Statistics and Trends for Black-Owned Businesses in 2021
1. In the United States, there are more than 2 million Black-owned companies.
2. World Wide Technology is the country’s biggest Black-owned company.
3. In 2012, black-owned companies produced $150.2 billion in gross sales.
4. Health care is the most common industry for Black-owned companies.
5. The city with the most Black-owned companies in the nation is New York.
6. The city with the greatest proportion of Black-owned companies is Washington, D.C.
7. 70% of Black company owners are satisfied with their operations.
8. During the COVID-19 epidemic, 58 percent of Black business owners stated their company’s financial condition is “at danger” or “distressed.”
9. Black women make up just 4% of all business founders.
10. Women account for 35% of Black business owners.
11. Black women’s companies earn substantially less than other women’s enterprises.
12. The desire to be their own boss motivates 34% of Black business entrepreneurs to start their own company.
13. 44% of Black entrepreneurs start their businesses with their own money.
14. Approximately 920,000 individuals are employed by black-owned companies.
15. Compared to a national average of 12 percent, just 7% of Black-owned employer businesses had six to ten workers.
16. Black business owners get less funding, less often, and at higher rates than white company owners.
17. 37.9% of Black company owners claim they have been “discouraged” from seeking financing.
18. The average amount of money needed to start a business by a Black entrepreneur is $35,205.
19. Only 1% of Black entrepreneurs get a company loan in their first year.
20. Only 18 percent of Black company owners say loan officers have helped them complete business loan applications.
In the United States, economic inequality is a major problem. Small companies may not get the same tax advantages and government bailouts as large enterprises, although inequality is not exclusively based on the size of the company. When compared to their white-owned peers, black-owned companies are at a significant disadvantage.
Aside from the usual difficulties of operating a company, Black entrepreneurs face a significant financing disparity between white and black-owned companies. It’s essential to remember that injustice extends well beyond the judicial system as political groups like Black Lives Matter gather traction throughout the nation. Historically, the banking system has discriminated against and persecuted Black company owners. As a result, many activists have urged people to support Black-owned companies as a means of bringing about good change in the nation.
It’s critical to understand the realities regarding Black-owned companies as people become more conscious of economic and social injustice. These Black business statistics demonstrate the extent of disparity while also highlighting the optimism that exists in the Black business sector.
Statistics on Black-Owned Businesses in General
In the United States, there are more than 2 million Black-owned companies
There are more than two million Black-owned companies in America, according to the most current available Census statistics. 124,000 of them are classified as “employer businesses,” meaning they employ people in addition to the owner
World Wide Technology is the country’s biggest Black-owned company
World Wide Technology, a global technology consulting organization, is the biggest Black-owned company, with sales of more than $2 billion in 2016.
In 2012, black-owned companies produced $150.2 billion in total sales
According to the Minority Business Development Agency, those two million businesses produced more than $150 billion in gross sales, accounting for less than 1% of the nation’s total gross revenue of more than $2 trillion
Health care is the most favored industry for Black-owned companies
Health care is the most prevalent kind of Black-owned company, accounting for 32 percent of all Black-owned companies. Repair and maintenance, personal and laundry services, advertising companies, and car dealerships are all prominent sectors
The city of New York boasts the most Black-owned companies in the nation
According to a research that looked at the number of black-owned companies in all 50 states and the District of Columbia, New York had the highest, with 204,093. Georgia is ranked second, Florida is third, and Texas is fourth on the list.
The number of Black-owned companies in Washington, D.C. is the highest in the nation
While New York has the most Black-owned companies, the research found that 28 percent of businesses in Washington, D.C. are owned by African-Americans, making it the city with the greatest proportion of Black-owned businesses in the nation. Georgia is in second place with 20%, while Maryland is in third place with 19%.
Seventy percent of Black company owners are satisfied with their operation
According to Guidant Financial study, a large majority of Black business owners, 70%, are satisfied with their company’s performance and effect on their life.
During the COVID-19 epidemic, 58 percent of Black business owners stated their company’s financial condition was “at danger” or “distressed.”
Despite the fact that most Black business owners are pleased, the COVID-19 epidemic has had a major effect on the health of their companies. While 58 percent of Black business owners think their company is in danger, just 27 percent of white business owners agree.
Women of Color in Business
Black women make up less than 4% of all company founders
The number of companies created by Black women more than doubled between 2016 and 2018, according to digitalundivided’s Project Diane 2018 study, The State of Black Women Founders. However, it more than doubled from less than 2% to less than 4%. That’s some improvement, but it’s not a lot. California and New York were home to almost half of all Black women-led businesses.
Women account for 10.35% of Black business owners
Despite the fact that Black women have a modest number of startups, they are much more prevalent in the small company sector. Women own 35 percent of Black-owned companies, compared to just 27 percent of female-owned enterprises of other races.
Black women’s companies earn substantially less than other women’s enterprises
Despite the fact that Black women make up a large percentage of company owners, they earn much less money than other entrepreneurs. According to one research, Black women-owned companies generated $24,000 in net income on average, compared to $142,900 for all women-owned enterprises. That is a huge and worrisome chasm.
What Are the Steps to Starting a Black-Owned Business?
34% of Black entrepreneurs start their companies because they want to be their own bosses
Thirty-four percent of Black business owners said they began their company because they were “ready to be my own boss.” “Desire to follow my own passion” (29 percent), “dissatisfaction with corporate America” (13 percent), and “the opportunity presented itself” were other popular responses (10 percent ).
Cash is used by 13.44% of Black small company entrepreneurs to start their firm
More Black small company entrepreneurs than the typical small business owner utilize their own money to finance their companies. Only 37% of all small company entrepreneurs fund their enterprise with their own money.
How Many Individuals Are Employed by Black-Owned Companies?
About 920,000 people are employed by black-owned businesses
Only around 125,000 of America’s two million Black-owned companies employ people. More than 920,000 people are employed by these companies, with a total yearly payroll of $23.9 billion.
Compared to a national average of 12 percent, just 7% of Black-owned employer businesses had six to ten workers
Employer businesses owned by African-Americans also have fewer workers than the national average. According to American Express study, 38 percent of small businesses have two to five workers, while just 7% have six to ten. What about the overall averages? Fourteen percent employ two to five individuals, while twelve percent employ six to ten.
Issues Facing Black-Owned Businesses
Black business owners get less business finance, less often, and at higher interest rates than white company owners
The disparity in racial financing is quite substantial. According to the Federal Reserve, 80.2 percent of white company owners get at least a portion of the financing they need from a bank. Only 66.4 percent of Black, indigenous, and people of color (BIPOC) company owners can claim the same. When BIPOC-owned companies do get financing, it is often for $30,000 less than similar white-owned enterprises, with interest rates 1.4 percent higher.
37.9% of Black company owners believe they are “discouraged” from seeking financing
Many Black company owners are hesitant to seek for loans because they think they will be turned down even if they do. Only 12.7 percent of white company owners share this sentiment.
The average amount of money needed to start a business for a Black entrepreneur is $35,205
White entrepreneurs, on the other hand, report an average of $106,720 in starting financing. For Black entrepreneurs, the margin for error is razor-thin.
Only 1% of Black entrepreneurs get a company loan in their first year
In comparison, just 7% of white-owned businesses get business loans in their first year. Other first-year funding figures include:
Credit cards are used by 30% of white company owners and 15% of black business owners.
Personal loans are taken out by 18% of white business owners and 14% of black company owners.
Family loans are taken out by 9% of white company owners and 14% of black business owners.
In their first year, black company owners are much more likely to seek financial assistance from their family and community than from a financial institution.
Only 18 percent of Black company owners say loan officers help them complete applications
It’s difficult to start a company and then obtain the funding you need to keep it going or expand it. As a result, it’s a problem that 59 percent of white company owners say they get assistance from loan officers, while just around one-fifth of black business owners say they do.
When we look at the data on Black-owned companies in the United States, we can see that they are at a significant disadvantage when compared to their white-owned counterparts. They get loans from financial institutions less often, and when they do, it’s usually for smaller sums with higher interest rates. This may be one of the reasons why Black-owned companies are smaller and employ fewer people than white-owned enterprises.
Despite the dismal news about the racial financing divide, there are indications that the Black business sector is growing, especially when looking at the success of Black women entrepreneurs.