News / USA

US Black-Owned Businesses On The Rise

Pierre and Jamyla Bennu pose in their basement production facility in their home in Baltimore (File)
Pierre and Jamyla Bennu pose in their basement production facility in their home in Baltimore (File)
Alex Villarreal

The U.S. Census Bureau says blacks owned nearly 2 million businesses in 2007, the year of the last survey of business owners. That was up more than 60 percent from the previous survey in 2002. The jump was more than triple the growth rate for all U.S. businesses, and the highest rate of increase of any minority.

Marc Morial is the head of the civil rights group the National Urban League, which works to empower historically underserved communities. Discussing the data in a conference call Tuesday, he said federal, state and local policy makers should look to this growth in black companies when planning how to help American communities emerge from the recession.

"The fact that there's an increase in business ownership, [and] increasing interest in entrepreneurship means that by focusing attention on helping black-owned businesses to grow, you can create jobs and economic growth in your communities," Morial said.

The survey defines black-owned businesses as firms in which blacks own 51 percent or more of the stock or equity.

In addition to the growing numbers, the Census Bureau's deputy director, Thomas Mesenbourg, said black-owned companies also saw an increase in sales.

"Black-owned businesses as a whole had a 55 percent increase in receipts and revenue over the five-year period, compared to 34 percent for all U.S. firms," said Mesenbourg.

But a huge gap remains between the gross receipts of black-owned businesses and those of white-owned businesses. And other racial disparities persist.

Many black-owned companies remain small. More than 94 percent of black-owned firms in 2007 did not have paid employees.

Ivonne Cunarro, with the U.S. Commerce Department's Minority Business Development Agency, says there also is still an entrepreneurial parity gap between African-Americans' growing share of the population and their ownership of just 7 percent of U.S. businesses. She says the true economic potential of the African-American business community is still unrealized.

"If African-American owned firms would have reached entrepreneurial parity with their share of the adult population in 2007, we would have had more firms,” Cunarro said. “There would have been 3.3 million firms, instead of 1.9 million. These firms would have generated $1.4 trillion in gross receipts instead of $138 billion, and they would have created 7.1 million jobs instead of 921,000."

Studies suggest black business owners have less family business experience and lower levels of education and startup capital than white businesses owners, which contributes to their companies' lower performance.

A 2005 study found black-owned businesses also are more strongly represented in less-successful industries, like personal services.

More black-owned businesses in 2007 were involved in health care and social assistance than any other field, followed closely by maintenance and personal services.

Although blacks were the minority with the largest growth in U.S. business ownership from 2002 to 2007, there were fewer black-owned firms than Hispanic-owned firms in 2007. Hispanic firms also generated higher sales.

Figures show that sales by Hispanic-owned firms increased to $345 billion in 2007, more than double the sales of black-owned businesses.

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