By Krissah Williams
Washington Post Staff Writer
Friday, July 29, 2005
Women and minorities have started businesses at a much faster clip than Americans as a whole, but the companies report sales that are lower than the national average, according to Census Bureau figures released yesterday.
In the period between 1997 and 2002, the number of businesses owned by women grew 20 percent, to 6.5 million, twice as fast as all U.S. businesses. The total number of businesses owned by blacks, Hispanics and Asians grew 33 percent, to 3.9 million.
But more than half of women- and minority-owned businesses have no employees and earn much less than the national average. For example, black-owned businesses with no employees earned an average of $20,761. Hispanic-owned businesses with no employees earned an average of $30,925.
"More minorities, especially African Americans and Hispanics, are seeing themselves as business owners, [but] we need to focus on helping those businesses grow larger," said Ronald N. Langston, the national director of the Minority Business Development Agency, during a news conference at the National Urban League Convention at the Washington Convention Center.
The census surveyed 2.4 million business owners with sales of more than $1,000 for the economic report. It culls the data for race, gender, ethnicity, business sales and geography. The final report has a category for women, which includes all ethnic groups. Women are also included in the race and ethnic categories, which are not broken down by gender.
Historically, studies have shown that women and minorities have left the corporate world and started their own companies because of frustration with disparities in pay, barriers to promotion or a desire for more independence.
Rosa Grillo, a District native of Afro-Cuban descent, left a position in the U.S. Office of Personnel Management to open her own public relations firm downtown in 1999. "I wanted to control my own life and my ability to raise my kid," she said.
The Washington region has been fertile ground for her, and other minority and women entrepreneurs. Grillo and Co. has grown enough that Grillo has plans to hire a senior public relations person and an office manager in the coming weeks. Her company recently became an 8(a) firm, which allows it to apply for federal contracts specifically set aside for small and minority-owned businesses.
Though the Census Bureau will not release data for counties and metropolitan areas until later this year, Anirban Basu of Sage Policy Group Inc. in Baltimore said business growth in the District, Maryland and Virginia is linked to federal government spending. Government contracting programs require that a percentage of all contracts be directed toward small and minority-owned businesses.
"A large portion of federal government contracts end up in the hands of large firms, however these large firms need smaller firms with specialized skills to help them satisfy the requirements of the contracts," Basu said.
Locally, in the same time period, minority business growth was led by black-owned businesses, which continue to have a strong presence in the District and its suburbs. But black-owned businesses appear to be going the way of the District's black population, which for the past decade has been increasingly lured into the suburbs. While about a quarter of all businesses in the District are black-owned, that number is relatively unchanged from the 1990s. Meanwhile, the number of black-owned businesses in Maryland grew by more than 20,000. Local business associations say much of that growth occurred in Prince George's County, which has also become a hub of the Washington area's black middle class.
Prince George's residents QC Jones and Anthony Hemmans decided to start an information technology and software engineering company after watching local tech companies' earnings soar in the 1990s.
But they say they faced the same hurdle as many minority and women business owners -- lack of capital.
"We didn't have angel investors or rich uncles," Hemmans said.
It took them two years to save enough money to get TMI Solutions Inc. off the ground. In 2003, they quit their jobs but had no employees. Jones worked from his basement and Hemmans worked from clients' offices for a while. In January, the company began leasing office space in a Largo tech incubator. They have also hired 10 employees to keep up with the government contracts TMI has won from the state of Maryland and Prince George's County.
On the other side of the river, growth in Virginia was driven by Asians and Hispanics, which collectively opened about 14,000 companies in the state between 1997 and 2002. In Northern Virginia, many of those companies are immigrant-owned, which reflects the state's growing foreign-born population.
One of those business owners is Juan Flores. He came to Northern Virginia from Chirilagua, El Salvador, in 1976. In 1991, he quit his job at a tire company to open his own auto repair shop. Last year, he used part of his earnings from the shop to open a Salvadoran restaurant in Falls Church. He recently opened a second one in Arlington and has also invested in a beauty salon owned by a family member in Culpepper.
"When I came here, there was no one. There wasn't anything," Flores said. "Now there are a lot" of Hispanic-owned businesses.