Exploring Black-Owned Businesses A Closer Look at the U.S

19 Feb, 2024

Exploring Black-Owned Businesses A Closer Look at the U.S

More than one-in-five Black adults in the United States assert that owning a business is crucial for achieving financial success, as highlighted in a September 2023 Pew Research Center survey. Despite notable growth in Black-owned enterprises in recent years, they still constitute a small portion of overall firms and revenue within the country, according to our analysis of federal data. The latest estimates from the Annual Business Survey (ABS), conducted by the U.S. Census Bureau and the National Science Foundation, reveal a rise in U.S. firms with majority Black or African American ownership, from 124,004 in 2017 to 161,031 in 2021. Over this period, Black-owned firms experienced a significant 43% increase in gross revenue, climbing from $127.9 billion to $183.3 billion.

However, despite this growth trajectory, majority Black-owned businesses represented only about 3% of all U.S. firms classifiable by the race and ethnicity of their owners in 2021. They accounted for just 1% of gross revenue from all classifiable companies that year. In contrast, White majority-owned businesses dominated the landscape, comprising 85% of classifiable firms and 93% of their revenue in 2021. About 11% of classifiable firms were majority-owned by Asian Americans, with no racial or ethnic group representing more than 7%.

Black or African American majority-owned firms provided employment for approximately 1.4 million workers in 2021, with annual payrolls estimated at $53.6 billion. Despite this, most Black-owned firms tend to be smaller enterprises, with two-thirds employing fewer than 10 individuals. Health care and social assistance emerged as the predominant sector for Black-owned businesses, followed by professional, scientific, and technical services. Urban areas host the majority (87%) of Black or African American majority-owned businesses, with states like Florida, California, and Georgia boasting the highest numbers.

Regarding ownership demographics, a slight majority of Black-owned firms are male-owned, and most owners are middle-aged with a significant portion holding college degrees. Motivations for entrepreneurship among Black owners often include the opportunity for higher income, autonomy, and realizing their ideas, goods, and services. For many, their business serves as their primary source of income, reflecting a commitment to economic independence and self-sufficiency.