Black-owned businesses are on a roll. In 2007, African-Americans ran 7.1 percent of businesses in the United States. Five years later, that number grew to 9.4 percent—even during a recession—according to the most recent data from the U.S. Census Bureau released this September. The portion of U.S. businesses with employees led by Blacks slightly increased as well—from 1.9 percent in 2007 to 2.0 percent in 2012.
The good news is that Black-owned businesses are rising, though to be sure, challenges remain.
This uptick in Black-owned businesses made us wonder: Which cities are doing relatively well by their Black-owned small businesses and where are thesel businesses finding success?
Thumbtack’s annual Small Business Friendliness Survey is a one-of-its-kind look at what makes a state or local government work for small businesses. Based on survey responses from 18,000 small business owners nationwide, we asked small business owners questions about the friendliness of local tax laws, licensing rules, and the regulatory environment. We use these responses to rank cities and states based on their friendliness to small business, from best (Texas) to worst (Rhode Island).
This year in our survey we also looked at responses from the 1,663 business owners who self-identified as Black or African American. We ranked each city based on responses from these business owners to three questions: 1) How friendly is your city? 2) How easy was it to start a business? and 3) Would you encourage others to start a business in your city?
What we learned is that black business-owners nationwide were slightly younger, more likely to work alone, and cited inflation as a top concern for the federal government at twice the rate of other business owners in our survey. They were also concentrated in a small number of industries with 26 percent in events (primarily catering and DJs) and 15 percent in cleaning. Black businesses were also notably overrepresented in moving and professional services like tax preparation and computer repair.
Where Black-Owned Small Businesses Are Thriving
Overall, the top cities for black-owned small businesses are:
Nine of the top ten cities are in the South. Three have black mayors. Six had median household income for black families above the national average of $35,398 (and four were below the average).
We also looked at the “friendlier” cities for black-business owners – these are cities where Black business owners rated their governments significantly better than business owners of other races:
Top Priorities for Black-Owned Small Businesses
We also ran what we call a “dominance analysis” to see which of the factors that we asked about most influenced the perceptions black business owners had of their local governments. Black small business owners told us that the three most important factors to them when evaluating their local government were the presence of helpful training and networking programs, easy to understand tax regimes, and licensing rules that were easy to follow and well enforced.
This is similar to what we saw in our overall results, where training was also seen as a top priority. Like skilled entrepreneurs everywhere, Black small business owners can benefit a lot from the opportunities that come when a city or civic organization offers programs to help them learn how to succeed in their business or meet fellow entrepreneurs. Austin’s excellent training programs — the city earned an A+ on this dimension — helped it achieve the best rating by Black-owned businesses.
Explore more data from our Small Business Friendliness Survey here.