The Impact of Black-Owned Small Businesses in the U.S.
As organizations and companies across the country find ways to honor Black History Month in February, some look to the importance and impact of black-owned businesses in the U.S.
According to the U.S. Census Bureau, there were an estimated 134,567 Black- or African American-owned businesses in 2021, with $133.7 billion in annual receipts.
The businesses account for 1.3 million employees and an estimated $40.5 billion in annual payroll, the Census Bureau says. The largest sector was in the Health Care and Social Assistance industries, in which about 29.5% (39,705) of these businesses operate.
"By 2044, the nation's prosperity will rely even more on minorities, the fastest growing segment of the population," says the U.S. Department of Commerce's Minority Business Development Agency in a press release.
“Entrepreneurship is a sure pathway to wealth creation and a thriving national economy,” the MBDA says. Yet, Black-owned entrepreneurs don't enjoy the same access as their non-white counterparts in areas such as access to capital and growth opportunities, undercutting the potential contributions and impact black-owned businesses can have.
"Today, U.S. minority business enterprises (MBEs) represent 29% of all firms but only 11% have paid employees," the agency press release says. "If MBEs were to obtain entrepreneurial parity, the U.S. economy would realize 13 million more jobs."
Between 2019 and 2020, the share of new entrepreneurs who were Black increased slightly, and the percentage who were Asian, Latino, and white decreased minimally, according to the Kauffman Foundation's "Who is the Entrepreneur? The Changing Diversity of New Entrepreneurs in the United States, 1996-2020."
The overall trend since 1996 has been a decline in the share of new entrepreneurs who are white, and an increase in the percentage who are Asian, Black, and Latino, the report said.
Import of Ecosystems That Support Black, Women Entrepreneurs
Regardless of its size, new businesses instill new ideas and efficiencies, and potentially new jobs to the market, says Kauffman Foundation President and CEO Wendy Guillies in a recent Inc. magazine article.
And healthy entrepreneurship ecosystems lead to wealth creation, job growth, and overall healthy communities, she writes.
"Even though our economy and our news headlines seem to be dominated by booming Silicon Valley tech-based startups on the road to IPO and unicorn status, we currently don't have enough of them, especially those started by female entrepreneurs and founders of color."
Research at the Kauffman Foundation has found that, on average, companies that are more than ten years old trim about as many jobs as there are added. This could be the reason to the constant struggle faced in areas relying on older, existing industries, Guillies writes.
"Nearly all net job growth -- meaning more jobs added than lost -- comes from younger companies in the startup or early growth phases."
To achieve equity in entrepreneurship and create wealth, Guillies recommends breaking down the “historic barriers that keep underserved communities around the country.” In response, she says, an almost 200 organization-strong coalition has partnered to work together in creating the policy prescriptions necessary to provide access to opportunity, funding, knowledge, and support necessary to enable new companies to thrive.
Be Informed: Look for Niche Content, Celebrations
From projects and events to content, look for how big brands and other companies set out to highlight black entrepreneurs and their businesses this month and Black History Month events and themes in local communities.
Apple was among the first corporations to announce its Black History Month focus, with various exclusive content and curated collections intended to "amplify Black voices."
The new content includes special episodes of "The Message" that will focus on Black creators' contributions to culture and the importance of health and wellness in the community (the 2022 theme of Black History Month).
The company announced there will also be new workouts that honor Black History Month on Apple Fitness+ and new podcasts from Black creators about health, well-being, and culture.