There’s a silver lining in the dark cloud of the Great Recession. A new Census Bureau report reveals that from 2002 to 2007, the number of black-owned businesses in the United States increased by 60.5 percent to 1.9 million–more than triple the national rate.
The reasons for this are many, beginning with the long history of African-American entrepreneurship in response to poverty, high unemployment, and discrimination. Consider the case of Madam C.J. Walker. The daughter of slaves, in the early 1900s she turned her dream of financial independence into a hair care and cosmetics business that revolutionized the beauty products industry, created well-paying jobs, and made her a wealthy woman and philanthropist.
“I had to make my own living and my own opportunity, but I made it!” the trailblazing African-American businesswoman said. “Don’t sit down and wait for the opportunities to come. Get up and make them.”
Like Madam C.J. Walker, many African Americans may have turned to entrepreneurship in recent years because of high unemployment in our communities. The fact is, black unemployment never got back down to where it was before the 2001 recession. So in effect, we’re seeing entrepreneurship by necessity.
There’s also an economic independent streak, particularly among new generations. Building a business gives great satisfaction and cushions entrepreneurs from the shock of losing jobs because of economic down cycles.
New York State leads the country with more than 204,000 black-owned businesses, followed by Georgia and Florida. From 2002 to 2007, nearly 4 in 10 of these businesses operated in the health care and social assistance industries, as well as the repair, maintenance, and personal and laundry services sectors. The retail trade and health care and social assistance sectors accounted for 27.4 percent of black-owned business revenue.
The Census also found that in addition to an increase in the number of black-owned businesses, annual sales at these businesses increased by 55 percent to $137.5 billion.
“Black-owned businesses continued to be one of the fastest growing segments of our economy, showing rapid growth in both the number of businesses and total sales during this time period,” said Thomas Mesenbourg, the Census Bureau’s deputy director.
Despite this surge in African-American entrepreneurship, black businesses still make up only 7 percent of all companies, and they tend to be smaller than other businesses. Black-owned businesses are also often hampered in their revenue growth by a lack of capital, connections, and contracts.
On behalf of the National Urban League, I recently called on federal, state, and local governments to develop a “hyper-focus” on black- and minority-owned businesses. Every city, county, and state needs to have a plan that focuses on small and minority business. There’s a spirit of entrepreneurship out there that needs to be nurtured and energized.
I hope these new findings by the Census say loudly and clearly to the investment community that it’s missing an emerging market in the United States. If minority businesses are growing at a faster clip than overall businesses, imagine what the growth rate would be if those barriers were eliminated or lowered. We need investors to recognize that they’re missing an incredible opportunity.