February 17th 2025.
In recent years, there has been a gradual increase in the number of Black-owned businesses, but they still fall short of what their representation would be if it were proportional to the 14% of the United States population. According to a 2022 report by the Pew Research Center, Black businesses make up only 3% of all U.S. businesses that can be identified by race or ethnicity. Moreover, their share of gross revenue from all companies in the same year was just 1%.
These statistics clearly show that Black-owned businesses are not generating as much revenue as they could be. One factor contributing to this is the size of their workforce - 71% of Black-owned businesses have small teams of one to nine employees. This is just one of the many challenges faced by Black entrepreneurs, as highlighted in a 2024 report by Third Way compiled by National Urban League President and CEO Marc H. Morial. He pointed out the systemic barriers and underinvestment in Black entrepreneurs that hinder their success.
Morial believes that business ownership is directly linked to economic empowerment and wealth creation. However, the road to success for Black entrepreneurs is still filled with obstacles. Despite the growth in Black entrepreneurship over the past 30 years, there is still a long way to go to ensure equal opportunities for Black entrepreneurs to start and grow their businesses.
To shed light on the unique position of Black businesses within the larger American economy, the Alliance for Entrepreneurial Equity - a partnership between Third Way and the National Urban League - released a report titled "The State of Black Businesses." This report aims to provide experts, policymakers, and advocates with a better understanding of the challenges faced by Black businesses.
In addition to discussing the current state of Black businesses, the report also touches on the historical context, mentioning the broken promise of Reconstruction and the struggles faced by Black entrepreneurs before the civil rights movement. The report states that even today, discrimination, exclusion, and economic exploitation continue to perpetuate cycles of inequality in Black communities. Despite advancements in civil rights and affirmative action policies, Black entrepreneurs still face disparities in access to capital, markets, and resources. These disparities have far-reaching consequences, such as lower rates of business ownership, limited growth opportunities, and higher rates of business closures among Black-owned enterprises.
However, amidst these challenges, there is also hope for the future of Black-owned businesses. In 2024, Brookings Metro Senior Fellow Andre Perry presented new data that showed the positive impact of investing in Black-owned businesses. A panel discussion featuring Erika Seth Davies, CEO of Rhia Ventures; Stacey Bowers, Director of the Office of the Advocate for Small Business Capital Formation at the U.S. Securities and Exchange Commission; Patrice Green, Vice President of Programs at the Surdna Foundation; and Alphonso David, President and CEO of the Global Black Economic Forum, further highlighted the untapped potential of Black-owned businesses in growing the economy.
As Zoey Foster, the Public Affairs Intern at NetChoice, pointed out, Black-owned businesses stimulate the economy and represent a significant expansion of American entrepreneurship with high growth potential. The increased presence of entrepreneurship in minority populations has both social and economic benefits, such as improving socioeconomic conditions and boosting the overall economy. These businesses hold great potential, but they need to be nurtured and supported first.
Did you know that there are more than 3.6 million Black-owned businesses in the U.S.? Despite the challenges they face, these businesses are a vital part of our economy and have the power to make a significant impact. With the right support and resources, Black entrepreneurs can continue to thrive and contribute to the growth and success of our nation.
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