State of Black-Owned Businesses in the United States
Updated: Nov 7
I began The Social Consult in the middle of the Pandemic. I endured lost contracts that led to financial hardship. Yet, with perseverance, I survived the lean years. Therefore, I feel so blessed to still be operating when 41 percent of Black-owned businesses shut down during the first few months of the pandemic. The Association for Enterprise Opportunity reported that as of April 2021, 79% of Black-owned businesses were fully or partially operating.
Although I am proud of my accomplishments as an Executive Coach, it is humbling for my efforts to be recognized by my peers. Further, it is more special for someone I admire who is outside of my industry to acknowledge me. Beyonce!
Black Parade Route Luncheon
Imagine an invitation to the BeyGOOD Black Parade Route Small Business Impact Luncheon. I was one of 100 entrepreneurs in Chicago selected to attend by BeyGOOD, Beyonce’s public charity foundation, and the National Minority Supplier Development Council (NMSDC).
The Black Parade Route promotes the sustainability of Black-owned businesses by providing financial relief assistance, resources, and educational opportunities. The luncheons will take place in 10 cities worldwide. A select 1,000 small businesses will be provided with grant opportunities and/or business sustainability support services. At the luncheons, 10 business owners will receive a $10,000 grant each.
Beyonce has pledged $1 million to Black-owned small businesses impacted by economic inequities worldwide. Notably, The Social Consult is the only Executive Coaching and People and Culture Consulting Firm on the list. In addition, we will be added to the Black Business list on the BeyGOOD website. Also, attendees in Chicago received a congratulatory and encouraging letter from First Lady Michelle Obama.
In 2021, the Black Parade Route began to assist small businesses impacted by the pandemic. However, the need for assistance is still present. As NMSDC CEO and President Ying McGuire explained:
We continue to see the disparities our Black NMSDC-certified businesses face when starting and growing their businesses. From access to capital to systemic racism, we must remove these barriers for Black businesses to flourish. This partnership is one of many steps NMSDC is taking this year to create more equitable economic opportunities for the Black community.
Additionally, of the NMSDC-certified minority business enterprises, Black-owned businesses increased their total annual revenue by a single-digit percentage (4.6%) compared to double-digit increases for other communities of color. By focusing on economic equity and access to resources, BeyGOOD is facilitating the growth and sustainability of Black-owned businesses.
Challenges to Ownership and Sustainability
Business ownership is one factor in generational wealth. Only 7% of black-owned businesses survive into the second generation, compared to 19% of white-owned firms. The lack of generational wealth is an obstacle for Black entrepreneurs to secure startup capital. Loans are more likely to be denied, smaller, or at a higher interest rate, sometimes 7.8% higher. As of 2022, Black-owned businesses comprise 10% of all U.S. firms. In addition, the growth rate for Black-owned businesses has slowed in recent years. Since 1982, the number has increased by more than 400%. However, the number grew by only 2.4% from 2007 to 2012. Other firms in the U.S. grew by 9.8% in that period.
Additionally, Black-owned businesses tend to be sole proprietorships with no employees, 90% compared to 77% of white-owned sole proprietorships. So, another obstacle to growth and sustainability for Black-owned businesses is limited access to broader business networks. Without equal access to resources and connections, many business deals and partnerships are out of reach.
Overall, Black-owned businesses tend to be concentrated in low-growth and low-margin sectors. Industries like retail, personal services, healthcare, and transportation generate an average revenue of $58,000. Black-owned businesses make up 29.4% of those industries, compared to 11.9% of non-minority-owned businesses.
As stated by Ms. McGuire, disparities in access to capital and systemic racism are ongoing challenges to Black-owned businesses’ growth and sustainability. BeyGOOD focuses on economic equity and access to resources to advance entrepreneurship and small business sustainability. Beyonce’s commitment demonstrates her belief “in a society where everyone has an opportunity to prosper.” Resulting in communities that thrive, which leads to economic prosperity, generosity, and justice.
I, too, believe organizations affect the community. Sustainable businesses produce a legacy of builders who believe in a better tomorrow. The Social Consult works with organizations to build a foundation of diversity, equity, inclusion, and belonging. Businesses that are deliberate about their role in society and act in the interests of their teams, customers, and community perform better. They also have high productivity and profits.
The Social Consult is dedicated to “reimagining success as humane.” Through executive coaching and consulting we affect the continuous growth and well-being of people and organizations.
If you need to hone in on your purpose, contact us at firstname.lastname@example.org.