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An Analysis of Growth Trends of African American Women-owned Businesses

African American women-owned businesses have grown at a rate that is 2.5 times that of women-owned businesses in the United States. Between 2007 and 2012, women-owned businesses grew by 27%, which is, in itself, a huge accomplishment. A closer look at where the growth is happening reveals that African-American women-owned businesses grew an astonishing 67% in the same five year time period. Go back a little bit more, to 2002, and  African-American women-owned businesses have grown 178%, making them the fastest growing group of women business owners.

Let’s start with the geographical trends. African-American women-owned businesses have seen growth rates of well over 100% in 12 states. The vast majority of states witnessed growth rates of over 50% too. This growth, however, was not seen to the same extent for African-American men-owned businesses – 42 states did not surpass 50% growth. This suggests that the exceptional growth at the national level is not concentrated in a handful of states nor is it limited to the states with exceptionally high levels of African- American women populations. Instead, we are witnessing enormous increases in the number of African American women-owned businesses in a majority of states. We call this a trend.

African-American men-owned businesses, however, are not experiencing the same geographical percent increases as women-owned firms. In fact, nationally between 2002 and 2007, African-American women-owned businesses represented 48% of all African-American firms and 45% of all men-owned firms in the country. Women-owned firms rose 11 percentage points to 59% while men-owned firms reduced by 6 percentage points. This begs the question – what is enabling African American women to start ventures at a higher rate than African American men? Are their challenges different than African American men, and if so – how are they overcoming these obstacles?

For African-American women, the top five states with the highest growth rates were South Dakota (584%), Nevada (163%), North Dakota (141%), Iowa (127%), and Tennessee (121%). While some of these states had low rates of African-American business ownership in general at the time of the last survey, that does not diminish the profound growth, especially because in both North and South Dakota where the population is less than 2% African-American.

Industry also provides some dynamic insights about this group. African-American women business owners have seen the most drastic increases in the industry classifications of other services (123%), accommodations and food services (108%), agriculture, forestry, fishing and hunting (94%), manufacturing (89%), and utilities (80%). When we compare the top five industry growth rates for women business owners of other ethnicities and races, (Asian, Hispanic, Native Hawaiian and Other Pacific Islander, and White), there are some interesting nuances.  For instance, compared to their peers, African-American women-owned firms have the highest growth rate of all women-owned businesses in the industry of other services (which include auto/equipment repair, beauty salons, dry cleaning, pet care, and more). They are also the only women-owned ethnic/racial group to have manufacturing as one of the top five growth rates, an industry where women are generally underrepresented.   

The growth in number of firms is triumphant, but the revenue disparities remain. The majority of industries for African-American women-owned businesses fall short of $48,000 in annual revenues or average receipts. In fact, average receipts for an African-American woman-owned firm within the “other services” industry classification, which has the highest growth rate and the highest number of African-American women-owned firms (457,850), is $13,607. The growth in number is not replicated in revenues.

Alas, impact is also measured by jobs – and these women are creating more jobs, and doing so amidst one of the greatest economic crises. Since 2007, African-American women-owned businesses are responsible for an additional 71,503 U.S. jobs – an increase of nearly 30%. In comparison, African-American men-owned businesses created 10,727 U.S. jobs – only an increase of 1.9% since 2007. Between 2007 and 2012, African-American women-owned businesses created jobs at about 6.5 times the rate of African-American men-owned businesses.  This is important because job creation not only spurs economic growth, but also innovation.

Ultimately, we are seeing some amazing growth amongst African-American women-owned businesses. They are growing in number in all industry categories, have increased their revenues substantially, and are employing more & more individuals. Yet, it is important to remember that much of the growth we are witnessing is in industries with low average receipts. These low revenue categories could limit African American women-owned businesses’ ability to not only survive, but to scale effectively.

Policymakers and researchers must examine the African-American ecosystem in its entirety -- to not only look at these astonishing growth rates, but to explore the unique challenges and impediments for African American women that exist. The Council and the SBA Office of Advocacy is determined to gain a better understanding of this subgroup and has commissioned a study to explore the experiences of African American women-owned businesses. Expert panels and research will be conducted in Washington, DC and New York City. This research will not only supplement our research on the 2012 Survey of Business Owners, but go beyond statistics by gaining much needed qualitative data on this subject.  Once, we have a better understanding of the successes and limitations African-American women in business, we can develop strategic policies that increase their access to capital, access to markets as well as spur innovation and job growth.

For more information on African American Women-owned Businesses please see our most recent fact sheet.  

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