(ThyBlackMan.com) Despite the fact that black company ownership is on the rise across the United States, our research reveals that the Mid-Atlantic region offers the finest business environment for black people.
Despite societal hurdles that still exist and a global epidemic, black entrepreneurship is sharply increasing. As per the UC Santa Cruz study, black-owned firms rose astonishingly 38% from February 2020 to August 2021, whereas white- and Asian-owned enterprises had declines of 3% and 2%, correspondingly. Additionally, the Kauffman Foundation discovered that in 2020, a year plagued by COVID, more black Americans founded firms than in any of the preceding 25 years.
However, according to our analysis of Census Bureau statistics, black-owned firms only account for 2.3% of employer enterprises in the US, a far distant from 14.2% of the populace that black Americans make up. Funding shortages merely emphasize this mismatch. According to the Federal Reserve’s 2021 Small Business Credit Survey, only 13% of black businesses were successful in obtaining the finance they needed, a significantly lower percentage than the 40% success rate for white enterprises.
The size and diversity of America produce regional differences in business success rates. We set out to assess every state based on a variety of variables in order to determine areas in which the US black businesspeople are best positioned to flourish.
For each state, we gave the following race-specific success factors the highest weights:
- percentage of black-owned enterprises,
- the proportion of black-owned enterprises’ staff
- black-owned enterprises’ average yearly payroll,
- black company owners’ average yearly income.
We also took into account a number of general measures, like the rate of unemployment, state income rate, and living costs to provide a more comprehensive economic picture of each state.
What We Found Out?
Black business owners have found great success in the Mid-Atlantic region of Virginia, Maryland, and Delaware, which received slots 1, 2, and 5, respectively. The region’s success can be ascribed to several factors, including the sizeable black population there and public and private programs designed to support black-owned enterprises.
When it pertains to payroll, black-owned businesses have significant disparities. The estimated yearly payroll for employer firms across the country is $1.25 million, which is more than four times the $301K average yearly income for employer businesses managed by black people. Almost definitely, the previously indicated financial deficit is at play in this situation. An earlier study by the Stanford Institute found that black-owned businesses only received $500 in outside stock at the time of establishment, compared to an average of $18,500 for white-owned businesses. Black firms encounter difficulties when they try to catch up after starting off behind.
The Top 5 List
Virginia
Virginia comfortably holds the top spot in the rankings thanks to three of the top five criteria. The 2.18% of the workforce in the Old Dominion is employed by black-run firms, which ranks second nationwide. There are 755 black-run employers for every million persons (third-ranked nationwide). Additionally, the average annual payroll of black-owned companies is $437K, which places them fifth overall.
Virginia concluded as the No. 4 state for black women-owned firms in one of our prior data reports, and it was ranked 10th in our most recent study on the best states for female-run startups. The Virginia state authorities maintain a registry of all recognized small businesses in the state in an effort to expand regional minority-run firms and stimulate contracts with those enterprises.
Maryland
Maryland has the fourth-largest percentage of black citizens in the country and the largest proportion of black residents of just about any state on the East Coast, with 31% of its population being black. Therefore, it should not come as much of a revelation that there are numerous black company owners in Maryland.
Both the number of black-owned enterprises per million residents (1,213) and the percentage of the workforce that is employed by black-owned firms (3.49%) are highest in the Free State. The average annual payroll for black-owned enterprises in Maryland is $465K, ranking fourth highest in the US. The state government provides money, small biz certifications, and help programs, among other resources, for minority business owners.
Texas
Despite the fact that no metric immediately stands out, Texas consistently earns high rankings. Black business owners in the Lone Star State have an average annual salary of $64,240, ranking 10th nationwide, and employ $337K on average per year, making it a lucrative place for them to launch a company (17th overall).
Due to Texas’ absence of an income tax, all of this money can be spent more effectively there. The Dallas Black Chamber of Commerce and the Texas Black Expo are two organizations that can offer local black businesses resources. Both of these groups work to support neglected businesses.
Nevada
Nevada’s position on this list could surprise some people given that the state’s black population only makes up 12.1% of the total population. Nevertheless, Nevada is an exceptionally business-friendly state, and somehow this holds true for both huge multinationals and tiny, minority-owned firms. In reality, the SBA reports that the majority of businesses in Nevada are owned by companies with under 100 employees.
Nevada being among the few states without a state income tax is one of the things that makes it “open for business”. Nevada also has the largest yearly black-owned business payroll in the US, at $586,000.
The first casino owned by African-American in this state was in 2002. That was the time of the rise of online bookies, the industry that now gives you the opportunity to choose from tens of thousands of operators, such as the best Romanian casino sites. Two decades ago, the legendary Don Barden opened a casino in Las Vegas.
Delaware
According to Census Bureau statistics, black people make up 24.7% of the population in Delaware, making it the state with the seventh-highest black population throughout the nation. Delaware is fourth in terms of the percentage of the workforce that is recruited by black-owned businesses (1.74%) and sixth in regards to the number of black-owned enterprises per million residents (648).
The Delaware Black Chamber of Business was established in 2020 with the goal of fostering and expanding black-owned businesses in the region. Since then, it has assisted black businesses through funding alliances and networking occasions.
Staff Writer; Terry Jackson