Only 2.4% of businesses in the US are owned by African Americans, despite them making up 12.8% of the population. Meanwhile, 86.5% of businesses are owned by whites, who make up 72.0% of the population. This discrepancy is a reflection of the racial wealth gap that has been present in the US for centuries. The State of Black Business and Our Economic Impact has been a topic of discussion for decades. In 1968, Dr.
Martin Luther King Jr. called on supporters to strengthen black institutions and businesses by moving their money away from white-run commercial and banking establishments and depositing their dollars with black-owned institutions. This idea has been widely adopted by a range of Americans, including Booker T. Washington, Marcus Garvey, Richard Nixon and former President Barack Obama. But what is the current state of black business in the US? According to the Census Bureau Business Owner Survey, conducted every five years, more than 90% of Latino and Black businesses don't have a single employee other than the owner.
A new trend is the proportion of owner-only businesses that peak close to 98% for the sub-group of African-American companies led by women. Data from the Small Business Administration indicates that 19 million businesses are owned by whites, accounting for 88% of total sales and 86.5% of US employment. Black companies have only 1.3% of total US sales and 1.7% of the country's employees, while Latino companies hold 4% of US sales and 4.2% of US employment. The state of black wealth through entrepreneurship has long been praised as a pathway to bridging the racial wealth gap. However, this has not been confirmed by larger-scale tests over time, nor has it proven to be accurate advice under current circumstances. At the other end of America's economic spectrum, black households make up less than 2% of those in the top one percent of the country's wealth distribution; white households make up more than 96% of the richest Americans. Even among the richest households in the country, extreme differences persist on the basis of race. To combat this wealth problem, solid black entrepreneurship will require an environment in which racial wealth disparity has already been directly addressed and altered.
Greater black wealth, and therefore financial capital, is a vital prerequisite for black entrepreneurship to help bridge the wealth gap. A key solution is financial empowerment and the promotion of better pay and income parity. Connecting with BLNDED Media on Facebook, Twitter and Instagram can help learn more about their mission, stories and opportunities to participate. The SBSC is an annual survey of companies with fewer than 500 employees, representing 99.7% of all employing firms in the US. Black owners of employing businesses are less likely to seek services such as legal and financial counseling. Black-owned businesses accounted for 34.8% of all businesses in Washington D. C., followed by Mississippi (27.7%) and Georgia (27.6%).
This concern may be related to having more difficulty accessing credit since the COVID-19 crisis began; 36% of black business owners who responded to a survey said they had experienced it, compared to 29% of all respondents. Added barriers to starting and maintaining a black-owned business translate structural bias into lower access to capital, lower income and darker business growth prospects. The new criteria will have a particular effect on “cash-only” businesses in informal or clandestine local economies, such as barbershops, beauty salons and other neighborhood-oriented firms. Among states, Georgia had the highest total number with 256,848 black-owned businesses (9.9%), followed by Florida (251,216; 9.7%). Only 4% of African-American companies survive the early stage, even though 20% of African-Americans start businesses. If black companies accounted for 14% (equivalent to their share in population) of employing companies there would be 798,318 more black companies. The report also calculated that if this percentage was achieved it would result in more businesses, jobs and income for the nation. Procurement practices should evolve to include more black-owned businesses and organizations should devote funds to supplier development programs that can help black-owned suppliers better participate in supply chains. Black entrepreneurs may also lack access to resources such as venture capital or angel investors which can help them grow their business.