Black-owned Businesses: A Profile of High Performers

In 2011, small businesses (with 10 to 100 employees) owned by blacks had average revenues of $1.7 million and employed 21 workers. Black-owned businesses had significantly lower revenues than did Latinos; however, the latter were more concentrated in construction industries while blacks were more situated in professional service enterprises. Typically, to compare the revenue of a service industry to that of a production industry, one should multiply the service industry revenue by 3. Even still, the revenue of blacks was lower than that of other groups.

This article provides an industry profile of high-performing Black-owned gazelles, based on information generated through the Gazelle Index national quarterly survey. The Index tracks information pertaining to the outlook, future hiring plans and current conditions of minority, women and non-minority small businesses.

The Gazelle Index survey results are based on a nationally representative sample of 631 responses from firms with 10 to 100 employees. The survey is stratified by race and ethnicity (i.e. African American/black, Caucasian/white and Hispanic/Latino) and by gender. The results for each group have a 5% margin of error.

Here are also some very interesting facts about black business owners based on the national survey

When black businesses were separated into a high-growth group (20% or higher annual increase in employment) and no growth group (less than 1% annual employment growth), the following factors explained the differences between two groups. High growth companies:

◦      Set much higher annual growth targets

◦      Were more likely to have developed and executed a business growth plan.

◦      Were more likely to have implemented improvements in management efficiency.

◦      Were less likely to focus on competitors.

◦      Were more likely to have younger owners.

What was interesting is that there was no difference in the level of risk taking between the two groups or in how many hours each spent working in their businesses. Based on the outcome, it appears that the CEOs of high-growth firms worked smarter, even if they did not work longer hours.

Industry Profile of Black-owned High-Performing Small Businesses

  • Largest industry concentration for black businesses: Management and Administrative Services, 21.2%
  • Second largest industry concentration: Construction; 19.8%
  • Average revenue: $1.7 million
  • Industry with largest revenue: Wholesale trades, $8.9 million
  • Industry with smallest revenue: Food Services; $555,000
  • Average employment: 21 Workers
  • Industry with the largest average employment: Information Technology, 28
  • Industry with the Smallest Employment: Finance and Real Estate; 14