Despite Obstacles, Black-Owned Businesses Are on the Rise in Texas

By Rose Cahalan in 40 Acres, Research on June 20, 2014 at 3:55 pm | 1 Comment

Black-owned businesses are growing fast in Texas—but they tend to be smaller than average, and black entrepreneurs face significant economic challenges, according to a new report from UT’s Bureau of Business Research.

Census data show that the number of black-owned businesses rose 74 percent in Texas from 2002-07, far outpacing the 25 percent average for all Texas businesses. Yet black-owned businesses only make up 7 percent of all businesses, and more than 95 percent of them have no employees other than the owner.

To dig into these numbers, researchers Bruce Kellison, John Sibley Butler, and Matt Kerwick surveyed nearly 1,000 black business owners across the state. More than half of all respondents said they had never applied for a loan, and 79 percent agreed that black business owners have less access to funding than average. “The survey showed a strong need among black business owners for more financial training and increased access to working capital,” Kellison said in a statement. “Many of our survey respondents have businesses in the service sector, a growing segment of the state and national economy. But their firms have difficulty scaling and remain smaller than the average Texas business. ”

Here are four more notable findings from the report:

• Most black business owners (61 percent) rely exclusively on personal savings to start their companies.
• Black-owned business have diverse customers and employees. Only 16 percent reported having a mostly black customer base, and among the small minority (less than 5 percent) of black-owned businesses that have employees, 42 percent employ an even mix of black and non-black staff.
• More than 96 percent of black business owners started their business themselves, rather than inheriting or acquiring it.
• Black business owners are much more highly educated than other blacks in Texas. Some 91 percent of respondents said they have attended college.

The report concludes with three goals: to focus policy on improving access to financial training, to enable black business owners to hire employees when they launch, and to provide information on financial literacy and continuing education.

Read the report in full below:

Survey of Texas Black-Owned Businesses

Photo by Jose Venegas on Flickr.

Tags: black-owned businesses, Bruce Kellison, Bureau of Business Research, business, entrepreneurship, IC2, John Sibley Butler, Matt Kerwick, research