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Businesses Owned by Women of Color Growing Faster than the Overall Economy

Employment, sales also on the rise

Release by the Center for Women's Business Research

Washington, DC – Firms owned by women of color are growing at six times the rate of all U.S. firms, according to estimates released today by the Center for Women’s Business Research and underwritten by Bank of America. Between 1997 and 2004, the number of privately-held firms that are 51% or more owned by women of color grew by 54.6%, while all privately-held firms in the United States grew by 9.0%.

The report, “Businesses Owned by Women of Color in the United States, 2004,” reveals that these businesses not only are growing in number, but also are expanding in employment (up 61.8%) and sales (up 73.6%). As of 2004, there are an estimated 1.4 million privately-held firms which are majority-owned by women of color and these firms employ nearly 1.3 million people and generate $147 billion in annual sales.

“There has been significant growth in women’s entrepreneurship among every major racial and ethnic group,” said Myra M. Hart, Professor, Harvard Business School and Chair, Center for Women’s Business Research. “Between 1997 and 2004, African-American women-owned businesses grew by 32.5%, while Hispanic women-owned businesses grew by nearly 64% (63.9%). The two groups seeing the largest growth in women-owned firms are Asian and Pacific Islanders and Native Americans/Alaska Natives (both grew by 69.3%).”

“This is a positive sign for the entire country,” Hart continued. “At this crucial time for the economy, we’re seeing that greater participation in entrepreneurship among women from a variety of backgrounds is playing an important role in facilitating economic growth.”

This is the final part of the Center for Women’s Business Research’s 2004 biennial update, which includes updated estimates of the number of women-owned businesses in the U.S., 50 states, and top 50 metropolitan areas. According to this report, the 1.4 million businesses that are majority-owned (51% or more) by women of color represent more than one-third (35.6%) of all of the firms owned by persons of color. Additionally, one out of every five (21.4%) privately-held, 51% or more women-owned firms is owned by a woman or women of color.

"Bank of America applauds the efforts of the Center for Women's Business Research to learn more about women business owners – incredibly vital and important contributors to our nation's economic health," said Lynn Pike, president, Bank of America Small Business Banking. "I see the results of this study as a call to action for all financial service companies to design and deliver solutions that will help women-owned businesses grow and prosper now and into the future."

When broken down by industry, the greatest estimated growth for firms owned by women of color was in services (55.8%), followed by transportation/communications/public utilities (47.3%), and agri-businesses (34.8%).

The top 10 states for privately-held firms that are 51% or more owned by women of color (based on an average of the number of firms, employment, and sales) are: 1) California; 2) Texas; 3) Illinois; 4) New York; 5) Florida; 6) Maryland and New Jersey (tied); 8) Michigan; 9) Virginia; and 10) Ohio.

The 10 states with the highest growth rates of privately-held businesses that are 51% or more owned by women of color (based on an average of the number of firms, employment, and sales) are: 1) Oklahoma; 2) Vermont; 3) Alaska; 4) Montana; 5) Massachusetts; 6) Nevada and North Dakota (tied); 8) Idaho and South Dakota (tied);
and 10) Michigan.

The 10 states in which firms 51% or more owned by women of color comprise the greatest share of all women-owned firms are: 1) Hawaii; 2) California; 3) District of Columbia; 4) New Mexico; 5) Maryland; 6) Texas; 7) New York; 8) Florida; 9) Georgia; and 10) Alaska.

Methodology

Estimates of the number, sales, and employees of firms owned by women of color are derived from the Census Bureau’s most recent published data in the “1997 Survey of Minority-Owned Business Enterprises” (SMOBE) as well as supplemental unpublished data provided by the Census. The estimates are projections based on a linear model extending 1992-1997 growth into 2004. The projections are for privately-held firms in the United States owned at least 51% by a woman or women and at least 51% by a racial or ethnic minority, identified as African American, Hispanic, Asian American/Pacific Islander, or Native American/Alaska Native. Estimates and growth rates were calculated separately for each minority group, all minorities combined, and each state as the data permitted. Adjustments related to ownership, incorporation, undercounts, and growth rates were made as necessary. See Center for Women’s Business Research: “Businesses Owned by Women of Color in the United States, 2004,” November 2004, for more details.

Center for Women’s Business Research

Center for Women’s Business Research is the premier source of knowledge about women business owners and their enterprises worldwide. The Center’s mission is to unleash the economic potential of women entrepreneurs by conducting research, sharing information and increasing knowledge about this fast-growing sector of the economy.

Since 1989, the Center has generated research-based intelligence that has helped public- and private-sector leaders, advocates, and individual women business owners make informed strategic decisions for generating greater business opportunities.

The Center shares its knowledge of the economic and social aspects of women’s entrepreneurship with policy makers, financial institutions, corporate leaders, government agencies, academia, and the media through research reports, press releases, newsletter publications, seminars, speaking engagements, and worldwide on the Internet at www.womensbusinessresearch.org.

Bank of America

Bank of America is one of the world's largest financial institutions, serving individual consumers, small businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The company provides unmatched convenience in the United States, serving 33 million consumer relationships with 5,800 retail banking offices, more than 16,000 ATMs and award-winning online banking with more than eleven million active users. Bank of America is the #1 Small Business Administration lender in the United States. The company serves clients in 150 countries and has relationships with 96 percent of the U.S. Fortune 500 companies and 82 percent of the Global Fortune 500. Bank of America Corporation stock (ticker: BAC) is listed on the New York Stock Exchange. (www.bankofamerica.com).

The report, Businesses Owned by Women of Color in the United States, 2004, is available for $130. (Discounts are available for Center corporate partners and NAWBO members.)  Purchase the entire printed 2004 update series (including the National & State ($155), Metropolitan ($155), and Women of Color ($130) updates) for a discounted price of $375. The National & State and Metropolitan updates are available in print or on CD-ROM. For further information, contact: Center for Women’s Business Research, 1411 K Street, NW, Suite 1350, Washington, DC 20005-3407 Phone: 202-638-3060, ext. 10. Email: info@womensbusinessresearch.org, Web site: www.womensbusinessresearch.org. Copyright © by Center for Women's Business Research.