So what does this mean for African American entrepreneurs?
It should first be noted that the Census Bureau’s Annual Survey of Entrepreneurs doesn’t cover all entrepreneurs and small businesses. It mainly focuses on the roughly 290,000 firms in the U.S. with paid employees and leaves out the millions of solo and non-employer companies in the U.S.
Also, the article quotes Thomas Boston, a professor and himself a business owner, who says that blacks as a group start out with less wealth, and were hit particularly hard by the financial crisis because a larger share of their wealth was in home equity. In addition, he noted that many black-owned firms have focused on doing business with the public sector, leaving them vulnerable to cutbacks in government spending and affirmative action programs.
Cultural factors may also be playing a role. Malcolm Crawford, founder of a minority business association in Chicago blamed culture factors. “Entrepreneurship is just not pushed in our community,” he told the Journal.
That said, there is good news for African-Americans entrepreneurs. According to the Census Data report half of the firms started by black people were launched in just the past five years. That’s significant. Cheaper and better technology has been a driver of this growth. And education is a big part. More and more African-Americans are attending university , majoring in business topics and that number continues to increase. I’m betting that this trend will continue and the ownership percentages will favorably change.