Black Businesses Grew at 3 Times the National Rate

A lack of capital and connections still hampers success for African-American entrepreneurs.

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Between 2002 and 2007, the number of black-owned businesses in the United States increased by 61 percent to 1.9 million. It was a growth rate more than triple the 18 percent rate for all businesses. Black-owned firms also saw their receipts rise 55 percent to $137.5 billion during those years.

It is a great snapshot provided by the U.S. Census Bureau, but there are shadows. Every five years, the Survey of Business Owners takes the entrepreneurial pulse of black-owned businesses. The hitch is that the data were collected in 2007, before the Great Recession hit millions of U.S. businesses, workers and consumers, and doesn’t reflect reality for many of those groups today.

Marc Morial, the president and CEO of the National Urban League, addressed that issue when speaking about the survey’s release. He said that company building has been affected by the downturn, but that necessity has always driven black entrepreneurship. He added that the difficulty for most black would-be entrepreneurs is gaining access to capital and connections.

There are also disparities between black and nonblack businesses when it comes to average receipts and number of employees. The survey reports that only 12.7 percent of African-American companies have annual revenues of more than $50,000, and 68 percent have four or fewer employees.

Steady Growth for 20 Years

The results of the 2007 survey are no anomaly, however. Since 1987 the number of black-owned businesses and the total revenue they receive has been soaring. To paraphrase Esther Phillips, who sang about positive changes, what a difference 20 years makes. In 1987 there were 424,165 black-owned businesses that took in revenue of $19.8 billion, according to the Census Bureau. During the next 20 years, the number of black businesses grew 353 percent to 1,921,881, and their revenue soared 594 percent from $19.8 billion to $137.5 billion.

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