What is the Percentage of Black-Owned Businesses in America?
The Landscape of Black-Owned Businesses in America
Over the past decade, black entrepreneurs have been starting new businesses at unprecedented rates — slowly but steadily chipping away at long standing inequities in business ownership across the United States. As of 2022, there are approximately 2.6 million black-owned businesses nationwide, employing almost 1 million workers and generating nearly $200 billion in annual revenue.
After exploring the current data and trends shaping America‘s black business landscape today, it becomes clear that targeted support still remains vital on multiple fronts — from capital access to public policy reforms. However, the overall momentum is heading in an extremely positive direction.
Steady 10-Year Growth Trajectory
According to the latest Annual Business Survey (ABS) data from the U.S. Census Bureau, the number of black-owned non-employer firms has risen an impressive 34% over the past 10 years — climbing from 1.9 million in 2012 up to 2.6 million at the end of 2021. Total paid employees at black-owned businesses grew by 13% during this period, while annual sales revenue vaulted upwards by 31% over 10 years surging from $151 billion to $198 billion nationwide as of 2021.
Zooming in specifically on employer firms with at least 1 paid employee on staff, the number of black-owned businesses rose from 108,473 in 2012 up to 134,567 firms in 2021. The 6-year compounded annual growth rate (CAGR) for black-owned employer firms has been 2.12% — outpacing the 1.85% CAGR for all U.S. businesses during this time frame.
While overall U.S. business ownership recorded declines during 2020 at the height of COVID shutdowns, the number of black-owned employer firms continued increasing by 6.1% — speaking the resilience and determination of black entrepreneurs everywhere to keep pushing forward despite unprecedented challenges.
Now halfway through 2022, this steady growth trajectory remains well intact. The U.S. black business community has proven itself recession-proof and poised for greater growth in the decade ahead as new startup support mechanisms continue gaining traction nationally.
Top States and Key Cities for Black-Owned Businesses
Several U.S. metro areas stand out for having high concentrations of black-owned businesses — especially where substantial African American consumer populations exist to help anchor and sustain these enterprises locally.
Atlanta continues holding its ranking as the #1 U.S. metro area in percentage of total businesses that are black-owned, with over 34,629 black-owned firms accounting for nearly 11.3% of all businesses citywide as of 2021. Following closely behind is Washington D.C. where 20,885 black-owned businesses, the bulk clustered around Prince George‘s County suburbs, make up 9.2% of all district firms.
Other top metros for black business ownership rates include New Orleans (#3 nationally with 7.6% black-owned firms), followed by Baltimore (#4 at 7.5%) and Detroit (#5 at 7.2%.) Rounding out the top 10 metro leaders are Memphis, Houston, Philadelphia, St. Louis and Miami — all surpassing the 5% mark as well in black business participation rates according to the latest Census Annual Business Survey (ABS) data.
Statewide, the geographies with the highest count of total black-owned businesses based on 2021 Census figures include Florida (308,549 firms), Georgia (283,443 firms), Texas (251,256 firms), California (242,901 firms) and New York (165,401 firms). As emerging hubs of black entrepreneurial talent, both Georgia and Texas grew their base of black-owned businesses at a 9% compound annual rate over the past 5 years — outpacing the nationwide state average.
Interactive map showing states weighted by # and percentage of black-owned businesses within their total business population for geographic comparison.
Leadership Perspectives on Overcoming Historic Challenges
Despite the evident progress scaling up black entrepreneurship nationwide, systemic barriers undeniably persist when compared to other demographic groups. The typical black startup founder begins with just 13% of the capital raised on average by their white peers ($35K vs. $107K in personal savings), crippling many ventures before they have a chance to get off the ground.
Venture capital data reveals an even wider gulf. Black women founders receive a mere 0.34% of total VC funding, while black male founders collect 1.3%. The rest of America‘s risk capital system remains heavily tilted towards funding white founders, particularly in technology sectors.
Yet by building their own tables instead of waiting for invites, black innovators are pioneering new models to finance and accelerate promising early-stage companies left out by status quo. Initiatives like Backstage Capital, New Voices Fund, Fearless Fund, Slauson & Co and other emerging funds exclusively invest VC dollars into companies with underrepresented founders — providing not just cash but wraparound mentoring support. Revenue-based financing providers offer non-dilutive growth capital to asset-light service firms without requiring giving up equity ownership. Real estate crowdfunding platforms enable pooled investments into properties and development in historically redlined areas.
And the meteoric rise of black angel investor networks like Collab Capital, Iconic Ratio, andpodcasts like "The Black Unicorn" host their own versions of Shark Tank to connect promising startups with new sources of smart capital. Platforms like gener8tor and DivInc. have pioneered accelerator programs dedicated to minority founders across multiple cities.
Rethinking traditional funding doctrine opens up greater possibilities, as serial entrepreneur Brandon Andrews explains: "The signaling risk concept that justifies venture‘s exclusivity simply does not apply for this demographic given structural dynamics. There‘s a bigger risk not funding worthy founders than funding them."
Technology Access Drives Business Growth Potential
Another key enabler for unlocking the next level of black business success resides in greater technology access and digital skills training. Black tech entrepreneurship thrives in cities like Atlanta and Washington DC where robust tech startup ecosystems intersect with strong local engineering talent pipelines and HBCU networks. Organizations like Black Tech for Black Lives equip youth with coding bootcamp certificates to access higher paid careers. Black Girls Code hosts hackathons that teach web development skills.
On the small business front, only 47% of black-owned microbusinesses have an online presence compared to the nationwide average 53% for all racial groups combined, leaving sales growth opportunities still on the table. Thankfully non-profit initiatives like Ureeka and Digital Divide Data along with Google‘s Black Founders Fund provide customized digital skills coaching and heavily subsidized website buildout services aimed at closing these tech utilization gaps. Solving digital literacy and practical tech constraints for early-stage ventures removes one more growth barrier across industries.
Customer & Capital Convergence Driving Explosive Growth
Despite obstacles, the new era of black entrepreneurship renaissance shows zero signs of slowing down thanks to overlapping tailwinds. Record levels of consumer support and brand loyalty now propel black-owned manufacturers, retailers, restaurants and consumer product goods companies as societal attention increased on racial equity issues since 2020. Mainstream apps like Official Black Wall Street, WeBuyBlack, EatOkra and IHeartBlackBiz make locating these gems easier for conscious shoppers.
On top of booming customer demand, a convergence of new capital deployment options allows founders of color to self-fund startup ideas that likely struggled to secure traditional loans or angel investments previously because of bias and pattern-matching. The rise of revenue-based financing, rolling VC funds, fintech innovations like online microlending as well as historically high black household savings rates during pandemic shutdowns have created the dry powder to power a new generation of innovative black-owned enterprises.
Additionally municipal, state and federal policy tweaks focused on expanding minority contracting plus supplier diversity and inclusion programs amongst Fortune 500 corporations continue fueling business-to-business revenue growth too.
The multiplier effects across the ecosystem are easy to spot as pioneers like Esusu near unicorn status providing fintech services supporting minority home ownership. Venture Noire‘s portfolio companies have achieved 20 acquisitions and IPOs over its 13 year track record. Mahisha Dellinger‘s luxury haircare brand, CURLS, delivers over $100 million in retail sales through 25,000 locations via Sally Beauty Holdings. Richelieu Dennis took Mrs. Dennis’ homemade beauty recipes global as CEO of Sundial Brands, maker of SheaMoisture, before exiting in a $1.1 billion acquisition by Unilever in 2017.
Projected Growth Trends This Decade Signal More Wins Ahead
Recent research surveying over 500 black business owners sheds optimistic light on projected growth trends for the decade ahead. The following statistics summarize key survey findings on business conditions, output and employment forecasts:
- 64% of black business owners expect to increase number of paid employees on staff
- Median sales growth forecast of 14% CAGR over next 5 years
- 72% intend to expand introduction of new products and services
- 92% aim to leverage digital channels and social media for sales growth
With such robust growth forecasts plus increasingly favorable local support programs and resources launching nationwide, America‘s black-owned business movement shows no sign of slowing momentum. Consumers, corporations and investors alike have growing incentives in ensuring these enterprises realize their full potential as catalysts for an inclusive, equitable prosperity that lifts all communities.
