The number of black-owned businesses in the United States increased by 60.5 percent – faster than for any other ethnic group – between 2002 and 2007, according to a report released Tuesday by the U.S. Census Bureau.

That was the good news.

The bad news: Black-owned firms tended to have lower gross receipts and employ fewer workers than those owned by other groups.

In 2007 the Census Bureau counted 1.9 million black-owned businesses, accounting for gross receipts totaling $137.5 billion.

“Black-owned businesses continued to be one of the fastest growing segments of our economy, showing rapid growth in both the number of businesses and total sales during this time period,” said Census Bureau Deputy Director Thomas Mesenbourg.

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BLACK BUSINESSES BOOM: Black-owned businesses grew at three times the rate of others in the United States from 2002 to 2007. SOURCE: U.S. Census Bureau
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North Carolina saw a 60.9 percent growth rate in the number of black-owned businesses, going from 52,122 in 2002 to 83,880 in 2007. South Carolina saw a 53.1 percent increase (28,613 to 43,810).

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Government officials said they were unsure what effect the recent recession might have had on the number of black-owned firms. The report did not include some of the worst years of the economic downturn.

Despite a growth rate that was triple the national average, 87 percent of black-owned firms reported gross receipts of less than $50,000, compared with 65 percent for all U.S. firms. Only 1 percent of black-owned businesses reported receipts of $1 million or more, compare with 5 percent for all U.S. firms.

Marc Morial, president and CEO of the National Urban League, said the explosive growth in the number of black-owned businesses might be traced to a weak U.S. economy – a trend he dubbed “entrepreneurship by necessity.”

Terry Jones, chairman of the Charlotte Mecklenburg Black Chamber of Commerce agrees.

“I think some of that growth is due to people being laid off or displaced, and they are starting to pursue business," Jones told Qctymetro.com in a telephone interview. "We have seen quite a bit of that. Part of that motivation is probably due to necessity.”

In a conference call with reporters during the Census Bureau release, Morial called on federal, state and local governments to develop a “hyper-focus” on black- and minority-owned businesses.

“Every city, every county, every state…needs to have a plan that focuses of small business and minority business,” he said. “There is a spirit of entrepreneurship out there that needs to be feed, that needs to ne nurtured, that needs to be energized.”

Morial said black-owned businesses are often hampered in their revenue growth by a lack of “capital, connections and contracts,” and he encouraged banks and equity investors to look more closely at minority-owned businesses.

“What I hope this report says loudly and clearly to the investment community out there is that you are missing an emerging market in the United States, he said. “If minority business are growing at a faster clip than overall businesses…imagine what the grow rate would be if those barriers were eliminated or lowered… We need the investor community… to look a this report and recognized that they are missing an incredible opportunity.”

Jones, the Black Chamber chairman, said African American entrepreneurs must look beyond banks to find non-traditional sources of capital -- including angle investors, private equity and venture funding.

"There has to be a greater focus on non-bank financing," he said. "In order to grow, you need capital."

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