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 user 2005-07-29 at 10:30:00 am Views: 70
  • #11915

    Minority Businesses Soar to More Than 4 Million

    (July 05) – The number of minority-owned businesses soared 31% to more than 4 million from 1997 to 2002, the Census Bureau said in a new survey illustrating the growing economic impact of minority entrepreneurs.

    The survey, done every five years, is closely watched by marketers, economists, politicians and others for clues about shifts in what has become the USA’s fastest-growing small-business sector.

    “It shows where jobs are coming from,” says Betsy Zeidman, director of the Center for Emerging Domestic Markets at the Milken Institute, a think tank in Santa Monica, Calif., focused on economics.

    Entrepreneurship experts and minority-business advocates say the growth reflects broader start-up trends. Professionals who leave big companies amid layoffs or early retirement are starting businesses instead of going to work for other companies, says Earl Graves, founder of Black Enterprise magazine.

    What’s more, minority students who once would have worked for corporations right out of college are instead starting businesses. “The nature of business is becoming more entrepreneurial,” says Harry Alford, CEO of the National Black Chamber of Commerce.

    The 2002 Census figures show that among minorities, Hispanics continued to own the most companies: 1.6 million, a 31% increase from 1997.

    Yet African-Americans moved to catch up. The number of their businesses soared 45%, to 1.2 million, ranking them No. 2 in minority-business ownership. That’s a switch from 1997, when Asian entrepreneurs for the first time pushed past blacks.

    Asians in 2002 owned 1.1 million firms. Native Americans and Alaska Natives owned 206,125.

    Overall, the number of U.S. businesses grew 10% in the period, to 23 million. Minorities owned 18% of those 23 million, up from 15% in 1997, Census says.

    Zeidman says it is noteworthy that the report shows continued growth in revenue among minority businesses, because that boosts chances of corporate prosperity and job growth. Annual revenue at Hispanic-owned businesses, for example, rose 22% to an average $143,866 per company.

    Still, that figure — and those for other minority firms — continued to lag revenue at companies owned by whites: an average of $417,395 per firm, up 5% from 1997. The gap illustrates the importance of minority businesses getting better access to investor dollars and other sources of capital so they can expand more, Zeidman says.

    The survey also tracked business ownership by gender. The number of companies owned by women jumped 20%, to 6.5 million. That was twice the rate of growth of all businesses. The proportion owned by women rose to 28.3% from 26% in 1997.

    More marketers from Microsoft to Ford Motor in recent years have focused on adding minority and female-owned businesses to their supplier networks and targeting them as customers.

    That’s because many of those small businesses will potentially grow to become much bigger, increasing their appetites for software, vehicles and other business goods, says Sharon Hadary, head of the Center for Women’s Business Research. “If they’re continuing to grow, you want to get in there early on to gain their loyalty,” she says.