiple streams of income
Adding a side hustle or alternative stream of income can open the door to investment opportunities and build wealth at an accelerated rate. From real estate to coaching, there are so many ways to make additional income on limited hours. It can be tricky to create extra income in a 9-5 that caps earning potential. With entrepreneurship, there’s no ceiling.
Most importantly, generational wealth through entrepreneurship offers a path to a more equitable future. A life on one’s own terms. The flexibility to work when you want and retire when you’re ready. You can build a business, invest a portion of the profit and pass down a successful business to your family.
Generational wealth paves the way for the next generation and creates an untouchable legacy. I can’t wait to tell my children, “Mommy started this business for you, and you can live an easier life than I could have ever imagined.”
Simone McNish is a business coach and DEI Consultant. She works with moms and women of color on running profitable and sustainable businesses. As a DEI Consultant, she helps small businesses and non-profit organizations create more equitable and impactful workplaces. Simone is a mom of 2 and an avid reality TV lover.