Minority-Owned Businesses: The Force Driving Small Business Growth

Transcription

1 Minority-Owned : The Force Driving Small Business Growth

2 Research Method o Nationally representative sample of companies with employees o o Business owners, executives and key decision makers 1,283 completed surveys o o 163 Minority owned business owners 1,120 Non-Minority owned business owners o January 2017 Notes: Minority-owned businesses: 50% or more of company is owned by a Hispanic, African-American, Native-American, Asian or any other member of a racial or ethnic minority group U.S. Census Bureau data is an additional source used in parts of this report. See source notes at the bottom of each page. 2

3 Executive Summary Source of Strong U.S. Business Growth Minority-owned businesses represent a powerful growth engine for the U.S. business market. Over the past ten years, their numbers have nearly doubled. They are now estimated to represent 11.1 million businesses nationwide. They employ over 6.3 million people, and generate more than $1.8 billion in revenues annually. Hispanic-owned businesses are the fastest growing segment (+46%), with African Americanowned businesses (+34%) and Asian-owned businesses (+24%) close behind. Minority owners run fast-growing, younger companies. Four out of ten have experienced sales growth of 11%+ over the past three years. Many are also young themselves: 40% are under 45 years of age. Self Sufficient with a Keen Entrepreneurial Spirit Importance of Community at Home and Abroad Over three-quarters of minority owners used personal savings to get their companies started. They are highly driven to get to the top of their fields, and are very hands-on with business. Most make purchasing decisions autonomously, and many don t even consult others for advice about these decisions. They appear facile with technology, employ mobile solutions, and have figured out how to generate revenue directly from social media. Community matters to minority-owned businesses. Over the past three years, their engagement with the local community has only grown stronger. They are very aware of the correlation between getting and keeping customers with their own giving back to the community. They also believe that businesses today have a responsibility to address key social and environmental issues. Their commitment to this ideal has dramatically increased over the past five years. Similar to all small and mid-sized businesses, almost all source sales locally. But minority owners do not stop there. Nearly 40% source sales from abroad, while simultaneously having expanded sales growth nationwide. 3

4 Source of Strong U.S. Business Growth

5 The number of minority-owned businesses in the U.S. is estimated at 11.1 million * 6.2M 11.1M Minority-Owned 24% 2.42M Minority-Owned 40% Non Minority- Owned 76% 4.26M Non Minority- Owned 60% Source: U.S. Census, Survey of Business Owners 2012: Number of firms with or without paid employees * 2017 estimate based on % increase from 2007 to

6 Hispanic-owned businesses are the fastest growing segment among minority-owned companies Hispanic-Owned African American-Owned Asian-Owned M +46% 4.8M $2,500 $2, M $2,500 $2, M 4.4M $2,500 $2, M 2.3M $640 $474 Billion Billion (Estimate) $1,500 $1,000 $500 $ M +34% 0.98M 1.05M $150 B $165 B (Estimate) $1,500 $1,000 $500 $ M 1.9M +24% $965 Billion $699 Billion (Estimate) $1,500 $1,000 $500 $0 Source: U.S. Census, Survey of Business Owners estimate based on % increase from 2007 to

7 Minority business owners are significantly younger than non-minority owners Age of Minority-Owned Business Owners Under 35 17%* 6% 14% 20% 40%* %* 26% % 54%* 55 or older 38% Minority-Owned Non Minority-Owned Average Age Please tell me the year in which you were born. *Significantly higher statistically at the 90% confidence level or higher vs. the other segment 7

8 Minority-owned businesses include more fast-growing, younger companies Total SMB Owners Owners of Minority- Owned Owners of Non Minority-Owned Annual sales (average) $7.0M $4.1M $7.5M* Fast-growing business (11%+ growth) 34% 43%* 33% # of Employees (average) Employees 73% 63% 74%* employees employees 6 10* employees Years in operation (average) * Business travel 1+/month 33% 41%* 32% # Business trips/year (average) * 9.1 Hours work per week (average) * *Significantly higher statistically at the 90% confidence level or higher versus the other segment 8

9 Minority business owners skew toward living in the South and West in urban locations Total SMB Owners Owners of Minority-Owned Owners of Non Minority-Owned Male 69% 65% 70% Married * College grad or higher Household Income (average) $194K $174K $199K Average Net Worth $1.5M $1.2M $1.6M* Value of investment portfolio (average) $451K $410K $460K A/B Counties 76% 87%* 74% Northeast * South Midwest * * West 23 32* 22 Republican * Democrat Independent * *Significantly higher statistically at the 90% confidence level or higher versus the other segment 9

10 Industry focus varies across minority segments Leading Industries Among Minority-Owned Other Services (see footnote) Administrative Support Construction Healthcare & Social Assistance Professional, Scientific & Technical Retail Trade Transportation & Warehousing Real Estate/Renting & Leasing Arts, Entertainment & Recreation Accomodation & Food Services Educational Services Finance/Insurance 3% 3% 3% 2% 3% 2% 3% 2% 2% 4% 5% 4% 5% 4% 4% 3% 2% 2% 3% 4% Other Services = Business and civic services, repair and maintenance services, personal and laundry services, etc. Source: U.S. Census, Survey of Business Owners % 5% 6% 7% 7% 8% 8% 8% 9% 8% 8% 8% 9% 11% 11% 11% 10% 11% 11% 13% 14% 14% 15% 16% 17% 19% 20% 25% Hispanic-Owned African American-Owned Asian-Owned Non Minority-Owned 10

11 Self Sufficient with a Keen Entrepreneurial Spirit

12 The large majority across all minority segments used personal money or savings to start their businesses Sources of Capital Used To Start or Acquire Business Personal/family savings, assets, home equity loan Hispanic-Owned African American- Owned Asian-Owned 77% 76% 75% Personal credit card Business loan from bank or financial institution Business credit card Business loan/investment from family, friends Government guaranteed business loan from bank or financial institution Other source(s) of capital Source: U.S. Census, Survey of Business Owners

13 Minority business owners are striving for success and want to be at the top of their fields I Want To Get To The Very Top Of My Field or Profession Strongly Agree 68%** 24% * 62% 18% Agree 44% 44% Minority-Owned Non Minority-Owned Following are a series of statement which may or may not reflect how you think about business, or life in general. Please indicate whether you agree or disagree with each one, using a 0 to 10 scale. *Significantly higher statistically at the 90% confidence level or higher versus the other segment; **Directionally higher at the 80-90% confidence level 13

14 Over two-thirds of minority owners make all business purchasing decisions autonomously Role in Purchasing Decisions 27% Personally make all the purchasing decisions 46%* 68%* 57% 30%* Others give advice, but personally make final decision 22% Decisions are made jointly with others in company 32% 43%* Minority-Owned Non Minority-Owned Which of the following statements best describes your role in most of your company s purchasing decision? *Significantly higher statistically at the 90% confidence level or higher versus the other segment 14

15 Minority owners are highly engaged with technology products and services Technology Importance/Usage Rate wireless services/applications as extremely/very critical 68% 85%* Likely to add cloud-based solution in next year 25% 42%* Used mobile or Internet payment devices (e.g., Square, Paypal) for business past year 28% 36%* Personally used payment apps (e.g., applepay, currentc) past year 23% 33%* Minority-Owned Non Minority-Owned How important are wireless services and applications in your day-to-day operations? How much do you agree or disagree with each of the following statements about technology? Which of the following products or services have you used in the past year for your business? Which of the following have you personally used during the past year? *Significantly higher statistically at the 90% confidence level or higher versus the other segment 15

16 Minority-owned businesses are significantly more likely to employ mobile solutions Technology Adoption Attitudes (% Agree) Company website is designed for mobile usage 70% 85%* In lieu of paper, I often use my SmartPhone for boarding passes, tickets, other payments and receipts 43% 60%* My company is using mobile to transform our customers' experience 32% 50%* Minority-Owned Non Minority-Owned How much do you agree or disagree with each of the following statements about technology? Thinking about your company website, was it designed for mobile as well as desktop/laptop usage? *Significantly higher statistically at the 90% confidence level or higher versus other segment 16

17 Four out of ten minority-owned businesses generate revenue from social media Generate Revenue From Social Media 42% * 29% Minority-Owned Non Minority-Owned Has your company generated revenue directly from Social Media? *Significantly higher statistically at the 90% confidence level or higher versus other segment 17

18 Importance of Community at Home and Abroad

19 Engagement with the local community has been increasing among minority business owners Local Business Attitudes Among Minority Business Owners (% Strongly Agree) First and foremost our company tries to do business with other local companies 48% 54% 65% Marketing/selling directly to the local community is a key component of our company's success 45% 61% 62% Our company is actively involved in the local community to promote good will & to generate business 50% 60% 66% Following are a series of statements which may/may not reflect how you think about business or life in general. Please indicate whether you agree/disagree with each one using a 0-to-10 scale. 19

20 The social responsibility of businesses today is a strong and growing belief among minority-owned companies Today Have A Responsibility To Address Key Social And Environmental Issues (% Strongly Agree) 69%* (Trended Among Minority-Owned ) 64% 62% 69% 55% 52% 53% Minority-Owned Non Minority-Owned Which of the following marketing and advertising vehicles has your company used in the past 12 months? Check all that apply. *Significantly higher statistically at the 90% confidence level or higher versus other segment 20

21 Almost all minority-owned businesses source sales locally, but many are also reaching targeted communities across the U.S. and abroad Where Company Generates Sales Minority-Owned Non Minority- Owned Locally (Within your local area) 95% 95% Nationally (The rest of the U.S.) Internationally (Outside the U.S.) 38* 26 Have increased the amount of sales generated nationally 54%* 41% Using 100% points, how would you break out your companies 2016 sales among the following three categories? In the past year, did your company increase the amount of sales that it generated nationally (i.e., sales made in the U.S. that were not local)? *Significantly higher statistically at the 90% confidence level or higher versus the other segment 21

22 CONTACTS Jessie Shaw, Vice President Research Amy Innerfield, Associate Research Director About The Business Journals: The Business Journals is a division of American City Business Journals (ACBJ), the largest publisher of metropolitan business newsweeklies in the United States, with 43 business publications across the country reaching more than 3.6 million readers each week. We also offer specialty publications for sports fans, sports business readers and classic car enthusiasts. 22