If small business owners are the economic engine of the U.S., minority business owners are increasingly providing the power. The number of Black-owned businesses rose a noteworthy 60.5% to 1.9 million from 2002 to 2007, more than triple the 18% rate for businesses established nationally, according to the U.S. Census Bureau’s Survey of Business Owners.
During the most recent period for which there is Census data, Black-owned businesses generated $137.5 billion in receipts, up 55.1% (the government defines Black-owned businesses as firms in which Blacks or African-American’s own 51% or more of the equity, interest or stock of the business.)
Where are these businesses?
New York, Georgia and Florida are the states with the largest concentration of Black-owned businesses, while New York City, Chicago, Houston and Detroit were the four cities with the largest concentration of the nation’s Black-owned businesses, the Census says.
However, of the 1.9 million Black-owned businesses, little more than 100,000 had paid employees. (And that was a 13% increase from 2002 figures). Just 14,000 of those businesses had receipts of $1 million or more.
With the largest concentration of Black-owned businesses in New York, Chicago, Houston and Detroit, inner-city and underserved communities with large minority populations are likely among the customer demographic. With only 14,000 of these businesses grossing $1 million or more, it’s fair to assume that the recent economic recession pushed these numbers down, possibly to dismal levels, for many business owners.
But help is out there, you just need to know where to look.
A growing list of organizations, agencies and online resources are dedicated to providing Black and minority business owners with more resources to be successfully self-employed.
A good place to start is any local chapter of the U.S. Department of Commerce’s Minority Business Development Agency, the National Black Chamber of Commerce, affiliate chapters of the National Urban League, or social media groups.
It doesn’t take more than a simple Google search to turn a minority-business owner’s attention to a site like Black Business Women Online, an online and social media organization dedicated to African-American women business owners. Even a search onLinkedIn(LNKD_) yielded many business-networking groups specifically for minority owners.
Here are a few examples of organizations that offer support for various aspects of business ownership, from securing loans to building a franchise and winning government contracts:
The SBA is stepping up initiatives to build awareness of its programs amongst underserved communities.
According to a blog post by Marie Johns, the SBA’s Deputy Administrator, the SBA teamed last week with the U.S. Black Chamber of Commerce to increase the participation of Black-owned small businesses in SBA programs, including loan programs, government contracting and its resource partner network, such as SCORE.
Banks and government agencies also have lending programs, specifically for Blacks and other minorities who are owners of companies past the start-up stage. Check this article on Business.com to get more resources to help your business grow.
Franchising amongst Blacks and minorities is rising. According to a December report by the International Franchise Association, minority ownership of franchised businesses rose from 6.2% in 2002 to 20.5% in 2007. The report cited the most recent U.S. Census data available.
Blacks and minorities were also more likely to run a franchised business as compared to a non-franchised business. Blacks owned 4.9% of all franchises, compared to Asians who owned 10.4% of all franchises and Hispanics who owned 5.2%, the report said.
Franchisors in the IFA’s MinorityFran program are actively looking to recruit minority prospects. Through the program, the franchises extend incentives to their prospects, including reductions in initial franchise fees, additional marketing support or incentives to establish brands in underserved communities that could provide tax credits to the franchisee, among other programs.
The IFA is also about to launch a “Meet the Mayors” program in three cities this year, kicking off in Burnsville, Minn. on Aug. 23. According to IFA spokesman Matt Haller, the program is focused on inner-city franchise development and will address topics such as:
Development issues including the permit process; How to effectively communicate with economic development officials;
New market expansion;
What it would take to establish an economic development fund; and
Access to capital.
“It’s all about accelerating franchising,” says Miriam Brewer, the IFA’s senior director of education and diversity.
American Express (AXP_) is trying to be a major resource for small business owners through its online community, OPEN Forum. The financial services company has particularly looked to be the expert resource when it comes to small-business government contracting.
A recent survey commissioned by the company on government contracting found that it took active African-American business owners 1.7 years to win their first federal contract, compared to the 1.3 years it took for the average small business contractors, even though the group is, on average, submitting more bids than small business contractors overall.
The effort is paying off, though. While small business contractors saw their overall success rate in prime contracting decline by 8% for the two-year period between 2008 and 2010, as compared to the 2007 to 2009 period, African American contractors’ success rate in prime contracting remained stable, the March survey found.
Jennefer Witter, owner of The Boreland Group, a public relations firm, praised her recent experience with learning more about government contracting through Amex OPEN. She was recently certified as a minority and women-owned businesses to increase her chances of winning government contracts.
Once she was certified, Witter says she attended a free seminar sponsored by Amex where she obtained “a huge amount of information on bettering my chances in gaining federal contracts as a woman and minority owned business.” She says she learned about the Amex group on LinkedIn.