Minority- and Women-Owned Businesses Skyrocket
As part of its ongoing survey of the nation's business owners, the Census Bureau recently released statistics showing that the total number of black-owned businesses grew 45% between 1997 and 2002 -- more than four times the national average. During the same period, Hispanic-owned firms grew 31%, while women-owned firms shot up 20%. The report will be completed later this year.
The nation's 1.2 million black-owned businesses and 1.6 million Hispanic-owned businesses still account for just 12% of all U.S. firms, however. Women own 6.5 million businesses, according to the most recent data.
Although only preliminary numbers are available, the Census Bureau estimates that the number of Asian-owned businesses increased by roughly 24% between 1997 and 2002, and that businesses owned by Hawaiians and Pacific Islanders increased as much as 67%. Final reports on these groups will be released this month.
"A whole generation of minority people is retiring from government and corporate jobs, and they are looking to take their golden parachutes and start a business," said Ronald Langston, national director for the Commerce Department's Minority Business Development Agency. "They not only have the assets, but also the skills to compete in the marketplace."
The Census statistics show that many are succeeding. Minority-owned business receipts grew significantly between 1997 and 2002, with black-owned firms showing revenue gains of 25%. Hispanic-owned firms saw revenue grow 19%, while women-owned businesses grew 15%. By comparison, over the same five-year period, U.S. firms as a whole saw revenue jump 22%, reaching $22.6 trillion in 2002, while white-owned businesses saw increases of just 5%.
In a statement, Census Bureau Director Louis Kincannon called the statistics "encouraging," adding that the increase in both number of firms and revenue demonstrates that "these firms are among the fastest-growing segments of our economy."
The Census data also suggests that businesses owned by minorities and women skew smaller, for now. Ninety-two percent of black-owned businesses in 2002, and 86 percent of women-owned businesses have no employees, compared to a national average of about 75%.
"Minorities have a history of micro businesses," Langston said. "Smaller businesses, as well as certain industries, have fewer barriers to entry. Historically, you don't have a lot of minorities in high asset businesses."
Health care and social assistance, for example, were the most common industries for women- and black-owned businesses. A category referred to as "Other Services," which includes repair and maintenance, came in as the second-largest industry for women- and black-owned businesses, as well as the most common industry for Hispanics.
Nearly half of all black-owned businesses are located in five states: New York, California, Florida, Georgia, and Texas. New York and Georgia also boast two of the fastest growth rates for Hispanic-owned companies -- 57% and 56%, respectively -- and recorded among the fastest growth rates for women-owned businesses.
Los Angeles, New York, Chicago, and Houston top lists of high growth and ownership volume for black and Hispanic firms.
Harry C. Alford, president of the National Black Chamber of Commerce, said he is not surprised by the results. "They're large cities, historically diverse, and there is a strong black middle class in those areas," he said. "A lot of this goes back to the Civil Rights Act of 1964, and is the result of an educated and experienced black middle class emerging."
As such entrepreneurs continue to refine their business skills, Langston said he believes such growth will continue. "Diversity in population demographics is accelerating, and as minorities and immigrants become stakeholders in the economy, we're going to see sustained growth there."
And Alford said the success of this current generation of entrepreneurs will carry over to the next one. "Growth will continue because the children of these Baby Boomers will have even more opportunities than their parents did," and expects, "similar growth should continue for the next 10 to15 years."
"We're narrowing the gap," he said. "The glass is starting to fill."
However, Daryl Williams, director of minority entrepreneurship at the Kansas City, Mo.-based Kauffman Foundation, warned that attention should also be paid to the long-term success of such businesses. "People should be encouraged, but not blinded, by these numbers," he said.
"Startups have never been the problem," Williams added. "It is the ability to grow a business from a one-person consulting firm into a Fortune 500 company. There is not a groundswell of minority businesses ready to take that next step."