Although Black-owned businesses have slowly ticked up from where they were in 2019, they still lag what they would look like were their numbers proportional to the 14% of the United States population.
According to a report from the Pew Research Center, in 2022, Black businesses made up approximately 3% of all U.S. businesses identifiable by race or ethnicity. Furthermore, they only accounted for 1% of gross revenue from all companies that could be classified in that same year.
As the numbers allude to, Black-owned businesses don’t generate more revenue because most of them, 71%, have small workforces, defined as between one and nine employees.
Another reason, as National Urban League President and CEO Marc H. Morial described in a 2024 report compiled by Third Way, is the systemic lack of equitable resources for and underinvestment in Black entrepreneurs.
“Business ownership directly leads to economic empowerment and wealth creation, but far too many Black entrepreneurs continue to struggle with systemic barriers that make it difficult to be successful,” Morial said. “Despite the challenges, Black entrepreneurship is growing at the fastest pace in 30 years. It is essential to recognize the resilience and innovation of Black-owned businesses and realize how far as a nation we must still go to ensure Black entrepreneurs have equal opportunity to start and scale their ventures.”
The Alliance for Entrepreneurial Equity, a joint venture between Third Way and the National Urban League, released the report “The State of Black Businesses” to provide experts, policymakers, and advocates to understand the unique positioning of Black businesses within the context of the larger American economy.
After briefly discussing the failed promise of Reconstruction, the report touched on what today’s Black entrepreneurs face, much like their predecessors did in the time preceding the civil rights movement.
“Today, these communities are still subject to discrimination, exclusion, and economic exploitation, perpetuating cycles of inequality. The economic landscape for Black entrepreneurs remains fraught with obstacles. Despite advancements in civil rights and the emergence of affirmative action policies, disparities persist in access to capital, markets, and resources. The consequences of these disparities are far-reaching, contributing to lower rates of business ownership, limited growth opportunities, and higher rates of business closures among Black-owned enterprises,” the report stated.
Despite these challenges, however, there is hope for Black-owned businesses moving forward, as Brookings Metro Senior Fellow Andre Perry presented new data in 2024 that showed the benefits of investors inserting capital into Black-owned businesses.
Indeed, according to NetChoice’s analysis of the presentation of data by Perry and subsequent panel discussion from Erika Seth Davies, CEO of Rhia Ventures; Stacey Bowers, Director of the Office of the Advocate for Small Business Capital Formation, U.S. Securities and Exchange Commission; Patrice Green, Vice President of Programs, Surdna Foundation; and Alphonso David, President and CEO of Global Black Economic Forum, Black-owned businesses represent untapped potential that could help grow the economy, but they need to be nourished first.
As NetChoice’s Public Affairs Intern, Zoey Foster, wrote, “Black-owned businesses stimulate the economy and represent expanded American entrepreneurialism with high growth potential. Increased entrepreneurship in minority populations has meaningful societal and economic impacts, especially regarding better socioeconomic conditions and a boosted economy.”
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