THE BUSINESSJOURNALSA DIVISION OF ACBJ
Minority-Owned Businesses:The Force Driving Small Business Growth
THE BUSINESSJOURNALSA DIVISION OF ACBJ 2
Research Method
o Nationally representative sample of companies with 5-499 employees
o Business owners, executives and key decision makerso 1,283 completed surveys
o 163 Minority owned business ownerso 1,120 Non-Minority owned business owners
o January 2017
Notes: • Minority-owned businesses: 50% or more of company is owned by a
Hispanic, African-American, Native-American, Asian or any other member of a racial or ethnic minority group
• U.S. Census Bureau data is an additional source used in parts of this report. See source notes at the bottom of each page.
THE BUSINESSJOURNALSA DIVISION OF ACBJ 3
Executive SummaryMinority-owned businesses represent a powerful growth engine for the U.S. business market. Over the past ten years, their numbers have nearly doubled. They are now estimated to represent 11.1 million businesses nationwide. They employ over 6.3 million people, and generate more than $1.8 billion in revenues annually.
Hispanic-owned businesses are the fastest growing segment (+46%), with African American-owned businesses (+34%) and Asian-owned businesses (+24%) close behind.
Minority owners run fast-growing, younger companies. Four out of ten have experienced sales growth of 11%+ over the past three years. Many are also young themselves: 40% are under 45 years of age.
Over three-quarters of minority owners used personal savings to get their companies started. They are highly driven to get to the top of their fields, and are very hands-on with business. Most make purchasing decisions autonomously, and many don’t even consult others for advice about these decisions. They appear facile with technology, employ mobile solutions, and have figured out how to generate revenue directly from social media.
Community matters to minority-owned businesses. Over the past three years, their engagement with the local community has only grown stronger. They are very aware of the correlation between getting and keeping customers with their own giving back to the community. They also believe that businesses today have a responsibility to address key social and environmental issues. Their commitment to this ideal has dramatically increased over the past five years.
Similar to all small and mid-sized businesses, almost all source sales locally. But minority owners do not stop there. Nearly 40% source sales from abroad, while simultaneously having expanded sales growth nationwide.
Source of Strong U.S. Business Growth
Self Sufficient with a Keen Entrepreneurial Spirit
Importance of Community at Home and Abroad
Source of Strong U.S. Business Growth
THE BUSINESSJOURNALSA DIVISION OF ACBJ
Minority-Owned Businesses
40%
Non Minority-Owned Businesses
60%
5
The number of minority-owned businesses in the U.S. is estimated at 11.1 million
4.26M
2.42M
Minority-Owned Businesses
24%
Non Minority-Owned
Businesses76%
2007 2017*
6.2M 11.1M
Source: U.S. Census, Survey of Business Owners 2012: Number of firms with or without paid employees * 2017 estimate based on % increase from 2007 to 2012
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Hispanic-owned businesses are the fastest growing segment among minority-owned companies
Hispanic-Owned Businesses
Source: U.S. Census, Survey of Business Owners 20122017 estimate based on % increase from 2007 to 2012
$474$640
3.3
4.8
2.3
2.8
$0
$500
$1,000
$1,500
$2,000
$2,500
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2012 2017 (Estimate)$150 $165
2.6
3.4
0.98 1.05
$0
$500
$1,000
$1,500
$2,000
$2,500
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2012 2017 (Estimate)
African American-Owned Businesses
Asian-Owned Businesses
$699
$965
1.9
2.4
3.5
4.4
$0
$500
$1,000
$1,500
$2,000
$2,500
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2012 2017 (Estimate)
+46%
+24%
+34%
M
M
M
M
B
M
Billion
M
M
M
M
M MBillion
B
Billion
Billion
M
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Minority business owners are significantly younger than non-minority owners
“Please tell me the year in which you were born.”*Significantly higher statistically at the 90% confidence level or higher vs. the other segment
Age of Minority-Owned Business Owners
38%54%*
22%
26%23%*
14%17%*
6%
Minority-Owned Businesses Non Minority-Owned Businesses
Under 35
35 - 44
45 - 54
55 or older
40%*
20%
Average Age 48.5 54.0
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Minority-owned businesses include more fast-growing, younger companies
Total SMB Owners
Owners of Minority-Owned Businesses
Owners of Non Minority-Owned
Businesses
Annual sales (average) $7.0M $4.1M $7.5M*
Fast-growing business (11%+ growth) 34% 43%* 33%
# of Employees (average) 25 30 24
5-19 Employees20-49 employees50-99 employees100-499 employees
73%1764
63%2110*6
74%*1664
Years in operation (average) 28.3 16.3 30.0*
Business travel 1+/month# Business trips/year (average)
33%9.5
41%*13.6*
32%9.1
Hours work per week (average) 50 48 51*
*Significantly higher statistically at the 90% confidence level or higher versus the other segment
THE BUSINESSJOURNALSA DIVISION OF ACBJ 9
Minority business owners skew toward living in the South and West in urban locations
Total SMB Owners
Owners of Minority-Owned
Businesses
Owners of Non Minority-Owned
Businesses
Male 69% 65% 70%
Married 74 59 76*
College grad or higher 70 67 71
Household Income (average) $194K $174K $199K
Average Net Worth $1.5M $1.2M $1.6M*
Value of investment portfolio (average) $451K $410K $460K
A/B Counties 76% 87%* 74%
NortheastSouthMidwestWest
19352323
1041*1732*
20*3424*22
RepublicanDemocratIndependent
442125
2738*23
47*1925
*Significantly higher statistically at the 90% confidence level or higher versus the other segment
THE BUSINESSJOURNALSA DIVISION OF ACBJ
Industry focus varies across minority segments
10
4%
2%
3%
5%
10%
4%
9%
15%
9%
11%
8%
13%
3%
2%
8%
3%
8%
5%
11%
14%
11%
4%
4%
20%
2%
3%
2%
5%
3%
7%
6%
8%
19%
5%
11%
25%
2%
2%
3%
3%
4%
7%
8%
8%
11%
14%
16%
17%
Finance/Insurance
Educational Services
Accomodation & Food Services
Arts, Entertainment & Recreation
Real Estate/Renting & Leasing
Transportation & Warehousing
Retail Trade
Professional, Scientific & Technical
Healthcare & Social Assistance
Construction
Administrative Support
Other Services (see footnote)
Hispanic-Owned BusinessesAfrican American-Owned BusinessesAsian-Owned BusinessesNon Minority-Owned Businesses
Other Services = Business and civic services, repair and maintenance services, personal and laundry services, etc. Source: U.S. Census, Survey of Business Owners 2012
Leading Industries Among Minority-Owned Businesses
Self Sufficient with a Keen Entrepreneurial Spirit
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The large majority across all minority segments used personal money or savings to start their businesses
Source: U.S. Census, Survey of Business Owners 2012
Hispanic-Owned Businesses
African American-Owned
BusinessesAsian-Owned Businesses
Personal/family savings, assets, home equity loan 77% 76% 75%
Personal credit card 10 11 8
Business loan from bank or financial institution 4 4 7
Business credit card 3 3 3
Business loan/investment from family, friends 2 1 3
Government guaranteed business loan from bank or financial institution -- 1 1
Other source(s) of capital 2 4 2
Sources of Capital Used To Start or Acquire Business
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Minority business owners are striving for success and want to be at the top of their fields
“Following are a series of statement which may or may not reflect how you think about business, or life in general. Please indicate whether you agree or disagree with each one, using a 0 to 10 scale.”*Significantly higher statistically at the 90% confidence level or higher versus the other segment; **Directionally higher at the 80-90% confidence level
“I Want To Get To The Very Top Of My Field or Profession”
44% 44%
24%18%
Minority-Owned Businesses Non Minority-Owned Businesses
68%**62%
Strongly Agree
Agree
*
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Over two-thirds of minority owners make all business purchasing decisions autonomously
“Which of the following statements best describes your role in most of your company’s purchasing decision?”*Significantly higher statistically at the 90% confidence level or higher versus the other segment
Role in Purchasing Decisions
32%43%*
22%
30%*
46%*
27%
Minority-Owned Businesses Non Minority-Owned Businesses
Personally make all the purchasing decisions
Others give advice, but personally make final decision
Decisions are made jointly with others in company
68%*57%
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Minority owners are highly engaged with technology products and services
Technology Importance/Usage
“How important are wireless services and applications in your day-to-day operations?” “How much do you agree or disagree with each of the following statements about technology?” “Which of the following products or services have you used in the past year for your business?” “Which of the following have you personally used during the past year?”*Significantly higher statistically at the 90% confidence level or higher versus the other segment
23%
28%
25%
68%
33%*
36%*
42%*
85%*
Personally used payment apps (e.g., applePay, currentC) past year
Used mobile or Internet payment devices (e.g., Square, Paypal) for business past year
Likely to add cloud-based solution in next year
Rate wireless services/applications as extremely/very critical
Minority-Owned Businesses Non Minority-Owned Businesses
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Minority-owned businesses are significantly more likely to employ mobile solutions
“How much do you agree or disagree with each of the following statements about technology?” “Thinking about your company website, was it designed for mobile as well as desktop/laptop usage?”*Significantly higher statistically at the 90% confidence level or higher versus other segment
32%
43%
70%
50%*
60%*
85%*
My company is using mobile to transform our customers' experience
In lieu of paper, I often use my SmartPhone for boarding passes, tickets, other payments
and receipts
Company website is designed for mobile usage
Minority-Owned Businesses Non Minority-Owned Businesses
Technology Adoption Attitudes(% Agree)
THE BUSINESSJOURNALSA DIVISION OF ACBJ 17
Four out of ten minority-owned businesses generate revenue from social media
“Has your company generated revenue directly from Social Media?”*Significantly higher statistically at the 90% confidence level or higher versus other segment
42%
29%
Minority-Owned Businesses Non Minority-Owned Businesses
Generate Revenue From Social Media
*
Importance of Community at Home and Abroad
THE BUSINESSJOURNALSA DIVISION OF ACBJ
Engagement with the local community has been increasing among minority business owners
”Following are a series of statements which may/may not reflect how you think about business or life in general. Please indicate whether you agree/disagree with each one using a 0-to-10 scale.”
50%
45%
48%
60%
62%
54%
66%
61%
65%
Our company is actively involved in the local community to promote good will & to generate
business
Marketing/selling directly to the local community is a key component of our company's success
First and foremost our company tries to do business with other local companies
2017 2016 2015
Local Business Attitudes Among Minority Business Owners(% Strongly Agree)
19
THE BUSINESSJOURNALSA DIVISION OF ACBJ 20
The social responsibility of businesses today is a strong and growing belief among minority-owned companies
“Businesses Today Have A Responsibility To Address Key Social And Environmental Issues”
(% Strongly Agree)
“Which of the following marketing and advertising vehicles has your company used in the past 12 months? Check all that apply.”*Significantly higher statistically at the 90% confidence level or higher versus other segment
69%*
64%
Minority-Owned Businesses
Non Minority-Owned Businesses
(Trended Among Minority-Owned Businesses)
55%52% 53%
62%
69%
2013 2014 2015 2016 2017
THE BUSINESSJOURNALSA DIVISION OF ACBJ
Almost all minority-owned businesses source sales locally, but many are also reaching targeted communities across the U.S. and abroad
“Using 100% points, how would you break out your companies 2016 sales among the following three categories?” “In the past year, did your company increase the amount of sales that it generated nationally (i.e., sales made in the U.S. that were not local)? *Significantly higher statistically at the 90% confidence level or higher versus the other segment
Minority-Owned Businesses
Non Minority-Owned Businesses
Locally (Within your local area) 95% 95%
Nationally (The rest of the U.S.) 64 62
Internationally (Outside the U.S.) 38* 26
Have increased the amount of sales generated nationally 54%* 41%
21
Where Company Generates Sales
THE BUSINESSJOURNALSA DIVISION OF ACBJ 22
CONTACTS
Jessie Shaw, Vice President [email protected]
Amy Innerfield, Associate Research [email protected]
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