AFRICANGLOBE – The ideal American prototype is someone born to modest circumstances who develops a significant and profitable business. Over the years a number of both public and private institutions have been developed to stimulate business growth. Private enterprise has become the nation’s secular religion.
It is indeed heroic to go into business. According to the Small Business Administration, the risk is substantial. Only half of new small businesses survive for five years, and only a third make it to their 10th birthday. When a business fails, its proprietor usually has to cope with a severe financial loss. Despite the risk, there is still a growing interest among Blacks in becoming entrepreneurs.
According to the U.S. Census Bureau, there has been a huge increase in the number of Black-owned businesses from 2002 to 2007. In fact, the increase of 60.5 percent to 1.9 million was greater than three times the rate of growth for the nation, which was only 18.0 percent. As one might expect, the revenues of black-owned businesses grew during this period by 55.1 percent, reaching $137.5 billion.
While the size of the consolidated revenue of Black businesses might appear to be impressive, it does not compare favorably with the nation’s mega-businesses. For example Walmart, with revenue of $476.3 billion, is 3.5 times bigger than all Black businesses combined. Of the 1.9 million Black-owned businesses, only 14,500 have revenues greater than $1 million per year. This group employed 565,000 workers.
It would be a mistake to conclude that Blacks are capable of operating only “Ma and Pa” businesses. Over the years Blacks have been very inventive. Their products have become part of the mainstream business economy. In his book Eight Black American Inventors, Robert Hayden profiles for younger readers the lives of three early inventors from the Boston area:
- Lewis Temple (1800-1854), a blacksmith living in New Bedford, designed a whaling harpoon that revolutionized the whaling industry.
- Jan E. Matzeliger (1852-1889), a resident of Lynn, designed and patented shoe-making machinery that drove production for United Shoe Machinery Company, which later became known as USM.
- Lewis H. Latimer (1848-1928), reared in Boston, invented the light bulb with carbon filaments as an associate of Thomas Edison. He held numerous patents.
Other inventions by Blacks profiled in Hayden’s book include automatic traffic lights, truck refrigeration units, sugar refinery equipment, a type of gas mask, and automatic lubrication devices for machinery. There undoubtedly are many more inventions which could not be secured by patents. For example, a Black Boston inventor reportedly created the first air brake, but lacked the finances to develop the product so ended up selling his rights. Also, enslaved Blacks lacked legal authority to obtain a patent.
Surprisingly, most of the 1.9 million Black-owned businesses in the Census Bureau report were operated by single entrepreneurs alone. Only 106,824 of the firms had employees. There are two major reasons for this. The process of invention is a solitary function. Also, the difficulty of finding investment capital is an impediment to employing the staff needed for growth.
We will assist private enterprise acolytes to become familiar with the culture of capitalism. The racial wealth gap in America will never diminish significantly without a major increase in the growth of black ownership in businesses.
By: Melvin B. Miller