After Andre Woolery got out of Stanford Business School two years ago, he turned down Wall Street jobs to start a tools business. Friends were stunned to see the 30-year-old Bronx native “waste” a top-notch MBA for such an uncertain venture. Today, Woolery’s Menlo Park, Calif., company, MagnoGrip, brings in lots of cash, enabling him to hire more hands this past summer to help work on a breakthrough plan to sell his merchandise at Wal-Mart stores around the country.
Woolery is one of the millions of African-American entrepreneurs who are choosing to go into business rather than work for someone else. The U.S. Census Bureau’s survey of businessowners for the past two decades show that Black business growth has significantly outpaced the national average since 1993.
The Network Journal was among the startups that year. While the total number of U.S. businesses has increased by 10 percent since then, from roughly 20.8 million to 23 million, the number of Black-owned businesses grew 45 percent, from 824,000 to 1.2 million. Revenues for Black-owned firms are up more than 200 percent during the same period to about $93 billion, compared to 22 percent for overall U.S. business revenues at $768 billion. Slightly more than 10 percent of businesses in Maryland, Mississippi and New York are owned by African-Americans, while 10 percent of businesses in California and Georgia are Black-owned. But the District of Columbia tops the list with 24 percent of businesses owned by African-Americans.
Most of the Black-owned businesses — 52 percent — are in the services industry, followed by retail trade at 11 percent, and transportation and communications at 9 percent each. Wholesale trade has the smallest Black presence, with only 1 percent of Black businesses in the sector, followed by agriculture with 2 percent of Black-owned firms.
Part of the Black business success from the 1990s onward can be attributed to policies under the Clinton administration that paved the way for technological advances. Those advances helped to create wealth across all sectors of the economy, benefiting all ethnic groups. The past eight years under George W. Bush have seen a slight drop in the economic condition of Blacks and Black-owned businesses.
Still, there is no shortage of state and private programs to help entrepreneurs get ahead. The National Black Chamber of Commerce, through its chapters nationwide, work with state and city governments to help small businesses with loans, advice and connections to new markets, including those overseas. Government programs have become more accessible to Blacks as more Black politicians became mayors and governors.
Private lenders are also getting in on the act. For example, Wells Fargo has set a goal of lending $2 billion to Black businesses through 2010. Investment banks Merrill Lynch and Bank of America have similar programs. Merrill Lynch targets high-net-worth African-American individuals, while Bank of America has a range of lending products for different income groups.
A recent study by professors at Babson College and the German Institute for Economic Research found that Blacks are almost twice as likely as whites to try starting a business, but are significantly less likely to survive beyond the initial startup process. The researchers concluded that Black entrepreneurs still encounter racism and other barriers to business growth — which is why the achievement of Black businessowners over the past 15 years is so remarkable. Blacks are 13.4 percent of U.S. population, but their poverty ratio has fallen only 7 percent in the past 15 years to 24 percent; and the number of African-Americans without health insurance — usually an important issue for those thinking of starting a business and even for small businesses — is up to 21 percent from under 20 percent, according to census data. The median income for Black households is up 20 percent to $32,000 a year over the past two decades.