Black-owned businesses grow in number, not size

By Julie Wernau
Posted Feb. 8 at 4:21 p.m.

While the number of black-owned businesses are on the rise, 94 percent of them have no paid employees, according to data from the U.S. Census Bureau’s Survey of Business owners released Tuesday.

At the same time, 87 percent of those businesses pull in less than $50,000 per year in revenue.

The conductors of the survey, taken in 2007, said they will not know how many of those businesses faired in the recession until the next survey in 2012 but expect that the numbers will show that bankruptcy affected many firms.

Marc H. Morial, president and CEO of the National Urban League, said the findings indicate that the African-American business community is still struggling to meet its potential.

“What I hope this report says loudly and clearly to the investor community out there is that you are missing a market here in the United States,” he said. “There’s an emerging market in the United States. It’s the nation’s black-owned businesses. It’s the nation’s Hispanic-owned businesses. It’s the nation’s Native American-owned businesses. It’s the nation’s Asian American-owned businesses.”

The number of black-owned businesses is growing at triple the national rate (from 2002 to 2007, black-owned firms increased by 60.5 percent, to 1.9 million, according to the study). In the Chicago metropolitan statistical area, black-owned businesses rose 57.8 percent, to 101,586, in 2007, and sales by those businesses increased 55.1 percent, to $137.5 billion. About half were in the repair, maintenance, personal and laundry services sectors, while the other half were in health care and social assistance.

Access to capital continues to be a hurdle for many black-owned businesses, according to Ivonne Cunarro, chief of the Knowledge Management Unit of the Minority Business Development Agency. An agency study, she said, found that African-American-owned businesses tend to use credit cards to start or acquire businesses far more than their non-minority counterparts.

“One of the sources of capital that they need to look at is to look beyond their traditional commercial banks and look for alternatives sources of capital,” she said.

Other findings of the report:

– Of the 1,921,881 black-owned businesses in the U.S., 1,815,057 had no paid employees. Paid employment among black-owned firms grew 22 percent from 754,000 workers to 921,000 workers from the previous period, compared to less than 1 percent growth for non-minority firms.

– Approximately 7.1 percent of all U.S. businesses were black-owned in 2007, compared to 5.2 percent in 2002.

– 87 percent of black-owned firm pulls in less than $50,000 per year in revenue, compared to 65 percent for all U.S. firms.

– Black-owned firms with receipts of $1 million or more represented 1 percent of all black-owned businesses but generated 57 percent of revenue and 61 percent of all paid employment.

See the Survey of Business owners.

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