21 December 2007

Number of U.S. Minority-Owned Businesses Increasing

Women minority business owners becoming more common

 

Data courtesy of the U.S. Small Business Administration (SBA)

Data courtesy of the U.S. Small Business Administration (SBA)

Minorities owned approximately 18 percent of the 23 million U.S. firms in 2002, according to a survey conducted by the U.S. Small Business Administration (SBA).

The SBA defines minority-owned businesses as businesses in which minorities own at least 51 percent of the stock or equity. The agency breaks those businesses into five general demographic groups: Hispanic, black, American Indian or Alaskan Native, Asian, and Native Hawaiian or other Pacific Islander.

The agency reports several interesting facts and trends:

• Black-owned firms had the highest growth rate between 1997 and 2002 in several measures, including a 45.5 percent increase in the number of firms;

• The number of all minority-owned businesses increased 10 percent during the same period.

• The percentage of minority women owning businesses also rose between 1997 and 2002. Twenty-nine percent of black-owned firms with paid employees and 47 percent of Black nonemployer firms (family businesses) were owned by women.

• Hispanics and Latinos constituted the largest minority business community, owning 6.6 percent of all U.S. firms, 3.7 percent of employer firms and 7.4 percent of nonemployer firms.

• Among minority business owners, Asian Indians had the highest average receipts per nonemployer firm ($56,792 annually); the Japanese had the highest average receipts per employer firm ($1,256,646 annually).

• The distribution of firms tends to vary by industry and race/ethnicity. For example, 16 percent of Native American-owned businesses were in construction; 20.5 percent of black-owned firms were in health care and social assistance; and Hispanic and Islander-owned businesses were concentrated in administrative, support, waste management and remediation (contaminant removal) services (13.2 percent and 11.6 percent respectively).

• About half of nonemployer minority owners used their own and family savings to start their business. The second most popular source of financing (between about 9 percent for most and close to 12 percent for Americans Indians) was a personal or business credit card.

The U.S. Small Business Administration’s study on minorities in business primarily used data from the 2002 Survey of Business Owners, the latest available data from the U.S. Census Bureau.

More information on Small Business Administration reports and studies is available on the agency’s Web site.