And still we rise: census report tracks dramatic increase in start-ups of black-owned businesses

Black Enterprise, April, 1996 by Cliff Hocker

The good news--black-owned businesses in the U.S. grew by a whopping 46% from 1987 to 1992. So what's the bad news? Those same businesses still trailed behind the national average when it came to revenue growth, according to a recently released report.

According to the report--1992 Black-Owned Businesses--released by the Commerce Department, the number of black-owned businesses grew from 424,165 in 1987 to 620,912 at the end of 1992. Businesses owned by nonblacks increased from 13.7 million to 17.3 million during that same period--a 26% increase.

"The fact that we are having this significant formation of black-owned businesses, even in the midst of the recession, means the quest for entrepreneurship continues to be very strong," says Thomas D. Boston, professor of economics at the Georgia Institute of Technology and a past participant in a BLACK ENTERPRISE Board of Economists roundtable.

While the overall news is encouraging, Boston says the disturbing news is that while the number of black businesses has grown impressively, revenues have lagged behind. Revenues at black-owned businesses, including individual ownerships, partnerships or subchapter S corporations, rose by 63% to $32.2 billion, compared with the revenue growth of nonblack-owned businesses, which rose 67% to $3.32 trillion over that same time period.

"While we're getting a rapid rate of growth in the number of firms, we're still seeing a much slower rate of return, which translates into the fact that the average revenue per firm is decreasing over that period," Boston says.

Receipts per firm averaged $52,000 for African American-owned firms, compared with $193,000 for all U.S. firms. Fifty-six percent of African American-owned firms had receipts under $10,000, and approximately 3,000 firms had sales of $1 million or more. The survey also shows that 10% of African American firms with paid employees accounted for 70% of the gross receipts of black companies. Of these firms, 342 had 100 or more employees and accounted for $6 billion in receipts.

                          SETTING UP SHOP