minority-owned businesses: the force driving small ... · hispanic-owned businesses are the fastest...

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.


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


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


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


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


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


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


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


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


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


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%


68%**62%

Strongly Agree

Agree

*


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%


Personally make all the purchasing decisions

Others give advice, but personally make final decision

Decisions are made jointly with others in company

68%*57%


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 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


Technology Adoption Attitudes(% Agree)


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%


Generate Revenue From Social Media

*

Importance of Community at Home and Abroad


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 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%



(Trended Among Minority-Owned Businesses)

55%52% 53%

62%

69%

2013 2014 2015 2016 2017


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



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


CONTACTS

Jessie Shaw, Vice President [email protected]

Amy Innerfield, Associate Research [email protected]

About The Business Journals:

The Business Journals is a division of American City Business Journals (ACBJ), the largest publisher of metropolitan business newsweeklies in the United States, with 43 business publications across the country reaching more than 3.6 million readers each week. We also offer specialty publications for sports fans, sports business readers and classic car enthusiasts.

minority-owned businesses: the force driving small ... · hispanic-owned businesses are the fastest...

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