Good News, Bad News

Black-Owned Companies Multiply Rapidly, But Remain A Small Cog In The U.S. Business Machine. In Connecticut, Some Say The Improvement Is Hard To See

April 19, 2006
By RITU KALRA, Courant Staff Writer

U.S. Census officials and black business leaders applauded data released Tuesday showing that the number of businesses owned by black entrepreneurs grew by 45 percent between 1997 and 2002, more than four times the national rate for all businesses.

But the numbers also suggest that progress is still lagging significantly. Despite the rapid growth, black-owned businesses account for a small share of all companies in the country. And their revenues account for an even smaller fraction of total U.S. sales.

"Even if the Census Bureau is right about the numbers, the value of those businesses and the wealth generated by black businesses is insignificant," said Vanessa Burns, executive director of Connecticut's African-American Affairs Commission.

"That's one of the reasons why we fight around here for the need for capital infusion, to give money to minority businesses. Our problem is we start small, and we stay small."

Black entrepreneurs owned 1.2 million businesses in 2002, employing more than 756,000 people and generating nearly $89 billion in revenues, according to the Census Bureau report.

That translates into 5 percent of the nation's 23 million non-farm businesses, 1 percent of all employees and 0.4 percent of the $23 trillion in receipts for all U.S. businesses.

African Americans as a whole made up about 12 percent of the U.S. population in 2002.

To some national business leaders, the gains were encouraging even though the gap was still wide.

"We're about halfway there," said Harry Alford, president and CEO of the National Black Chamber of Commerce. "The future is bright. We will continue to spiral up."

The growth of black-owned enterprises in Connecticut largely matched the nation, according to the census report. Black entrepreneurs owned 10,309 businesses in the state in 2002, up 42 percent from 7,251 in 1997.

For the state's community leaders and black entrepreneurs, the numbers were heartening, but also a bit puzzling.

"I'm from New Haven and I know what's transpired in New Haven," Burns said. "There has been an increase in Hispanic businesses that you can see. I just don't see the same with black-owned businesses. I could be wrong. Maybe the growth is just not happening in New Haven, but it is happening everywhere else?"

Entrepreneurs in Hartford said they haven't seen a surge in black-owned businesses either.

"I believe the numbers, but I haven't seen it here in Hartford," said Anthony Griffin, owner of Anthony's Clothing on Barbour Street in the North End. "There hasn't been a big influx of black-owned businesses here."

Griffin, who runs a mentoring program that teaches teenagers how to become entrepreneurs, said obstacles African Americans face in the business world prevent black entrepreneurs from thriving.

"Psychologically, a lot of our youth feel inferior. They haven't been given the self-esteem and confidence necessary to compete," said Griffin, 45, who draws on his own experiences - including growing up in a rough neighborhood and spending the 1980s in jail for armed robbery - to connect to inner-city kids.

"Everyone wants to work, but a lot of the kids just don't have the etiquette. They don't understand what's expected from them in the work place," Griffin said.

Not knowing how to navigate the system is among the toughest hurdles for black entrepreneurs, said Raymond Harris, who opened Book's Blessed Hand Barber & Beauty on Main Street in Hartford five years ago.

"It's very difficult. I had to do this without a loan. It was basically a shot in the dark. I was illiterate to the whole system," said Harris, 36, who recently found out he owes more than $40,000 in back taxes to the IRS. "That was partly my mistake, because I just jumped into it without doing the proper stuff I should have done. But that's me being out here, being a black business owner. That's what we do. We jump out on faith."

The census report, based on administrative records and a survey of 2.4 million businesses, also shows that revenue for black-owned businesses in Connecticut grew 37 percent from 1997 to 2002, surpassing the national rate of 25 percent over the five-year period. But with a possible error of plus or minus 28 percentage points, the report's authors caution that the numbers can be misleading.

"In some states, the base numbers were so small that the growth rate would have been phenomenal," said Michael Bergman, a spokesman for the Census Bureau. "And that's why when you get into the smaller level of geography, like state, we shied away from doing a lot of growth statistics from this report."

The report is the third in a Census Bureau series on businesses owned by women, Hispanics and blacks. Together, the reports show that the three groups are underrepresented in business ownership but are narrowing the gap with white men.

From 1997 to 2002:

The number of all U.S. businesses grew by 10 percent, to about 23 million.

The number of businesses owned by women grew by 20 percent, to 6.5 million.

The number of businesses owned by men grew by 16 percent, to 13.2 million.

The number of Hispanic-owned businesses grew by 31 percent, to nearly 1.6 million.

The number of businesses owned by white entrepreneurs grew by 8 percent, to 19.9 million.

The number of businesses owned by black entrepreneurs grew by 45 percent, to 1.2 million.

Overall, black entrepreneurs owned 5 percent of U.S. businesses in 2002, Hispanics owned about 7 percent and women of all races and ethnicities owned 28 percent, according to the Census Bureau.

The Census Bureau defines black-owned businesses as private companies in which blacks hold at least 51 percent of stock or interest. The report does not classify public companies, with publicly traded stock, because they can be owned by many stockholders of unknown races and ethnicities.