- There are currently 2.58 million Black-owned businesses in the US, per top-tier media outlets (e.g., Forbes), reputable business associations (e.g., Association for Enterprise Opportunity), experts in black businesses (e.g., Black Demographics, BLNDED Media) and established publications (e.g., New Pittsburgh Courier).
- While other credible outlets (e.g., Investopedia) regularly report much smaller numbers of Black-owned businesses in the country, a deeper look at the metadata leveraged in these reports indicates that such finding either misrepresent reputable statistics or reflect only sub-populations (e.g., employer firms) of Black-owned companies in the US.
- Considering that there are 32.5 million businesses in the US, Black-owned companies represent only 7.9% of these organizations.
- Moreover, Black-owned businesses account for only 0.7% of US GDP, given that these minority-owned companies produce approximately $150 billion in annual revenue towards the country’s $20.54 trillion in annual GDP.
General Background on Black-Owned Businesses in the US
- The “vast majority” of Black-owned businesses in the US are sole proprietorships or small businesses, according to Forbes, the Association for Enterprise Opportunity, Black Demographics, and New Pittsburgh Courier.
- In particular, only 107,000 or 4% of Black-owned businesses have employees.
- However, Forbes notes that an “increasing number” of Black-owned companies are developing a “regional reach and national ambitions,” while the New Pittsburgh Courier adds that some Black-owned firms employ close to 1 million employees.
- Meanwhile, Black-owned companies tend to be in the service industry, such as care and comfort (35%), groundworks (15%) and workflow (10%).
- Additionally, Black-owned firms are most often located in the Southern US, particularly in Georgia, Florida and Texas.
Comparison with All Businesses in the US
- Black-owned businesses in the US have “lagged behind” other firms in the country for decades, according to the Association for Enterprise Opportunity (AEO).
- Perhaps most notably, African Americans represent 13.4% of the US population, but approximately half of that share in terms of business ownership.
- Additionally, Black-owned companies have fewer employees on average (9 employees) than nonminority-owned firms (11 employees).
- Moreover, the average revenue of Black-owned businesses in the US tends to be lower, in part because of their concentration in “industries where revenue is low and sometimes much lower” than those led by nonminority-owned companies.
- Geographic location is also likely a factor in the lower revenue of Black-owned companies, given that one-third of these firms are located in the Southern US, which has some of the “highest poverty rates in the country.“