Black entrepreneurship is a beautiful thing.
Not only do Black entrepreneurs embody resilience, creativity, and the pursuit of economic empowerment, they are taking action in creating opportunities for upward mobility and wealth creation within Black communities.
But of course, no good deed goes unpunished. In 2024, the state of Black businesses reflects a mixture of progress and persistent challenges, still as a result of systemic barriers and historical inequities. While there has been noticeable growth in the number of Black-owned businesses over the past few years, they still face significant barriers.
The Alliance for Entrepreneurial Equity unveils a new report that digs deeper into uncovering a dozen insights that illustrate significant disparities in access to capital, market opportunities, and resources.
“Recent legal challenges have taken direct aim at programs geared to marginalized communities, particularly around entrepreneurship,” says Imani Augustus, Director of the Alliance for Entrepreneurial Equity. “That’s why it’s even more essential for advocates and policymakers to truly understand the realities faced by entrepreneurs of color. Black business ownership is booming, but the economic landscape for Black entrepreneurs remains fraught with obstacles.”
This comprehensive look at the state of Black business in America is eye-opening to say the least.
The report found that while Black businesses have been steadily growing year-over-year, their presence remains significantly underrepresented in the market landscape. Most of these enterprises are small in scale, with a striking 97% boasting fewer than 20 employees, and a staggering 75% operating with less than five staff members.
Additionally, a considerable portion of Black-owned businesses are still relatively new, with many having been in operation for under two years. Despite their potential, the majority of these ventures are trailing in terms of revenue, with many bringing in less than $100,000 annually , yet they contribute to the diversity and vibrancy of the business community.
Moreover, they often face systemic barriers when seeking financial support, being shut out from conventional avenues for financing. This, coupled with their infrequent success in securing government contracts, underscores the ongoing challenges and disparities these businesses contend with.
Geographically, Black-owned businesses are more likely to be located in urban areas east of the Mississippi River. While they are spread across various industry sectors, they are still concentrated and tend to operate in sectors where access to capital and resources may be more limited. Despite being labeled as riskier by financial institutions, Black entrepreneurs demonstrate a willingness to explore alternative sources of financing, including fintech and online lenders, as traditional avenues remain largely inaccessible.
It comes as no surprise that while Black-owned businesses are showing signs of growth and resilience, they still grapple with significant hurdles. Despite their innovative potential and contributions to the economy, these enterprises are frequently sidelined, facing limitations in both resources and opportunities. Addressing these disparities requires concerted efforts to dismantle systemic barriers and create a more inclusive environment that fosters the growth and success of Black entrepreneurs and their businesses.
Read the full The State of Black Business 2024 here.