The State of Black-Owned Businesses in 2024: Key Statistics and Trends
Black-owned businesses have faced immense challenges and adversity over the years, yet they continue showing resilience and making strides towards greater representation and success. However, significant gaps and inequality persist when comparing black-owned firms to white-owned ones.
This article will provide an in-depth data-driven look at the current state of black business ownership in America. We‘ll analyze the latest statistics, trends over time, geographic differences, contributing factors, and the outlook for the future.
As a tech geek and data analyst, I‘m passionate about highlighting the trends and disparities facing black entrepreneurs across the country. The data reveals systemic barriers but also tremendous potential waiting to be unleashed. Ensuring more equitable access to capital and resources can ignite innovation across all industries.
Snapshot: Key Figures on Black-Owned Businesses
There are over 2.6 million black-owned businesses in the United States as of 2021, employing over 1 million people [1]. This represents approximately 9% of all US businesses.
Between 2007-2012, the number of black-owned employer firms grew by 38.4%, outpacing the growth of white-owned employer firms [2].
As of 2022, black women represent 42% of new women-owned businesses being created [3].
In a 2022 survey, 46% of black business owners said they still face challenges with accessing capital and financing [4].
The average black-owned employer firm earns $72,500 in annual revenue, compared to over $1.6 million for the average white-owned employer firm [2].
!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}();
Steady Expansion in Number of Black-Owned Firms
From 2007 through 2021, the number of total black-owned firms in America has trended upwards significantly. As illustrated below, they increased from approximately 1.9 million to 2.6 million over that 15-year stretch—a 34.5% jump.
In comparison, between 2007-2012 specifically, all U.S. firms only grew by 2.3%. So black-owned companies expanded at an over 15x faster rate in that period [2].
!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}();
Additionally, the number of black-owned employer firms grew 38.4% from 2007-2012, again surpassing growth among white-owned employers [2]. These numbers showcase the accelerating influence of black-owned enterprises nationwide.
However, minority-owned firms still only represent approximately 11% of total US businesses as of 2022 [5]. So significant room remains for further expansion to properly reflect America‘s diverse population.
Industries and Location
Black-owned businesses span many industries but cluster around certain sectors like professional services, healthcare, retail, and personal services. For example, there are over 120,000 black-owned haircare businesses across the country [6].
Additionally, 30% of black-owned companies provided health care and social assistance services as of 2017. Other common fields include repair/maintenance, administrative services, waste management, and construction [7].
!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}();
Geographically, over 20% of America‘s 2.6 million black-owned businesses are concentrated in just two states: New York (204,000) and Georgia (144,000). Florida, California, and Texas round out the top 5 [6].
However, other states contain a higher share of black-owned firms as a percentage of their total business population. For instance, an impressive 28% of all businesses in Washington D.C. are black-owned [8]. The highest concentrations nationwide are found in:
- Washington D.C. (28%)
- Georgia (20%)
- Maryland (19%)
As a tech professional myself, I was intrigued to analyze the tech startup space more closely. Unfortunately, black women founders received less than 1% of total VC funding from 2009-2019 [9]. So similar funding disparities exist even in innovative tech.
Targeted investments into geographic regions and industries with proven black entrepreneurial talent can unlock major economic opportunities. Government incentives to support minority tech innovation hubs could also help level the playing field nationwide.
Capital and Financing: Core Barriers for Black Business Owners
Access to credit and capital to start and grow companies remains one of the most restrictive challenges limiting black business success. Let‘s analyze some troubling statistics:
46% of black entrepreneurs cited funding and financing as top business challenges in 2022 [4].
Only 1% obtained business loans in their crucial first year of operations, compared to 7% of white owners [10].
Banks are less helpful assisting black business owners complete their loan applications compared to white owners (18% vs 59% received assistance) [10].
The numbers indicate deeply-rooted systemic obstacles across both personal and business finance. Black Americans begin with fewer capital reserves, receive disproportionately less lending support, and still perceive bias in banking practices.
!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}();
As a technologist, I see digital lending platforms using AI algorithms as one way to help mitigate unconscious biases in traditional loan assessments. Online crowdfunding opportunities also provide additional seed capital outside the conventional banking ecosystem.
However, the root causes behind lower black wages and savings must still be confronted to enable more entrepreneurs to scale. Lasting progress requires both tech innovations and advocacy addressing societal inequalities.
Pandemic‘s Disproportionate Economic Impacts
The COVID-19 pandemic and resulting economic slowdown dealt an exceptionally heavy blow to black-owned businesses across America. Government-mandated shutdowns lasted longer in cities where minority communities are concentrated, disproportionately reducing revenues.
The pandemic financial statistics reveal harsh realities about the vulnerabilities of black-owned companies relative to white-owned peers:
During the early months, 41% of black-owned businesses completely shut down compared to just 17% of white-owned businesses [11].
65% of black owners faced COVID financial setbacks compared to 37% of white owners [12].
In a 2021 survey, 58% of black entrepreneurs described their companies as being in "financial distress" compared to only 27% of white founders [13].
While various government stimulus measures provided lifelines for small businesses, pre-existing discrepancies in financial cushions and resources still persisted. Structural disadvantages amplified the pandemic‘s economic hurricane.
However, today I am optimistic that technology solutions can better protect black enterprises against future crises. Virtual offices, digital payments, automated operations, and remote work access can all help companies weather external shocks. Resilient systems will enable more black entrepreneurs to thrive for generations.
Contributions of Black Female Entrepreneurs
Let‘s now highlight a particularly fast-growing segment—black women-owned firms. Facing both racial and gender hurdles, black female founders display incredible tenacity and leadership opening new businesses.
The numbers speak volumes:
From 2014-2019, the number of black female-owned companies skyrocketed 50% [14].
As of 2022, black women now account for 42% of all new women-founded businesses [3]. That far outpaces their approximate 7% share of the total US population.
There are currently over 1.9 million black female-owned businesses generating $51 billion in revenue [15].
Impressively, 46% of black female entrepreneurs specifically cited starting new businesses in order to help drive positive community change [14]. They often pioneer companies focused on empowering and employing fellow women of color.
Systemically investing into the passions and untapped talents of black women business leaders represents a proven formula for fueling economic growth and advancing social justice. Their inspirational success creates positive ripple effects across entire communities.
Reasons for Optimism and Calls to Action
Despite substantial persisting obstacles, there are also strong reasons to remain hopeful for black businessownership entering 2023 and beyond. Minority spending power continues rising across America, opening new markets eager for diverse products and services.
The vibrant expansions from 2007-2021 also showcase the sheer economic influence of black-owned companies when provided adequate opportunities and resources. Further closing gaps in access to capital and fair regulatory treatment can ignite a new era of innovation nationwide.
Additionally, black-owned businesses actively counter inequality by employing people of color and giving back to minority communities at higher rates [16]. Moreblack entrepreneurs will only amplify these communal benefits.
My calls to action as a technologist to drive this positive progress include:
- Designing equitable digital banking solutions to expand access to capital
- Building data tools analyzing lending disparities and accountability
- Supporting virtual accelerator programs for underrepresented founders
- Advocating for government incentives to fuel minority innovation hubs
- Leveraging social media to equitably showcase black entrepreneur success stories
The incredible determination of black business owners pursuing their dreams despite facing steep odds gives me optimism America can come together supporting their important work. Now remains the critical time to confront the ongoing barriers—both physical and digital—that hinder diverse enterprises disadvantaged by historical inequities.
Sources
[1] U.S. Census Bureau[2] U.S. Department of Commerce Minority Business Development Agency
[3] American Express
[4] Bank of America
[5] Fundera
[6] Naturally Curly
[7] Pew Research
[8] Washington.org
[9] Digital Undivided
[10] NerdWallet
[11] National Bureau of Economic Research
[12] Fundbox
[13] McKinsey & Company
[14] American Express 2022 State of Women-Owned Businesses Report
[15] Project Diane 2021
[16] Institute for Research on Poverty
