Number of Black-Owned Businesses Grow, But Still Lags Behind Growth of Other Groups

0
11022

Black business (1)

A newly released report revealed that African-Americans still lag behind other groups when it comes to business ownership. However, the gap is slowly but surely narrowing.

According to a recent analysis by the U.S. Census Bureau, women and minorities consistently make up a disproportionately low share of U.S. business owners. For instance, Black Americans account for roughly 12 percent of the population, yet own just 3.3 percent of businesses less than two years old.

The numbers were even more dismal in 2014 when the annual census survey reported that Black-owned businesses made up just 2.1 percent of the nation’s companies with at least one employee. According to the Wall Street Journal, the majority of those Black-owned firms were founded after the 2008 recession.

The publication points out that the survey only considered businesses with paid employees, thus omitting those who are self-employed.

The 2014 Census study, which surveyed around 5.2 million business, also found that white-owned firms raked in twice the average number of sales as minority-owned and female-owned businesses. Now, white-owned firms account for 81 percent of U.S. businesses, with Asian and Hispanic-owned firms coming in at 9.7 and 5.8 percent, respectively.

“Black businesses, even though they have been growing, have lagged behind the growth of other groups,” said Thomas Boston, a professor of economics and international affairs at Georgia Institute of Technology.

According to the Census data, African-Americans also own less than 10 percent of businesses that could be categorized in each of the top 50 metropolitan cities. For example, Memphis, whose Black population is roughly 46 percent, boasted the highest share of Black-owned firms at 8 percent.

African-American businesses tend to be a bit smaller than others and accounted for just 1 percent of total sales. According to the report, sales at Black-owned firms averaged $915,000, which is way below the $2.38 million sales average of white-owned firms.

Boston attributed this deficit to the fact that African-Americans usually start out with less money and were hit particularly hard by the recession and financial crisis. Before then, Black-owned businesses had increased a whopping 60 percent between 2002 and 2007, according to Fortune.

The Wall Street Journal also states that many Black business owners are vulnerable to cutbacks in government spending and affirmative action programs because they’re too focused on doing business in the private sector.

Lack of business education could also play a role.

“Entrepreneurship is just not pushed in our community,” said Malcolm Crawford, founder of a minority business association in Chicago. “We teach our children to go to college so they can get a good job. We don’t have any place for them to come back and use what they learned at college inside the family business.”

Comments: Get Heard