Minority-Owned and Non-Minority Businesses have Different Characteristics

March 15 2005 - Minority-owned businesses expand, contract, and survive at different rates from non-minority owned business, according to a study from the Office of Advocacy of the U.S. Small Business Administration.

"This report provides new insights into the dynamics of minority-owned business establishments," said Thomas M. Sullivan, Chief Counsel for Advocacy. "These insights are important for policy-makers working to expand an ownership society to all segments of our society."

The report tracks the success of minority- owned employer establishments that were in existence throughout the period 1997 to 2001. Released at The Institute for Entrepreneurship, Leadership, and Innovation at the Howard University School of Business, main findings of Dynamics of Minority- Owned Employer Establishments, 1997-2001 include:

* During 1997-2001, 27.4% of non-minority owned establishments expanded. At the same time, 34% of Hispanic-owned establishments expanded, 32.1% of Asian and Pacific Islander-owned establishments expanded, 27.8% of American Indian and Native Alaskan-owned establishments expanded, and 25.7% of Black-owned establishments expanded.

* The four-year survival rate for non-minority owned businesses establishments was 72.6%. The survival rates for minority-owned businesses were lower, including Asian and Pacific Islander-owned at 72.1%, Hispanic-owned at 68.6%, American Indian and Native Alaskan-owned at 67%, and Black-owned at 61%.

* States with the highest survival rates for minority-owned businesses during 1997-2001 were Delaware for American Indian and Native Alaskan- owned establishments (93.8%), Wyoming for Black-owned establishments (93.5%), South Carolina for Hispanic-owned establishments (88.6%), and New Mexico for Asian and Pacific Islander-owned establishments (84.6%).

Special tabulations tracking a subset of the 1997 Survey of Minority-Owned Businesses by the Census Bureau, with funding from the Office of Advocacy, provided data for the report. While comprehensive, the dataset does not include the two million new businesses started in 1997-2001, or the jobs they created.

The Office of Advocacy of the U.S. Small Business Administration (SBA) is the government's "small business watchdog". It examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress, and the President. It aims to be the source for small business statistics presented in user-friendly formats and it funds research into small business issues. A copy of the report is available at: http://www.sba.gov/advo.

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