Recently published statistics denoting high concentrations of black-owned businesses in large metropolitan areas, including Washington, tend to convey a sense of well-being and unlimited opportunities in those communities. It's necessary to look beyond mere statistics, however, to get a real sense of the relative strength of black-owned businesses here and in other major metropolitan areas.
Washington, for example, ranks fourth among the top 10 metropolitan areas in the number of black-owned businesses, based on receipts for 1982, the last year for which data of this type is available. But only one black-owned business in the Washington area is among the top 50 companies in Black Enterprise magazine's list of the top 100 black-owned firmsfor this year. Only three, in fact, are among the top 100 based on 1986 sales.
That fact alone can't be taken as a definitive measure of the size and strength of black-owned businesses here. It does serve to illustrate, nonetheless, that receipts of black-owned firms in metropolitan Washington are small compared with total business volume in the area.
Washington certainly isn't unusual because of that. Nationally, black-owned businesses registered receipts estimated at $17 billion in 1986, accounting for 0.31 percent of total business sales, according to Black Enterprise.
This area ranked third, behind Los Angeles and New York, in number of black-owned businesses (18,805) and fourth in the number of black-owned businesses per 1,000 black residents (22), according to a recent article in American Demographics. Black-owned businesses in the Washington area accounted for $556.4 million in sales in 1982, putting this area in fourth place, behind Chicago, Los Angeles and New York, according to figures contained in the latest issue of MarkeTrends, the newsletter of the Greater Washington Research Center.
The special issue of MarkeTrends compares Washington with nine other major metropolitan areas based on economic and demographic information gathered from those areas. In noting Washington's fourth-place ranking among areas with the highest sales for black-owned businesses, GWRC emphasizes that New York has about six times as many residents as the D.C. area, Los Angeles has four times as many and Chicago twice as many.
Comparisons such as those have little real meaning when it comes to measuring the performance of black businesses and their share of economic power in their respective areas. In fairness to GWRC, black-owned businesses is only one of several categories it selected to show how well Washington compares with other leading metropolitan areas.
Using data from the 1982 Survey of Minority Owned Businesses, William O'Hare, director of policy studies at the Population Reference Bureau Inc. in Washington, compiled a list of what he described as the best metropolitan areas for black businesses. In an article in the July issue of American Demographics, O'Hare notes that it's not surprising that the data show a higher number of black-owned businesses in metropolitan areas with larger black populations. To refine the measure of black business development, however, O'Hare uses what he calls the "black business rate" -- the number of black-owned businesses per 1,000 blacks in an area.
Even that fails to provide a meaningful account of the size and strength of the black-owned business sector. O'Hare's account of "Embattled Black Businesses" last year in American Demographics provided real insight into the raw numbers.
"Today, black participation is minimal," O'Hare wrote in a collaborative effort last year with Robert Suggs, a senior research associate at the Joint Center for Political Studies.
O'Hare and Suggs have another set of figures to make a point. They estimate blacks represent 12 percent of the population, but black-owned businesses account for only 0.16 percent of all business revenue in the United States. The latest survey of minority-owned businesses, they continued, showed that the number of black-owned firms increased 47 percent between 1977 and 1982. Most of the increase occurred in sole proprietorships and businesses with annual sales of less than $5,000, however. The owners of most of those businesses have no employes.
A recent survey determined that there are 5,700 minority-owned firms in Prince George's County. Yet, only 193 of those firms employ someone other than the owners.
O'Hare and Suggs pointedly concluded that a closer look "indicates that the black business community may have lost ground in recent years." Notwithstanding the growth of large black businesses -- "a bright spot in an otherwise gloomy picture" -- black firms still are only a small part of American business. Their revenue, as a share of total U.S. business revenue, is "continuing to decline," O'Hare and Suggs said.
Rankings and comparisons are like beauty contests and serve little purpose in assessing the development of black-owned businesses. The relevant issue in terms of black-business concentration is the climate for minority-owned firms in metropolitan areas.
For an adequate measurement of that, one needs to look at access to capital, competition, market penetration, equal access, technology's impact on the marketplace, and local governments' support of minority business development.