MINORITY MINORITY 

BUSINESS ENTERPRISES BUSINESS ENTERPRISES

The State of The State of

AN OVERVIEW OF THE AN OVERVIEW OF THE 

2002 SURVEY OF BUSINESS OWNERS: 2002 SURVEY OF BUSINESS OWNERS:

U.S. Department of Commerce 

Carlos M. Gutierrez, Secretary

Minority Business Development Agency 

Ronald N. Langston, National Director

August 2006

Number of Firms, Gross Receipts, and Paid Employees Number of Firms, Gross Receipts, and Paid Employees
The State of

MINORITY BUSINESS 

ENTERPRISES AN OVERVIEW OF THE 

2002 SURVEY OF BUSINESS OWNERS 

Number of Firms, Gross Receipts, and Paid Employees 

U.S. Department of Commerce 

Carlos M. Gutierrez, Secretary 

 

Minority Business Development Agency 

Ronald N. Langston, National Director 

 

August 2006 
ii
Table of Contents 

Preface 1 

Executive Summary 2 

Introduction 6 

National Picture 7 

 Growth in Number of Firms 7 

 Growth in Gross Receipts 7 

 Average Gross Receipts 9 

 Growth in Paid Employees 10 

Entrepreneurial Parity 12 

Geographic Picture 15 

 States 15 

 Growth in Number of Firms 15 

 Growth in Gross Receipts 19 

 Combined Statistical Areas 20 

Industry Picture 22 

 Average Gross Receipts 25 

SGI Firms vs. Non-SGI firms 27 

 Growth in Number of Firms 27 

 Growth in Gross Receipts 27 

 Average Gross Receipts 28 

 Growth in Paid Employees 28 

Conclusion 30 

Methodology 31 

Sources 33 

Appendix A: MBDA Programs 34 

Appendix B: Maps 36 

Appendix C: Additional Tables on Industry 39 

 

Appendix D: Relative Standard Error 41 

Appendix E: List of Tables and Charts 47

iii
iv
Preface 

 

As more individuals in the African-American, Latino, Asian/Pacific Islander, Native American 

and Alaska Native communities embrace entrepreneurship, we celebrate the contributions that 

over 4.1 million minority-owned businesses are making to the growth of the U.S. and global 

economies. 

More minority business enterprises are being created at every level, from small/micro 

operations to rapidly growing technology companies. According to this report, State of Minority 

Business Enterprises: An Overview of the 2002 Survey of Business Owners, minority-owned 

firms generated over $668 billion in annual sales, and employed about 4.7 million people in 

2002. 

Businesses grossing over $500,000 annually in sales represented 75 percent of all minority 

annual gross receipts and 73 percent of all employees in the minority business community in 

2002. These firms provide millions of people with steady jobs and create wealth in minority 

communities. The Minority Business Development Agency (MBDA) recognizes the critical 

importance of these firms to the economies of minority communities, the nation and the global 

markets, and has become an advocate for programs serving these companies. 

Minorities frequently commence their careers by working for a minority-owned firm or starting 

their own business. The minority population is projected to continue to grow rapidly and will 

constitute an increasingly significant part of the overall U.S. population. Empowering minority 

entrepreneurs and accelerating their level of productivity is critical to strengthening U.S. 

competitiveness nationally and worldwide. 

Although minority-owned firms are increasing in number at a faster pace than the rate of the 

minority population, the gap in annual gross receipts slightly widened when compared to the 

share of the minority population. With increased sources of financing for minority-owned 

businesses at all stages, strategic alliances, and access to the marketplace, many minority firms 

can expand and succeed. 

This report analyzes the U.S. Census Bureau’s economic survey to identify trends in minority 

business enterprises, which can be the basis for further research. Findings from this document 

provide a benchmark that we hope will influence the development of policies and programs to 

support the growth and expansion of minority business enterprises. 

In partnership with corporate America, government agencies, non-profit organizations and 

educational institutions, MBDA will continue accelerating the competitiveness and growth of 

minority-owned businesses by supporting programs addressing their specific needs. 

Ronald N. Langston 

National Director 

Minority Business Development Agency 

1
Executive Summary 

This report provides a snapshot of the data on minority business enterprises (MBEs)1

 from two 

U.S. Census Bureau’s surveys: the 1997 Survey of Minority-Owned Business Enterprises 

(SMOBE) and the 2002 Survey of Business Owners (SBO).2

 These surveys offer insight into 

the economic activity of these MBEs in the United States. 

Findings 

In 2002, there were 4.1 million MBEs representing almost 18 percent of firms that could be 

classified according to the race, ethnicity, or gender of ownership (classifiable firms).3

 These 

firms earned gross receipts of $668 billon (8 percent of gross receipts attributable to classifiable 

firms) and employed 4.7 million workers (9 percent of workers employed by classifiable firms).4

 

For a number of measures, MBEs showed strong growth in the 5 years between the surveys: 

• Between 1997 and 2002, the number of MBEs increased by 35 percent. The number of 

non-minority firms5

 increased by only 6 percent. The number of all U.S. firms increased 

by 10 percent. 

• From 1997 to 2002, annual gross receipts generated by MBEs increased by 13 percent. 

Annual gross receipts generated by non-minority firms increased only 3 percent over the 

same period. 

• The number of workers employed by MBEs grew by 5 percent between 1997 and 2002. 

Over the same period, the number of workers employed by non-minority firms declined 7 

percent. 

However: 

• In 2002, average gross receipts of minority firms were $162 thousand. This was 

considerably lower than the $448 thousand average gross receipts of non-minority firms. 

• The average gross receipts of MBEs decreased by 16 percent between 1997 and 2002. 

Over the same period, average gross receipts of non-minority firms remained level. 

 

1

 Minority business enterprises are firms that can be classified in terms of the race and ethnicity, and/or gender of 

ownership. These firms are owned by African Americans, American Indians and Alaska Natives, Asians, Hispanics, 

and Native Hawaiians and Other Pacific Islanders. 

2 Available standard errors for the data presented in this report are provided in the appendix. 3 The term ‘classifiable firms’ refers to all U.S. firms less publicly held firms, foreign firms, non-profits and other firms 

whose ownership cannot be classified in terms of race, ethnicity, and/or gender. 

4 Workers refer to paid employees.

5 Non-minority firms are a sub-set of firms that can be classified with respect to the race, ethnicity, or gender status of 

ownership. 

2
Large MBEs—MBEs with gross annual receipts greater than $500,000—showed particularly 

strong performance.6

• In 2002, there were 194 thousand large MBEs, representing 5 percent of all MBEs. 

These firms generated $498 billion in annual receipts and employed 3.4 million people. 

That year, large MBEs generated 75 percent of total gross receipts attributable to MBEs, 

and employed 73 percent of the workers employed by MBEs. 

• The number of large MBEs increased by 15 percent between 1997 and 2002. The 

number of similarly sized non-minority firms grew by 13 percent. 

• From 1997 and 2002, annual gross receipts of large MBEs grew by 11 percent. Annual 

gross receipts of similarly sized non-minority firms grew by only 3 percent. 

• Over the same period, the number of workers employed by large MBEs increased by 9 

percent. The number of workers employed by similarly sized non-minority firms declined 

by 6 percent. 

• Average gross receipts of large MBEs decreased by 3 percent between 1997 and 2002. 

Over that same time period, average gross receipts of similarly sized non-minority firms 

declined 9 percent. 

Some measures showed growth among small MBEs—MBEs with less than $500,000 in annual 

gross receipts—although these firms account for a relatively small share of total economic 

activity attributable to MBEs. 

• In 2002, small MBEs accounted for 95 percent of all MBEs. That year, they generated 

25 percent gross receipts attributable to MBEs and employed 27 percent of workers 

employed by MBEs. 

• Between 1997 and 2002, the number of small MBEs grew 36 percent. 

• Gross receipts of small MBEs grew 19 percent between 1997 and 2002. 

Parity is a benchmark used by the U.S. Department of Commerce’s Minority Business 

Development Agency in assessing the performance of minority businesses. Parity is achieved 

when economic measures (such as number of firms, gross receipts, or paid employees) show 

that MBEs contribute to the economy at rates comparable to the minority share of the population 

age 18 and older. 

MBEs have yet to reach parity in number of firms, gross receipts, and paid employees. 

• In 2002, minorities represented 29 percent of people age 18 and older in the United 

States. As previously noted, MBEs represented almost 18 percent of firms that could be 

classified according to the race, ethnicity, or gender of ownership. They earned 8 

percent of gross receipts and employed 9 percent of the people employed by these 

classifiable firms. 

 

6 The “Strategic Growth Initiative” (SGI) of the U.S. Department of Commerce’s Minority Business Development 

Agency focuses on large MBEs; i.e. those MBEs with annual revenues in excess of $500,000.

3
• If parity had been reached, minority firms would have represented 29 percent of 

classifiable firms and generated comparable percentages in gross receipts and 

employment. 

• Although MBEs have not yet reached parity, the gap in the proportion of firms narrowed 

between 1997 and 2002. The growth rate in number of MBEs (35 percent), which is 

larger than the growth of the minority population (25 percent) between 1997 and 2002, 

has contributed, in part, to closing the parity gap in number of firms. 

• MBEs’ gap in gross receipts and paid employees remained essentially level over the 

same period. While MBEs needed $1.6 trillion more (2.7 times more) gross receipts to 

reach parity with their population share in 1997, an additional $1.9 trillion (2.8 times 

more) was required in 2002. 

• Given the extent to which MBEs contribute to the nation’s economic growth, and employ 

a minority workforce, special emphasis must be placed in assisting these firms in closing 

this gap. 

MBEs exist in all 50 states and the District of Columbia, with various degrees of concentration. 

• Fifty-seven percent of all minority businesses in the nation resided in California, Texas, 

New York and Florida in 2002. 

• Between 1997 and 2002, the fastest growth in number of minority firms occurred in 

Nevada, Georgia, New York, Florida, and Minnesota. 

• The greatest growth in gross receipts was generated by MBEs in Nebraska, South 

Carolina, Wyoming, Alaska, and Virginia. 

• Forty-four percent of all MBEs are located in five Combined Statistical Areas that 

included Los Angeles, New York, San Francisco, Miami, and Washington, D.C. 

MBEs are more highly concentrated in industries such as health care and social assistance; 

professional, scientific and technical services; retail trade; administrative support, waste 

management, and remediation services; and other services. 

• MBEs in the management of companies and enterprises industry had higher average 

gross receipts than non-minority businesses in that same industry. 

• MBEs in all other industries had lower average gross receipts than non-minority firms, 

with the largest gap occurring in the utilities industry. 

4
Recommendations 

Further research is needed to try to explain the trends in the MBE community, particularly with 

respect to the gap in average sales, and slower growth of gross receipts and paid employees 

compared to the growth in number of firms. An analysis of the upcoming release of the 2002 

Characteristics of Businesses and Business Owners from the U.S. Census Bureau, and 

longitudinal field research may assist us to answer some of these questions. 

Additional studies of MBEs and non-minority firms by industries and kinds of companies would 

contribute to a better understanding of MBE performance. Research on American Indian and 

Alaska Native businesses is particularly crucial, since the data from the U.S. Census 2002 SBO 

and 1997 SMOBE were not directly comparable. 

5
Introduction 

The U.S. Department of Commerce’s Minority Business Development Agency (MBDA) is the 

only Federal agency established to foster the establishment and growth of minority-owned 

businesses in America. Created in 1971, MBDA provides services to African American, 

Asian/Pacific Islander, Hasidic Jew, Hispanic, and Native American/Alaskan entrepreneurs. 

Since its inception, MBDA has provided business development services to minority 

entrepreneurs and developed research and information about the minority business community. 

MBDA’s mission is to achieve entrepreneurial parity for minority business enterprises (MBEs) by 

enhancing their growth and expansion. The agency coordinates and leverages public and 

private-sector resources in support of its mission. 

Over the past several years, MBDA has focused on providing business services to minority 

entrepreneurs who are pursuing accelerated growth. These entrepreneurs are well-positioned 

to impact the local economies by creating jobs and generating significant revenues, and 

expanding into national and global markets. 

MBDA analyzes economic and population data to understand the economic conditions of 

businesses, particularly minority enterprises. These analyses help the agency shape its 

strategies, program design and implementation, and develop its advocacy efforts. 

The Final Estimates of the 2002 Survey of Business Owners (SBO), released by the U.S. 

Census Bureau from March through June of 2006, contain statistics on U.S. businesses by race 

and Hispanic or Latino origin. The U.S. Census Bureau first conducted this survey in 1969, and 

has produced subsequent surveys every 5 years, since 1972. Previous surveys were entitled, 

Survey of Minority-Owned Business Enterprises (SMOBE). 

MBDA’s State of Minority Business Enterprises: An Overview of the 2002 Survey of Business 

Owners, analyzes data from the 2002 SBO and the 1997 SMOBE to understand better the 

status of minority-owned businesses as it relates to all U.S. firms. Additional SBO statistics on 

business and business owner’s characteristics, to be released by the U.S. Census in September 

of 2006, will be reviewed and discussed in a future publication. 

The State of Minority Business Enterprises reveals trends in the growth of minority-owned 

businesses as compared to all U.S. firms, and the minority population in the United States. 

MBDA defines parity as a measure where the percentage share of minority-owned firms, 

minority gross sales and paid employees, are equivalent to the share of the minority population 

in the United States. By benchmarking the representation and performance of minority 

business enterprises in the U.S. economy, we can report on the progress made in narrowing the 

parity gap 

This publication was prepared by the Minority Business Development Agency, Office of Business 

Development. Ivonne Cunarro, David Whitfield, and Jerry Miller contributed to this report. We would also 

like to acknowledge U.S. Census Bureau Lee Wentela and Valerie Strang, and MBDA Edith McCloud, 

Anita Wells, Efrain Gonzalez, Bernice Martinez, Carlos Guzman, Melda Cabrera and Tambra Stevenson 

for their support and editing of this document. 

6
National Picture 

In 2002, MBEs7 represented almost 18 percent (4.1 million) of classifiable firms8, grossed 8 

percent of all annual gross receipts ($668 billion) and employed 9 percent of all paid employees 

(4.7 million). 

Between 1997 and 2002, minority-owned companies increased in number, annual gross 

receipts, and paid employees at a faster rate than non-minority firms.9

 

Growth in Number of Firms 

From 1997 until 2002, minority-owned businesses grew in number at a higher pace than nonminority firms. MBEs increased at a rate of 35 percent, with the number of minority firms 

growing from 3 million in 1997 to over 4.1 million MBEs in 2002. By comparison, non-minority 

firms grew at a rate of 6 percent, from 17.4 million in 1997 to 18.4 million businesses in 2002. 

The growth in minority firms also exceeded the growth of the minority population (25 percent) 

during the same period. (Table 1a) 

Native Hawaiian and Other Pacific Islander-owned firms led all minority groups in growth of 

number of firms with a 49 percent increase from 1997 to 2002. During the same period, African 

American-owned firms grew by 45 percent, Hispanic-owned businesses by 31 percent, and 

Asian-owned firms by 24 percent. 

The number of American Indian and Alaska Native-owned firms in 1997 is not directly 

comparable to that of 2002, because the U.S. Census introduced new questions in the 2002 

SBO survey which allowed for the exclusion of some tribally owned businesses, while some of 

these firms may have been included in the 1997 SMOBE survey. 

Growth in Gross Receipts 

Between 1997 and 2002, the growth in annual gross receipts for MBEs was also much greater 

than that for non-minority firms. While MBEs increased their overall annual gross receipts by 13 

percent, from about $591 billion in 1997 to $668 billion in 2002, non-minority firms grew their 

annual gross receipts by 4 percent, from $7.8 trillion in 1997 to $8.1 trillion in 2002. 

African American businesses led the growth in annual gross receipts and at a faster pace than 

all U.S. firms.10 The receipts of African American businesses grew by 25 percent, from $71 

 

7 Total number of minority firms and other business measures for all minorities for 2002 represent MBDA estimates 

only by Hispanic or Latino origin and race (excluding white). Hispanics may be of any race, as business owners were 

allowed to identify with more than one race category. 

8 The term ‘classifiable firms’ refers to all U.S. firms less publicly held firms, foreign firms, non-profits and other firms 

whose ownership cannot be classified in terms of race, ethnicity, and/or gender.

9 Total number of non-minority owned firms and other business measures for non-minority businesses for 2002 

represent MBDA estimates. 10 These U.S. firms include publicly held, foreign-owned, not-for-profit and other firms not classifiable firms by race, 

Hispanic or Latino origin.

7
billion in 1997 to almost $89 billion in 2002. Hispanic-owned businesses followed with a 19 

percent growth, from $186 billion in 1997 to almost $222 billion in 2002. 

In 2002, Asian-owned firms generated the largest annual gross receipts, $326 billion, which 

represented almost 45 percent of all minority receipts in that year. Compared to 1997 gross 

sales, Asian firms’ growth rate was 8 percent. 

Native Hawaiian and Other Pacific Islanders increased their firms’ receipts by a slower rate than 

non-minority firms (3 percent), from $4.1 billion in 1997 to almost $4.3 billion in 2002. 

American Indian and Alaska Native businesses generated $26 billion in annual gross sales in 

2002. As noted earlier, data for this group are not comparable to 1997 statistics. 

Table 1a: Total Firms, Total Gross Receipts and Total Paid Employees, 1997 - 200211

Group Year Number of 

Firms 

% 

Change 

Gross Receipts 

($1,000) 

% 

Change 

Number of 

Employees 

% 

Change 

2002 1,197,661 $88,779,041 756,697 African American 

 

11 Due to the exclusion of tribally held governments in 2002, data for American Indian and Alaska Native firms for 

1997 and 2002 are not comparable, and therefore the percent change for that period is not represented. The term 

‘classifiable firms’ refers to all U.S. firms less publicly held firms, foreign firms, non-profits and other firms whose 

ownership cannot be classified in terms of race, ethnicity, and/or gender. All U.S. Firms include publicly held, foreignowned, not-for-profit and other firms not classifiable by race and Hispanic or Latino origin. The change in gross 

receipts for Native Hawaiian and Other Pacific Islander firms was not statistically significant from zero. Available 

relative standard errors from which the reliability of the estimates in this table can be determined can be found in 

Table 1b on page 41.

1997 823,499 

45% 25% 5% 

$71,214,662 718,341 

American Indian and 2002 201,387 $26,872,947 191,270 

Alaska Native 1997 197,300 $34,343,907 298,661 

2002 1,104,189 $326,352,983 2,212,813 Asian 

1997 893,590 

24% 

$302,794,624 

8% 

2,169,033 

2% 

2002 1,573,600 $221,976,823 1,537,801 Hispanic 1997 1,199,896 

31% 

$186,274,582 

19% 

1,388,746 

11% 

Native Hawaiian and 2002 28,948 $4,279,591 29,319 

Other Pacific Islander 1997 19,370 

49% 3% 

34,047 

-14% 

$4,138,358 

2002 4,105,785 $668,261,385 4,727,900 All Minority 1997 3,039,033 

35% 

$591,259,123 

13% 

4,514,699 

5% 

2002 18,374,647 $8,125,089,776 50,699,892 Non-Minority Firms 1997 17,401,382 

6% 

$7,800,742,138 

4% 

54,386,713 

-7% 

Classifiable Firms 2002 22,480,432 $8,793,351,161 55,427,792 

(Minority + Non-Minority) 1997 20,440,415 

10% 

$8,392,001,261 

5% 

58,901,412 

-6% 

All U.S. Firms, 2002 22,974,685 $22,627,167,224 110,786,416 

includes publicly held 1997 20,821,934 

10% 

$18,553,243,047 

22% 

103,359,815 

7% 

8
Chart 1: Change in Number of Firms and Gross Receipts, 1997-2002 

45

25 24

8

31

19

49

3

35

13

6 4

10

22

0%

10%

20%

30%

40%

50%

60%

Number of Firms Gross Receipts

African American

Asian

Hispanic

Native Haw aiian and

Other Pacific Islander

All Minority

All Non-minority,

excluding publicly

held firms

All U.S. Firms

Average Gross Receipts 

While minority-owned businesses overall had an extraordinary increase in the number of firms 

from 1997 to 2002, and many minority groups experienced healthy growth in gross receipts, the 

average receipts grossed by these firms declined between 1997 and 2002. Minority firms 

generated average gross receipts of about $195,000 per firm in 1997, compared with $163,000 

in 2002, a decrease of more than 16 percent. Average gross receipts of non-minority firms 

decreased slightly (1 percent) from about $448,000 in 1997 to $442,000. However, all U.S. 

firms, including publicly held and other firms, increased their average gross receipts by 11 

percent, from $891,000 per firm in 1997 to $985,000 in 2002. (Table 2) 

Businesses owned by each minority group also had declining average gross receipts. Native 

Hawaiian and Other Pacific Islanders businesses saw the biggest decline in average gross 

receipts, from about $214,000 in 1997 to nearly $148,000 in 2002, a 31 percent decline. 

Despite strong growth in total gross receipts, between 1997 and 2002 the average sales for 

African American firms declined more than 14 percent. The average gross receipts for Asian 

and Hispanic businesses also declined by almost 13 percent, and 9 percent, respectively. 

American Indian and Alaska Native firms generated, on average, about $133,000 in gross 

receipts in 2002. 

The extent of formation of new minority firms may have posed a challenge in the generation of 

greater gross receipts, since start-ups tend to earn less or have negative returns on their 

investment during their first few years of operation. Also, lack of access to financing, and such 

trends as supplier consolidation, contract bundling, and global outsourcing, may have impacted 

the growth of minority firms. Further research is needed to identify more clearly the challenges 

behind the performance of minority firms. 

9
Table 2: Change in Average Gross Receipts, 1997-200212

Group 

1997 

Average 

Gross 

Receipts 

2002 

Average 

Gross 

Receipts 

% Change 

African American $86,478 $74,127 -14% 

American Indian and Alaska Native $174,069 $133,439 

Asian $338,852 $295,559 -13% 

Hispanic $155,242 $141,063 -9% 

Native Hawaiian and Other Pacific Islander $213,648 $147,837 -31% 

All Minority $194,555 $162,761 -16% 

All Non-Minority Firms $448,283 $442,190 -1% 

Classifiable Firms $410,559 $391,156 -5% 

All U.S. Firms $891,043 $984,874 11% 

Growth in Paid Employees 

Between 1997 and 2002, minority-owned firms outperformed non-minority firms in the growth of 

paid employees. Minority firms employed over 4.7 million people in 2002, compared to 4.5 

million in 1997. This represents an increase of 5 percent in paid employees. In comparison, the 

number of paid employees declined for non-minority firms by 7 percent, from 54.4 million in 

1997 to 50.7 million in 2002. 

Hispanic-owned firms exceeded the growth rate of all U.S. firms with respect to employees. 

Hispanic firms employed over 1.5 million people in 2002 and 1.4 million in 1997, an 11 percent 

increase. African American-owned firms followed with over 756,000 paid employees in 2002, a 

5 percent increase from 1997. 

Asian-owned firms employed the largest number of people, 2.2 million in 2002. This represents 

nearly 50 percent of all employees hired by minority-owned firms. 

Despite their growth in number of firms (49 percent) and gross receipts (3 percent), businesses 

owned by Native Hawaiian and Other Pacific Islanders experienced a decrease in employees. 

These firms employed 34,000 persons in 1997 but only 29,000 in 2002, a 14 percent decline 

during the five-year period. American Indian and Alaska Native businesses employed over 

191,000 people in 2002. 

MBEs employed more people as a percentage of their share of gross receipts when compared 

to classifiable firms. While MBEs’ gross receipts represented 8 percent of these firms’ gross 

receipts, MBEs’ number of paid employees accounted for 9 percent of these firms’ paid 

employees. 

 

12 Due to the exclusion of tribally held governments in 2002, data for American Indian and Alaska Native firms for 

1997 and 2002 are not directly comparable, and therefore the percent change for that period is not represented.

10
For every $141,000 generated by a minority business enterprise, there is one paid employee. 

While for every $160,000 grossed by all non-minority firms, one person is employed. 

Moreover, MBEs allocate less money in payroll on average compared to non-minority firms. 

Minority firms allocate on average $25,000 in payroll per paid employee, while non-minority 

firms assign on average $30,000. 

Minority entrepreneurs generally hire more minorities than non-minority business owners. 

Studies indicate that minority-owned firms, specifically African American-owned firms, hired a 

workforce that was predominantly minority, while non-minority firms employed more nonminorities than minorities.13 Given historically higher unemployment rates of African Americans 

and Hispanics when compared to the U.S. unemployment rate, the ability of minority 

entrepreneurs to employ a large workforce is critical to the economic strength of minority 

communities and the country overall. 

 

13 Bates (2006). 

11
Entrepreneurial Parity 

Despite the accelerated growth in number of firms, minority-owned firms have yet to reach 

entrepreneurial parity within the group of classifiable firms, as compared to the representation of 

minorities in the U.S. population. While the parity gap for MBEs in terms of the number of firms 

drew closer between 1997 and 2002, it slightly widened in terms of gross receipts and paid 

employees during the same period. 

MBDA defines parity as an economic benchmark whereby minority business enterprises are 

contributing to the U.S. economy at a rate comparable to the percentage of the U.S. minority 

population. Parity is measured by reaching proportionality between the percentage of the 

minority population 18 years old and over, and the percentage share of minority-owned firms in 

business development measures such as numbers of firms, gross receipts, and employment.14 

According to U.S. Census population estimates, in 2002 the minority population age 18 and 

older in the United States represented over 62 million people or 29 percent of the total U.S. 

population 18 years and older. However, minority-owned firms that year accounted for only 18 

percent (4.1 million firms) of classifiable firms in that same year. These firms also generated 

only 8 percent (about $668.3 billion) of classifiable firms’ gross receipts, and employed only 9 

percent (almost 4.8 million people) of classifiable firms’ paid employees. 

If minority-owned firms had reached entrepreneurial parity, there would be about 6.5 million (2.4 

million more) minority business enterprises. Gross receipts would have reached $2.5 trillion 

(1.9 trillion more), and these firms would have employed 16.1 million people (11.3 million more). 

(Chart 2) 

Chart 2: Number of Minority Firms (in millions), Total Receipts (in $ trillions), 

 and Paid Employment (in millions) for Minority Firms15

Number of Firms (in millions) Gross Receipts (in $ trillions) Paid Employees (in millions)

 

16.1

4.7

0

2

4

6

8

10

12

14

16

18

2002 Actual 2002 Parity

$0.7

$2.5

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

2002 Actual 2002 Parity

6.5

4.1

0

1

2

3

4

5

6

7

2002 Actual 2002 Parity

14 Because individuals under the age of 18 are highly unlikely to be business owners, that segment of the population 

was excluded to provide a more accurate measure for entrepreneurial parity. 15 Parity figures were based on totals for ‘classifiable firms.’ The term ‘classifiable firms’ refers to all U.S. firms less 

publicly held firms, foreign firms, non-profits and other firms whose ownership cannot be classified in terms of race, 

ethnicity, and/or gender.

12
No minority group has reached parity in gross receipts and employment compared to that 

group’s population. However, the Asian community has reached parity in the number of firms 

compared to their population share. The Asian population 18 years and above represented 4.5 

percent of the U.S. population of the same age group, and owned 4.9 percent of all U.S. 

businesses. No other minority group independently has attained proportionality between the 

number of firms and their representation in the U.S. population. (Chart 3) 

Chart 3: Percentage of Minority Population, Number of Firms and Gross Receipts, 200216

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Percent of Total U.S. Population 12.1% 1.4% 4.5% 11.9% 0.3% 29.0%

Percent of Classifiable Firms 5.3% 0.9% 4.9% 7.0% 0.1% 18.3%

Percent of Classifiable Firms' Gross Receipts 1.0% 0.3% 3.7% 2.5% 0.0% 7.6%

Percent of Classifiable Firms' Employees 1.4% 0.3% 4.0% 2.8% 0.1% 8.5%

African 

American

American Indian 

& Alaska Native Asian Hispanic

Native Hawaiian 

and Other 

Pacific Islander

All Minority

Moreover, while the gap in entrepreneurial parity narrowed in terms of number of firms, it 

remained unchanged for paid employees and slightly widened for gross receipts between 1997 

and 2002. 

While MBEs required 2.3 million (75 percent) more firms to reach parity in 1997, 2.4 million (only 

59 percent) more were required in 2002. However, an additional $1.6 trillion (270 percent) in 

gross receipts would have been needed to reach parity in 1997, compared to $1.9 trillion more 

(281 percent) in 2002, and 11.3 million more (240 percent) paid employees would have been 

required to attain parity in 1997, instead of 10.8 million more (240 percent) in 1997. The 

minority population represented 26 percent of the total population 18 years and older in 1997. 

(Charts 4, 5, and 6) 

 

Further analysis is required to explain why MBEs are growing in number but not fast enough in 

size of receipts and paid employees. The relatively large growth in number of smaller MBEs 

grossing less than $25,000 annually, lack of capital, consolidation of suppliers, global 

competition, and other factors may be affecting this performance. 

 

16 Population estimates for group comparisons are for ages 18 and older. Percent of total U.S. firms excludes 

publicly held, foreign-owned, not-for-profit and other firms not classifiable by race and Hispanic or Latino origin. 

13
Chart 4: Parity Comparison for Number of Minority Firms (in millions) 

3.0

5.3

4.1

6.5

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

1997 Actual 1997 Parity 2002 Actual 2002 Parity

Chart 5: Parity Comparison for Total Receipts for Minority Firms (in $ trillions) 

$0.6

$2.2

$0.7

$2.5

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

1997 Actual 1997 Parity 2002 Actual 2002 Parity

Chart 6: Parity Comparison for Paid Employment for Minority Firms (in millions) 

4.5

15.4

4.7

16.1

0

2

4

6

8

10

12

14

16

18

1997 Actual 1997 Parity 2002 Actual 2002 Parity

14
Geographic Picture 

States 

Minority business enterprises exist in all 50 states and the District of Columbia, with various 

degrees of concentration. In 2002, most MBEs were located in the states of California 

(957,000), Texas (504,000), New York (453,000), and Florida (421,000). In fact, almost 57 

percent of all MBEs were located in these four states and over 23 percent in California alone. In 

2002, 47 percent of the minority population in the United States resided in these four states. 

(Table 3a) 

Moreover, all five minority groups surveyed by the U.S. Census had the highest concentration of 

their businesses in California, Texas, and New York. In 2002, four minority groups, African 

Americans, American Indian and Alaska Natives, Hispanics, and Native Hawaiian and Other 

Pacific Islanders, included Florida in the top five states where their businesses were located. In 

addition, over 74 percent of firms owned by Hispanic and Native Hawaiian and Other Pacific 

Islanders were located in the top five states for their respective group’s concentration. 

The representation of minority-owned firms in terms of number of firms was smaller than the 

percentage share of the minority population in each of the 50 states and in the District of 

Columbia. This illustrates that minorities have not reached entrepreneurial parity based on the 

number of minority firms in any state or the District of Columbia. (Table 4) 

Growth in Number of Firms 

In 44 states and the District of Columbia, MBEs grew in number at a more rapid rate than the 6 

percent national growth rate for non-minority firms between 1997 and 2002. In addition, MBEs 

also increased their number of firms at a faster pace in 40 states and the District of Columbia 

compared to the rate of increase for classifiable firms (10 percent) and all U.S. firms17 (10 

percent) during that same period. 

Nevada enjoyed the highest growth rate in number of minority firms, 66 percent, followed by 

Georgia (58 percent), New York (53 percent), Rhode Island (48 percent), and Florida and 

Minnesota (both at 47 percent). By comparison, the minority population grew in Nevada by 69 

percent, in Georgia by 32 percent, in New York by 21 percent, in Rhode Island by 55 percent, in 

Florida by 34 percent and in Minnesota by 64 percent, between 1997 and 2002. (Table 6) 

New Mexico, Hawaii, Idaho, New Hampshire, and Iowa showed increases in the number of 

MBEs, at a growth rate of 8 percent, 7 percent, 7 percent, 7 percent, and 5 percent, 

respectively, lower than the national average for all U.S. firms. 

Five states experienced a decline in the number of minority firms during the same period. 

Vermont, Alaska, West Virginia, Maine, and North Dakota saw declines in the number of 

minority firms of 32 percent, 12 percent, 12 percent, 8 percent, and 6 percent, respectively. 

American Indian and Alaska Native businesses decreased in these five states, from 1997 to 

2002. New U.S. Census survey questions, which excluded tribally owned businesses from the 

 

17 This is true for all U.S. firms including or excluding publicly held, foreign-owned, not-for-profit, and other not 

classifiable firms by race, ethnicity, and gender.

15
2002 SBO survey, may have contributed, in part, to the decline in American Indian and Alaska 

Native businesses, as noted earlier. In addition to these firms, Hispanic-owned firms also 

decreased in number in North Dakota, between 1997 and 2002. 

Table 3a: Top Five States for Minority Firm Concentration, 200218

State 

Ranking State Number of Firms Percentage of Firms in Minority Group 

All Minority 

1 California 957,214 23.3% 

2 Texas 503,683 12.3% 

3 New York 452,645 11.0% 

4 Florida 421,487 10.3% 

5 Illinois 156,761 3.8% 

 Total 2,491,790 60.7% 

African American 

1 New York 129,324 10.8% 

2 California 112,873 9.4% 

3 Florida 102,079 8.5% 

4 Georgia 90,461 7.6% 

5 Texas 88,769 7.4% 

 Total 523,506 43.7% 

American Indian & Alaska Native 

1 California 38,125 18.9% 

2 Oklahoma 17,097 8.5% 

3 Texas 16,204 8.0% 

4 New York 11,158 5.5% 

5 Florida 9,923 4.9% 

 Total 92,507 45.9% 

Asian 

1 California 371,415 33.6% 

2 New York 145,519 13.2% 

3 Texas 77,980 7.1% 

4 New Jersey 51,948 4.7% 

5 Hawaii 44,969 4.1% 

 Total 691,831 62.7% 

Hispanic 

1 California 427,727 27.2% 

2 Texas 319,339 20.3% 

3 Florida 266,727 17.0% 

4 New York 163,639 10.4% 

5 New Jersey 49,841 3.2% 

 Total 1,227,273 78.0% 

Native Hawaiian & Other Pacific Islander 

1 Hawaii 8,359 28.9% 

2 California 7,074 24.4% 

3 New York 3,005 10.4% 

4 Florida 1,480 5.1% 

5 Texas 1,391 4.8% 

 Total 21,309 73.6% 

 

18 Available relative standard errors for the data in this table are found in Table 3b on page 42.

16
17

Table 4: Share of Minority Firms and Minority Population by State, 200219

 

19 Population estimates are for all ages. State share of minority firms represents minority firms as a percentage of all 

firms in the state.

State Number of Minority 

Firms State Share Minority Population (Numbers in thousands) State Share 

.Alabama 38,464 12.73% 1,356 30.22% 

.Alaska 9,378 15.57% 209 32.47% 

.Arizona 58,552 15.78% 2,066 37.86% 

.Arkansas 15,427 7.58% 599 22.11% 

.California 957,214 33.61% 19,084 54.35% 

.Colorado 46,352 10.24% 1,198 26.59% 

.Connecticut 28,262 9.68% 802 23.17% 

.Delaware 7,049 11.91% 225 27.90% 

.District of Columbia 17,039 38.74% 412 72.24% 

.Florida 421,487 27.96% 6,050 36.20% 

.Georgia 140,316 21.30% 3,246 37.92% 

.Hawaii 58,132 60.36% 953 76.52% 

.Idaho 5,501 4.65% 168 12.53% 

.Illinois 156,761 16.80% 4,171 33.10% 

.Indiana 27,697 6.55% 897 14.57% 

.Iowa 5,579 2.44% 231 7.88% 

.Kansas 13,991 6.58% 481 17.70% 

.Kentucky 14,306 4.88% 452 11.03% 

.Louisiana 58,891 18.39% 1,697 37.85% 

.Maine 2,601 1.97% 46 3.59% 

.Maryland 114,744 26.60% 2,090 38.30% 

.Massachusetts 49,242 8.99% 1,181 18.37% 

.Michigan 75,051 10.46% 2,167 21.56% 

.Minnesota 22,382 5.18% 624 12.43% 

.Mississippi 30,052 16.48% 1,144 39.85% 

.Missouri 30,158 7.06% 938 16.53% 

.Montana 3,726 3.83% 98 10.73% 

.Nebraska 5,950 4.24% 232 13.40% 

.Nevada 25,172 15.35% 778 35.80% 

.New Hampshire 3,457 2.84% 65 5.10% 

.New Jersey 141,132 20.45% 2,999 34.91% 

.New Mexico 40,579 30.55% 1,037 55.93% 

.New York 452,645 27.20% 7,462 38.95% 

.North Carolina 81,021 12.92% 2,546 30.60% 

.North Dakota 1,439 2.66% 54 8.54% 

.Ohio 59,859 7.51% 1,852 16.21% 

.Oklahoma 34,849 12.23% 922 26.39% 

.Oregon 21,046 7.22% 607 17.24% 

.Pennsylvania 58,698 6.90% 2,006 16.27% 

.Rhode Island 7,058 8.35% 193 18.08% 

.South Carolina 37,520 13.19% 1,415 34.45% 

.South Dakota 2,093 3.13% 94 12.34% 

.Tennessee 42,012 9.44% 1,230 21.21% 

.Texas 503,683 29.65% 10,648 48.89% 

.Utah 10,221 5.47% 360 15.52% 

.Vermont 1,438 2.06% 24 3.90% 

.Virginia 93,691 18.21% 2,225 30.51% 

.Washington 50,586 11.14% 1,314 21.66% 

.West Virginia 3,770 3.45% 99 5.52% 

.Wisconsin 18,012 4.71% 720 13.23% 

.Wyoming 2,489 4.84% 57 11.36% 
18

Table 5a: Minority Firms by State and Race or Hispanic Origin, 200220

 

20 S = Estimates are suppressed when publication standards are not met. Available relative standard errors for the 

data in this table are found in Table 5b on page 43.

State All Minority African 

American 

American 

Indian & Alaska 

Native 

Asian Hispanic 

Native Hawaiian & 

Other Pacific 

Islander 

.Alabama 38,464 28,666 2,910 4,269 2,523 96 

.Alaska 9,378 926 5,151 1,908 1,241 152 

.Arizona 58,552 6,337 6,548 10,215 35,104 348 

.Arkansas 15,427 8,942 2,278 2,052 2,094 61 

.California 957,214 112,873 38,125 371,415 427,727 7,074 

.Colorado 46,352 7,066 3,931 10,910 24,054 391 

.Connecticut 28,262 10,309 1,208 7,170 9,408 167 

.Delaware 7,049 4,258 S 1,895 879 17 

.District of Columbia 17,039 12,198 220 2,411 2,162 48 

.Florida 421,487 102,079 9,923 41,278 266,727 1,480 

.Georgia 140,316 90,461 4,453 26,916 18,310 176 

.Hawaii 58,132 817 892 44,969 3,095 8,359 

.Idaho 5,501 373 1,143 1,111 2,775 99 

.Illinois 156,761 68,704 3,379 44,480 39,542 656 

.Indiana 27,697 14,068 1,957 6,077 5,481 114 

.Iowa 5,579 1,610 640 1,776 1,536 17 

.Kansas 13,991 4,468 1,727 3,564 4,188 44 

.Kentucky 14,306 7,592 1,324 3,236 2,094 60 

.Louisiana 58,891 40,243 2,705 8,218 7,645 80 

.Maine 2,601 327 680 834 731 29 

.Maryland 114,744 69,410 3,589 26,309 15,353 83 

.Massachusetts 49,242 12,818 2,231 18,063 15,922 208 

.Michigan 75,051 44,366 5,361 15,286 9,842 196 

.Minnesota 22,382 7,837 2,742 7,700 3,984 119 

.Mississippi 30,052 25,002 684 2,914 1,326 126 

.Missouri 30,158 16,750 3,280 6,380 3,652 96 

.Montana 3,726 220 1,990 512 964 40 

.Nebraska 5,950 2,091 428 1,456 1,966 9 

.Nevada 25,172 4,343 1,904 8,872 9,740 313 

.New Hampshire 3,457 470 529 1,528 913 17 

.New Jersey 141,132 36,282 2,613 51,948 49,841 448 

.New Mexico 40,579 1,541 6,826 2,364 29,708 140 

.New York 452,645 129,324 11,158 145,519 163,639 3,005 

.North Carolina 81,021 52,122 5,971 13,694 9,043 191 

.North Dakota 1,439 78 852 277 230 2 

.Ohio 59,859 35,658 3,123 13,740 7,109 229 

.Oklahoma 34,8.49 7,441 17,097 4,587 5,442 282 

.Oregon 21,046 2,222 3,061 9,053 6,360 350 

.Pennsylvania 58,698 24,757 S 22,627 11,023 291 

.Rhode Island 7,058 1609 445 1,544 3,415 45 

.South Carolina 37,520 28,613 1,441 4,410 3,015 41 

.South Dakota 2,093 122 1,303 300 355 13 

.Tennessee 42,012 26,811 3,565 7,241 4,301 94 

.Texas 503,683 88,769 16,204 77,980 319,339 1,391 

.Utah 10,221 649 1,145 2,821 5,177 429 

.Vermont 1,438 211 299 433 452 43 

.Virginia 93,691 41,149 2,669 30,462 18,988 423 

.Washington 50,586 6,985 5,731 26,880 10,262 728 

.West Virginia 3,770 1,473 405 1,234 648 10 

.Wisconsin 18,012 6,685 2,517 4,956 3,750 104 

.Wyoming 2,489 149 596 401 1,320 23 
Growth in Gross Receipts 

Some of the states that experienced a decrease in the number of minority-owned firms led the 

growth in gross receipts from 1997 to 2002. This is the case for MBEs in Alaska and Wyoming, 

which increased their annual gross receipts by 57 percent and 62 percent, respectively. 

Nebraska, South Carolina, and Virginia also led the growth in gross receipts by 121 percent, 72 

percent, and 52 percent, respectively. Further research regarding kinds of businesses and 

other variables is needed to explain this business performance. (Table 6) 

MBEs in 20 states matched or surpassed the 22 percent growth rate of gross receipts of all U.S. 

firms, including publicly held firms, non-profit, and foreign firms. Moreover, MBEs in 14 of the 

20 states had a higher growth rate in gross receipts than in number of firms during the same 

period. The 14 states include Alaska, Arkansas, Colorado, Idaho, Indiana, Kentucky, Montana, 

Nebraska, New Mexico, North Carolina, South Carolina, Utah, Virginia, and Wyoming. 

From 1997 until 2002, MBEs had lower growth in receipts than those generated by non-minority 

firms in only 11 states. Minority firms in these states also saw decreases in gross receipts, but 

MBEs increased in number in eight of these states during the same period: Connecticut, 

Delaware, Hawaii, New Hampshire, Ohio, Rhode Island, Washington, and Wisconsin. 

Table 6: Change in Minority Firms, Gross Receipts and Population, 1997-200221

 

Change in Change Change in Change in Change Change in 

State 

21 Population estimates were for all ages. 

Number of 

Firms 

in Gross 

Receipts 

Minority State 

Population 

Number of 

Firms 

in Gross Minority 

Receipts Population 

Alabama 36% 35% 13% Montana 11% 20% 29% 

Alaska -12% 57% 25% Nebraska 28% 121% 42% 

Arizona 35% 10% 44% Nevada 66% 23% 69% 

Arkansas 18% 24% 26% New Hampshire 7% -19% 65% 

California 30% 8% 21% New Jersey 38% 21% 22% 

Colorado 25% 46% 47% New Mexico 8% 23% 17% 

Connecticut 38% -11% 30% New York 53% 8% 21% 

Delaware 32% -22% 26% North Carolina 32% 41% 30% 

District of Columbia 12% 4% 8% North Dakota -6% 4% 22% 

Florida 47% 15% 34% Ohio 21% -6% 17% 

Georgia 58% 43% 32% Oklahoma 22% 10% 39% 

Hawaii 7% -1% 13% Oregon 16% 11% 61% 

Idaho 7% 22% 46% Pennsylvania 19% 21% 23% 

Illinois 42% 14% 24% Rhode Island 48% -10% 55% 

Indiana 22% 25% 32% South Carolina 22% 72% 16% 

Iowa 5% 21% 56% South Dakota 27% 15% 27% 

Kansas 20% 8% 41% Tennessee 29% 22% 23% 

Kentucky 13% 35% 33% Texas 38% 7% 26% 

Louisiana 41% 17% 8% Utah 19% 39% 62% 

Maine -8% -1% 66% Vermont -32% -62% 69% 

Maryland 39% 25% 19% Virginia 31% 52% 24% 

Massachusetts 26% 24% 31% Washington 18% -4% 45% 

Michigan 45% 5% 18% West Virginia -12% -9% 28% 

Minnesota 47% 4% 64% Wisconsin 32% -11% 37% 

Mississippi 37% 41% 10% Wyoming 16% 62% 26% 

Missouri 14% 13% 24% 

19
Combined Statistical Areas 

The following five combined statistical areas (CSAs) had the largest number of minority 

business enterprises (MBEs): Los Angeles-Long Beach-Riverside, California - CSA; New YorkNewark-Bridgeport, New York-New Jersey-Connecticut-Pennsylvania - CSA; Miami-Fort 

Lauderdale-Miami Beach, Florida - MeSA22; San Jose-San Francisco-Oakland, California - 

CSA; and the Washington-Baltimore-Northern Virginia, DC-Maryland-Virginia-West Virginia - 

CSA. These five regions combined had almost 1,805,000 MBEs, representing 44 percent of all 

MBEs in the United States. (Table 7a) 

The five racial and ethnic minority groups surveyed by the U.S. Census had the highest 

concentration of their businesses in the Los Angeles-Long Beach-Riverside, California – CSA, 

and the New York-Newark-Bridgeport, New York-New Jersey-Connecticut-Pennsylvania - CSA. 

The San Jose-San Francisco-Oakland, California - CSA is among one of the five CSAs with 

highest concentration of firms owned by four minority groups, Asians, American Indians and 

Alaska Natives, Hispanics and Native Hawaiians and Other Pacific Islanders. In addition, 

African Americans, American Indians and Alaska Natives, and Asians, included the 

Washington-Baltimore-Northern Virginia, DC-Maryland-Virginia-West Virginia - CSA among the 

top five CSAs where their businesses were located. 

Additionally, over 50 percent of the Asian, Hispanic, and Native Hawaiian and Other Pacific 

Islander firms were located in the top five CSAs for their respective group’s firm concentration. 

Table 7a: Top Five Combined Statistical Areas (CSAs) for Minority Firm Concentration, 

 200223

CSA Percentage of Firms CSA Number of Firms 

 

22 Data were not provided for Hilo, Honolulu, and Miami as CSAs, therefore, data at the MeSA level or MiSA level for 

these statistical areas were used instead. CSAs are given as defined by the Office of Management and Budget. 23 Available relative standard errors for the data in this table are found in Table 7b on page 44.

Ranking in Minority Group 

All Minority 

1 Los Angeles-Long Beach-Riverside, CA - CSA 580,960 14.1% 

2 New York-Newark-Bridgeport, NY-NJ-CT-PA - CSA 569,311 13.9% 

3 Miami-Fort Lauderdale-Miami Beach, FL - MeSA 284,736 6.9% 

4 San Jose-San Francisco-Oakland, CA - CSA 181,760 4.4% 

5 Washington-Baltimore-Northern Virginia, DC-MD-VA-WV - CSA 190,387 4.6% 

 Total 1,804,913 44.0% 

African American 

1 New York-Newark-Bridgeport, NY-NJ-CT-PA - CSA 155,271 13.0% 

2 Washington-Baltimore-Northern Virginia, DC-MD-VA-WV - CSA 92,267 7.7% 

3 Los Angeles-Long Beach-Riverside, CA - CSA 70,353 5.9% 

4 Atlanta-Sandy Springs-Gainesville, GA-AL - CSA 64,875 5.4% 

5 Chicago-Naperville-Michigan City, IL-IN-WI - CSA 64,844 5.4% 

 Total 447,610 37.4% 

20
CSA Percentage of Firms CSA Number of Firms Ranking in Minority Group 

American Indian & Alaska Native 

1 Los Angeles-Long Beach-Riverside, CA - CSA 20,380 10.1% 

2 New York-Newark-Bridgeport, NY-NJ-CT-PA - CSA 12,311 6.1% 

3 San Jose-San Francisco-Oakland, CA - CSA 6,549 3.3% 

4 Tulsa-Bartlesville, OK - CSA 4,745 2.4% 

5 Washington-Baltimore-Northern Virginia, DC-MD-VA-WV - CSA 4,699 2.3% 

 Total 48,684 24.2% 

Asian 

1 Los Angeles-Long Beach-Riverside, CA - CSA 209,229 18.9% 

2 New York-Newark-Bridgeport, NY-NJ-CT-PA - CSA 187,480 17.0% 

3 San Jose-San Francisco-Oakland, CA - CSA 104,424 9.5% 

4 Washington-Baltimore-Northern Virginia, DC-MD-VA-WV - CSA 49,798 4.5% 

5 Chicago-Naperville-Michigan City, IL-IN-WI - CSA 41,096 3.7% 

 Total 592,027 53.6% 

Hispanic 

1 Los Angeles-Long Beach-Riverside, CA - CSA 277,908 17.7% 

2 New York-Newark-Bridgeport, NY-NJ-CT-PA - CSA 211,075 13.4% 

3 Miami-Fort Lauderdale-Miami Beach, FL - MeSA 206,048 13.1% 

4 Houston-Baytown-Huntsville, TX - CSA 75,562 4.8% 

5 San Jose-San Francisco-Oakland, CA - CSA 53,488 3.4% 

 Total 824,081 52.4% 

Native Hawaiian & Other Pacific Islander 

1 Honolulu, HI - MeSA 5,052 17.5% 

2 New York-Newark-Bridgeport, NY-NJ-CT-PA - CSA 3,174 11.0% 

3 Los Angeles-Long Beach-Riverside, CA - CSA 3,090 10.7% 

4 San Jose-San Francisco-Oakland, CA - CSA 2,078 7.2% 

5 Hilo, HI - MiSA 1,548 5.3% 

 Total 14,942 51.6% 

21
Industry Picture 

Both minority-owned firms and the larger group of classifiable firms24 had the highest 

concentration of firms in the professional, scientific, and technical services industry and other 

services. The other services industry sector includes such companies as those operating in 

repair and maintenance, as well as personal and laundry services. (See footnote 26) 

In 2002, most firms owned by minorities were in the following industry sectors: other services 

(16.4 percent of all minority firms) health care and social assistance (14 percent); professional, 

scientific, and technical services (10.6 percent); retail trade (10.5 percent); and administrative 

support, waste management, and remediation services (9.8 percent). 

African American firms had the highest concentration of firms in health care and social 

assistance, with over 20 percent of the firms in this sector. The largest concentration of 

American Indian and Alaska Native firms is in the construction industry, with over 16 percent. 

For Asian-owned and Hispanic-owned firms, most firms were in other services, 17 percent and 

almost 16 percent, respectively, than in any other industry sector. Additionally, Native Hawaiian 

and Other Pacific Islander businesses were more prevalent in the retail trade industry, 

accounting for 16 percent of this group’s firms. (Table 8a) 

Other industries that ranked in the top five based on the concentration of firms owned by a 

particular minority group included accommodation and food services for Asian-owned firms (9.5 

percent), and real estate and rental and leasing, for Native Hawaiian and Other Pacific Islanders 

(6.4 percent). 

In comparison, classifiable firms exhibited the highest concentration in the following sectors: 

professional, scientific and technical services (14.4 percent); construction (12.2 percent), retail 

trade (11.4 percent); other services (11.8 percent); and real estate and rental and leasing (9.1 

percent). (Chart 7) 

Minority entrepreneurs also exhibited a higher share of businesses in health care and social 

assistance; administrative support, waste management, and remediation services; 

transportation and warehousing; accommodation and food services; and other services, 

compared the share of classifiable firms in those industries. 

Data on industries from the 2002 SBO is not directly comparable to the 1997 SMOBE because 

each survey used a different industrial classification system.25

 

24 The term ‘classifiable firms’ refers to all U.S. firms less publicly held firms, foreign firms, non-profits and other firms 

whose ownership cannot be classified in terms of race, ethnicity, and/or gender.

25 The 1997 SMOBE is based on the 1987 Standard Industrial Classification (SIC) system, and the 2002 SBO uses 

the newer North American Industry Classification System (NAICS). 

22
Table 8a: Top Five Industry Sectors for Minority Firm Concentration, 200226

Percentage of Industry 

 

26 Other Services includes establishments not provided for elsewhere in the classification system that are engaged in 

activities such as equipment and machinery repairing, promoting religious activities, grant-making, advocacy, 

providing dry-cleaning and laundry services, personal care services, and dating services. It does not include public 

administration. Available relative standard errors for the data in this table are found in Table 8b on page 45.

Sector 

Ranking 

Industry Sector Number of Firms in 

Firms Minority 

Group 

All Minority 

1 Other Services 675,099 16.4% 

2 Health Care and Social Assistance 575,561 14.0% 

3 Professional, Scientific, and Technical Services 434,089 10.6% 

4 Retail Trade 429,270 10.5% 

5 Administrative Support, Waste Management, and Remediation Services 401,596 9.8% 

 Total 2,515,615 61.3% 

African American 

1 Health Care and Social Assistance 245,767 20.5% 

2 Other Services 210,498 17.6% 

3 Administrative Support, Waste Management, and Remediation Services 121,143 10.1% 

4 Professional, Scientific, and Technical Services 115,765 9.7% 

5 Retail Trade 102,123 8.5% 

 Total 795,296 66.4% 

American Indian & Alaska Native 

1 Construction 32,253 16.0% 

2 Other Services 26,651 13.2% 

3 Health Care and Social Assistance 24,428 12.1% 

4 Professional, Scientific, and Technical Services 22,505 11.2% 

5 Retail Trade 20,494 10.2% 

 Total 126,331 62.7% 

Asian 

1 Other Services 188,673 17.1% 

2 Professional, Scientific, and Technical Services 154,235 14.0% 

3 Retail Trade 151,551 13.7% 

4 Health Care and Social Assistance 123,689 11.2% 

5 Accommodation and Food Services 104,978 9.5% 

 Total 723,126 65.5% 

Hispanic 

1 Other Services 249,277 15.8% 

2 Construction 212,496 13.5% 

3 Administrative Support, Waste Management, and Remediation Services 208,125 13.2% 

4 Health Care and Social Assistance 181,677 11.5% 

5 Retail Trade 151,501 9.6% 

 Total 1,003,076 63.7% 

Native Hawaiian & Other Pacific Islander 

1 Retail Trade 3,601 12.4% 

2 Administrative Support, Waste Management, and Remediation Services 3,362 11.6% 

3 Professional, Scientific, and Technical Services 3,239 11.2% 

4 Construction 2,853 9.9% 

5 Real Estate and Rental and Leasing 1,851 6.4% 

 Total 14,906 51.5% 

23
Chart 7: Industries Distribution for Minority-Owned Firms, 2002 

Other Services

16.4%

4.4%

3.3%

0.0%

0.1%

0.1%

0.6%

2.4%

0.0%

9.8%

8.8% 1.7%

10.5%

7.0%

1.1%

2.4%

5.0%

10.6%

1.6%

14.0%

Accommodation and Food 

Services

Arts, Entertainment, and 

Recreation

Utilities

Mining

Unclassified

Forestry, Fishing and 

Hunting, and Agricultural 

Support Services

Wholesale Trade

Management of Companies 

and Enterprises

Administrative Support, 

Waste Management, and 

Remediation Services

Construction Manufacturing

Retail Trade

Transportation and 

Warehousing

Information

Finance and Insurance

Real Estate and Rental and 

Leasing

Professional, Scientific, and 

Technical Services

Educational Services

Health Care and Social 

Assistance

Chart 8: Industries Distribution for Classifiable Firms, 2002 

Other Services

11.8%

4.2%

2.9%

8.6%

1.7%

0.1%

6.9%

14.4% 9.1%

3.8%

1.3%

4.3%

11.4%

3.1%

2.6%

12.2%

0.4%

0.1%

1.1% 0.1%

Arts, Entertainment, and 

Recreation

Accommodation and Food 

Services

Health Care and Social 

Assistance

Educational Services

Management of Companies 

and Enterprises

Administrative Support, 

Waste Management, and 

Remediation Services

Professional, Scientific, and 

Technical Services

Real Estate and Rental and 

Leasing

Finance and Insurance

Information

Transportation and 

Warehousing

Retail Trade

Wholesale Trade

Manufacturing

Construction

Mining

Utilities

Forestry, Fishing and 

Hunting, and Agricultural 

Support Services Unclassified

24
Average Gross Receipts 

Among classifiable firms, minority firms continued to have lower average gross receipts than 

non-minority firms in 2002. The average gross receipts for all minority-owned business was 

about $163,000 per firm, compared to $442,000 for non-minority firms in 2002. Non-minority 

firms’ average sales were 1.7 times larger (171 percent) than those of minority-owned firms in 

that same year. 

Minority-owned firms generated on average lower gross receipts in all the industries included in 

the 2002 SBO survey than non-minority firms, with the exception of firms under the 

Management of Companies and Enterprises industry. Minority firms grossed a greater amount 

of average sales, $1,339,000, in the Management of Companies and Enterprises industry, 

compared to $1,163,000 for non-minority firms in that same industry, in 2002. However, we 

should note that there were only 960 minority firms in this industry in that year. 

The highest gross receipts for minority firms were generated in the following industries: 

Wholesale Trade ($1,376,000), Management of Companies and Enterprises ($1,339,000), 

Manufacturing ($737,000), and Mining ($437,000). In comparison, non-minority firms grossed 

average sales of $2,888,000 in Wholesale Trade, $1,163,000 in Management of Companies 

and Enterprises, $1,963,000 in Manufacturing, and $534,000 in Mining. 

The gap in average gross receipts is narrower in some industries and wider in other sectors. 

For example, MBEs in Forestry, Fishing and Hunting, and Agricultural Support Services 

generated average gross receipts of about $90,000 compared to $115,000 for non-minority 

firms, only 28 percent more. 

Average gross receipts for firms in the Professional, Scientific and Technical Services industry 

also had narrower gaps than the average for all industry sectors. Minority firms in the 

Professional, Scientific, and Technical Services grossed, on average, $124,000, while nonminority firms in this sector grossed on average about $188,000, 52 percent higher. 

The gap in average gross receipts between minority and non-minority firms is greater in 

industries such as Utilities; Transportation; and in Administrative and Support and Waste 

Management and Remediation Services, among other. For example, in 2002 minority firms in 

the Utilities industry generated $118,000 on average gross receipts compared to $1 million for 

non-minority firms, 7.5 times more. In that same year, minority firms grossed $77,000 on 

average sales in the Transportation industry, while non-minority firms in that same industry 

generated on average $301,000, 2.9 times greater. 

Further research of business industries is necessary to try to explain the differences in gross 

receipts between minority and non-minority firms. 

25
Chart 9: Industries with the Highest Average Gross Receipts (in Thousands) for Minority 

 Firms Compared to Classifiable Firms, 2002

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

All U.S. Firms $2,672 $1,136 $1,813 $531 $666 $463

All Minority $1,376 $1,339 $737 $437 $290 $274

Wholesale 

Trade

Management of 

Companies and 

Enterprises

Manufacturing Mining Retail Trade

Accommodation 

and Food 

Services

26
SGI Firms vs. Non-SGI Firms 

MBDA defines companies under the Strategic Growth Initiative (SGI) as minority businesses 

that generate $500,000 or more in annual gross receipts, and have a high potential for future 

growth. Generally companies in the high-tech sector, manufacturing, energy, and 

telecommunications industries, among others, are considered high growth firms. These 

companies also employ more people compared to other sectors, such as Professional Services, 

which may constitute of only one high-paid consultant. 

Non-SGI firms are defined as minority companies, which gross less than $500,000 in annual 

sales. Micro operations, which are generally run by an entrepreneur with few or no employees, 

and lifestyle companies, which are started by individuals to replace a salary, are examples of 

non-SGI firms. 

For the purposes of this report, we defined SGI firms as minority firms grossing $500,000 or 

more in annual receipts. Non-SGI firms are minority firms generating less than $500,000 in 

annual sales. 

SGI firms represented about 195,000 firms, generated $498 billion in gross receipts, and 

employed 3.4 million people in 2002. These firms accounted for 10 percent of classifiable 

firms27 grossing $500,000 or more. SGI firms also represented 7 percent of all gross receipts 

generated and 7 percent of all workers paid by these larger classifiable firms. Non-SGI firms 

accounted for 3.9 million firms, grossed about $170 billion in sales, and had about 1.3 million 

paid employees.

Growth in Number of Firms 

SGI firms grew slightly faster than non-minority firms in the same size category. SGI firms grew 

in number at a rate of 15 percent from 1997 to 2002, compared to the 13 percent growth of nonminority firms grossing $500,000 or more. 

On the other hand, non-SGI firms grew much faster during the same period, at a rate of 36 

percent, compared to non-minority firms grossing less than $500,000, which grew by 5 percent. 

Non-SGI firms also represented 95 percent of all minority-owned firms. (Chart 10 and 11) 

Growth in Gross Receipts 

Between 1997 and 2002, SGI firms grew annual gross receipts at a faster pace than nonminority firms in the same size category. While SGI firms increased their receipts by 15 percent 

in 2002, non-minority firms of that size grew their sales by only 3 percent in that same period. 

SGI firms also generated annual gross receipts which were more comparable to their growth in 

numbers than non-SGI firms, from 1997 to 2002. While SGI firms grew by 15 percent, their 

annual gross receipts grew by 11 percent. Gross receipts also represented 74 percent of all 

sales generated by minority-owned firms. 

 

27 The term ‘classifiable firms’ refers to all U.S. firms less publicly held firms, foreign firms, non-profits and other firms 

whose ownership cannot be classified in terms of race, ethnicity, and/or gender.

27
Non-SGI firms increased in number by 36 percent but their gross receipts only grew by 19 

percent during the same period. In comparison, non-minority firms grossing less than $500,000 

grew in number by 5 percent, and increased their annual receipts at a much faster pace, by 10 

percent. (Chart 11) 

Average Gross Receipts 

In 2002, the average gross receipts of SGI businesses was closer to that of non-minority firms 

grossing $500,000 and more, as compared to non-minority firms of all sizes, which was 1.7 

times larger (171 percent). SGI firms grossed $2.6 million in average sales, while non-minority 

firms of that same size had average sales of $4 million, only 57 percent greater. 

Average gross sales of non-SGI were $43,000 in 2002, compared to $61,000 for non-minority 

firms generating less than $500,000 in sales, a difference of 41 percent. 

Growth in Paid Employees 

SGI firms outperformed non-minority firms of that same size in growth of paid employees, from 

1997 to 2002. SGI firms grew their number of paid employees by 9 percent, while non-minority 

firms grossing $500,000 or more in sales had a decline in paid workforce of 6 percent. 

On the other hand, the number of employed people by non-SGI firms decreased by 8 percent, 

compared to a 12 percent decline for all smaller non-minority firms of that same size, between 

1997 and 2002. 

Chart 10: SGI and Non-SGI Firms as a Percentage of All Minority Firms, 2002 

Chart 11: Change in Nu Firms, mber of Gross Receipts, Average Gross Receipts 

and Paid Employment for All Minority and All Non-minority Firms, Excluding 

4.7%

74.6% 72.9%

95.3%

25.4% 26.7%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

umber of Firms ross Receipts aid employees

SGI firms

Non-SGI

firms

N G P

28
Chart 11: Change in Number of Firms, Gross Receipts, Average Gross Receipts, and 

 Paid Employment for All Minority and All Non-Minority Firms, 1997-2002

-20%

-10%

0%

10%

20%

30%

40%

Change in Number of Firms 6% 13% 5% 35% 15% 36%

Change in Gross Receipts of Firms 3% 3% 10% 13% 11% 19%

Change in Average Gross Receipts -2% -9% 5% -16% -3% -13%

Change in Paid Employment -7% -6% -12% 5% 9% -8%

All Non-minority, 

excluding publicly 

held

All Non-minority 

($500,000 and 

above)

All Non-minority 

(less than 

$500,000)

All Minority SGI firms Non-SGI firms

29
Conclusion 

There is a continuous need to implement programs that address the needs of minority business 

enterprises to help them grow faster, particularly in annual sales and employment, and to close 

the entrepreneurial parity gap. 

MBEs are growing more rapidly in number, but their average gross sales, as well as their growth 

in gross receipts and paid employees is lagging behind their growth in number of firms. 

Challenges in developing capacity, including lack of capital access, globalization, increased 

contract bundling, intensified supply chain competition, and a larger share of minority start-ups, 

among others, may be affecting the performance of minority businesses. Further research is 

necessary to try to explain the issues that are slowing down the growth in gross receipts for 

MBEs. 

MBEs are an engine of employment. Although minority-owned firms grossed less in annual 

receipts and average sales compared to non-minority firms, these firms employed more people 

as a share of receipts than non-minority firms, as well as compared to all U.S. firms in the U.S. 

economy. It is critical to facilitate programs that can help these firms grow to their full potential. 

Strategic Growth Initiative firms grew faster in gross receipts and paid employees than minority 

firms grossing less than $500,000 in sales, between 1997 and 2002. Programs tailored for SGI 

firms, such as those supported by the Minority Business Development Agency, are helping 

these firms gain the knowledge and access to the marketplace and capital, which are necessary 

to remain competitive. 

While minorities have increased in population and number of firms, MBEs are not closing the 

parity gap in terms of gross receipts and paid employees when compared to the share of the 

minority population. This fact calls for action from government, educational institutions, and the 

private sector to find solutions that could address more effectively the challenges affecting the 

growth of minority-owned businesses. 

30
Methodology 

Minority-Owned Firms 

The source for the number of minority-owned firms for 1997 is the U.S. Census Bureau’s Survey 

of Minority-Owned Business Enterprises (SMOBE). The Census 2002 Survey of Business 

Owners did not provide data for minority-owned firms, but included data on firms owned by five 

separate minority groups (African American, American Indian and Alaska Native, Asian, 

Hispanic, and Native Hawaiian and Other Pacific Islander). 

MBDA calculates the number of minority firms by adding up the five minority groups reported in 

the 2002 Survey of Business Owners (SBO). The total number of minority firms is slightly 

overrepresented because businesses that are owned by Hispanic or Latinos may be of any 

race. In addition, in accordance with the Office of Management and Budget guidelines, each 

owner in 2002 had the option of selecting more than one race; so therefore, businesses could 

be tabulated in more than one racial group. Owners that reported more than one race may be 

counted more than once in the report. Figures for 2002 business measures such as, annual 

receipts, paid employees average gross sales, and size of firm, of minority-owned firms are 

calculated using the same methodology as the number of minority-owned firms. 

Non Minority-Owned Firms 

The source for the number of non minority-owned firms for 1997 is the U.S. Census Bureau’s 

Survey of Minority-Owned Business Enterprises (SMOBE). MBDA calculates this number of 

non minority-owned firms by deducting from the number of all U.S. firms, the number of 

minority-owned firms and the number of firms that are publicly held, not-for-profit, foreign 

owned, and not classifiable by race or Hispanic or Latino origin. 

To calculate the number of non-minority firms for 2002, MBDA deducts from the 2002 total 

number of all U.S. firms, the number of minority-owned firms, which is calculated as described 

previously. MBDA also deducts from the number of all U.S. firms the number of firms that are 

publicly held, not-for-profit, foreign owned, and not classifiable by race or Hispanic or Latino 

origin. Because business measures for minority-owned firms, including the number of firms, 

may be slightly overestimated, business measures for non-minority firms could also be 

underestimated by the same degree. Figures for 2002 annual receipts, paid employees, 

average gross sales, and size of firm, of non minority-owned firms are calculated in a similar 

fashion as the number of non minority-owned firms. 

American Indian and Alaska Native 

The data on firms owned by American Indian and Alaska Natives from the 1997 SMOBE survey 

is not directly comparable to the data from the 2002 SBO survey. MBDA reports this data but 

makes no comparisons between those years because it would not be statistically valid. New 

questions in the 2002 SBO survey may have allowed for the exclusion of tribally-owned firms 

that may have been included in the 1997 survey. 

31
Reliability of Data 

Relative Standard Errors 

The relative standard error (RSE) of an estimate is a measure of the reliability or precision of 

that estimate. Relative standard error is defined as the ratio of the standard error to the survey 

estimate. For example, a relative standard error of 10 percent implies that the standard error is 

one-tenth as large as the survey estimate. 

The RSE of an estimate is calculated by dividing the standard error of the estimate (SE(r)) by 

the estimate itself (r). This quantity is expressed as a percent of the estimate. 

The sample estimate and an estimate of its standard error allow us to construct interval 

estimates with prescribed confidence that the interval includes the average result of all possible 

samples with the same size and design. For example, Table 1 shows that there were an 

estimated 1,197,661 firms operated by African Americans in 2002. Table 1b shows that the 

RSE of this estimate is 1 percent. Multiplying 1,197,661 by 0.01, we obtain 11,977 as the 

standard error. This means that we are confident, with 2 chances out of 3 of being correct, that 

the average estimate from all possible samples of classifiable African American businesses is 

between 1,185,684 and 1,209,638 businesses. To increase the probability to about 9 chances 

out of 10 that the interval contains the average value over all possible samples (this is called a 

90-percent confidence interval), multiply 11,977 by 1.6, yielding limits of 1,178,498 and 

1,216,824 (1,197,661 businesses plus or minus 19,163). 

When a RSE is not available for a particular estimate, we cannot define with precision the ratio 

of the standard error of the estimate. 

For information on the reliability of individual minority group estimates and their relative standard 

errors, please visit the U.S. Census Bureau website at www.census.gov/csd/sbo. 

32
Sources 

Bates, Timothy. 2006. “The Urban Development Potential of Black-Owed Businesses,” Journal 

of the American Planning Association, 72-2, 229. 

Minority Business Development Agency. 2001. The State of Minority Business: 1997 Survey of 

Minority-Owned Business Enterprises (SMOBE). 

U.S. Census Bureau. 2000. Population Estimates for States by Race and Hispanic Origin, July 

1, 1997, ST-99-30. 

U.S. Census Bureau. 2001. 1997 Economic Census: Survey of Minority Owned Business 

Enterprises. 

U.S. Census Bureau. 2003. Annual Resident Population Estimates of the United States by Age, 

Race, and Hispanic or Latino Origin: April 1, 2001 to July 1, 2002, Table NA-EST2002-ASRO03. 

U.S. Census Bureau. 2003. State Population Estimates by Race Alone and Hispanic or Latino 

Origin, July 1, 2002, Table ST-EST2002-ASRO-03. 

U.S. Census Bureau. 2006. 2002 Economic Census: Survey of Business Owners. 

For questions or additional information on this report, please contact MBDA’s Office of Business 

Development, at 202-482-1940. 

For media inquiries, please contact MBDA’s Office of Legislative, Education and 

Intergovernmental Affairs, at 202-482-6272. 

Also, please visit www.mbda.gov/minoritybizfacts. 

33
Appendix A: MBDA Programs 

The Minority Business Development Agency (MBDA) has created and redesigned some of its 

programs to address more specifically the needs of minority business enterprises. A special 

focus has been placed on assisting MBEs with high growth potential and greater impact on the 

national economy. Some of these programs follow. 

MBEC/NABEC 

MBDA funds a network of Minority Business Enterprise Centers (MBECs) and Native American 

Business Enterprise Centers (NABECs), which are located throughout the United States and in 

Puerto Rico, that provide business development services to minority-owned businesses. The 

centers provide consulting services on management, market and growth strategies, and 

facilitate contracting and financial opportunities. 

MBOC 

MBDA also funds Minority Business Opportunity Centers (MBOCs), which are located in 

strategic cities across the nation. The centers act as one-stop brokering services by facilitating 

contract and financial transactions between MBE clients and the public and private sector. 

Phoenix Opportunity Matching System 

The Phoenix Opportunity Matching System is an online system that matches contracting 

opportunities with minority businesses. Phoenix is the formal point of entry for registering 

minority business enterprises and Opportunity is the data repository of contracting opportunities. 

Together, the systems interact to identify and match minority firms with opportunities based on 

the firms’ capability profiles. Notifications are sent via email. 

Business-to-Business (B2B) Linkages Forums 

MBDA brings together smaller MBEs with medium and large-size MBEs for teaming and 

potential partnership arrangements. The linkage forums revolve around major procurement 

opportunities and capacity-building among the teams to qualify for multi-million dollar contracts. 

These forums also introduce the teams with contracting officials to learn more about specific 

contracting opportunities. The forums are held in cities across the nation and target specific 

projects and industries. 

Capital Access 

MBDA, through its nationwide network of funded programs and staff, provides consulting and 

referral services, to minority business enterprises to obtain business loans, equity investment, or 

bonding. MBDA works closely with both public and private capital providers (financial 

institutions, venture capitalists, alternative lenders, government programs, and surety 

companies) to support the growth and expansion of minority business enterprises. 

34
Technology Commercialization 

The Federal Government and the private sector spend billions of dollars on research and 

development annually. The result of this large investment is innovation and new technologies. 

Many of the products and ideas simply sit on the shelf. MBDA seeks to help match MBE’s with 

these new technologies that have potential for commercialization. In addition, MBDA helps 

MBEs introduce their new technologies to the Federal government to be considered for 

participation in the Small Business Innovation Research program. Through this program, MBEs 

may receive grant money to enhance their technology to fit the government and for 

commercialization. MBDA provides these services in partnership with the West Virginia High 

Technology Consortium Foundation. 

Research and Knowledge Management 

MBDA conducts research studies on the state of MBEs, trends impacting MBEs, their 

performance, and challenges and opportunities for minority business growth. MBDA conducts 

some of its studies in collaboration with the Tuck School of Business at Dartmouth College. 

Through knowledge management, MBDA shares research and best practices with minority 

entrepreneurs and business development professionals to support MBEs growth and 

expansion. MBDA also shares its research with academia and government agencies to expand 

the knowledge of MBEs and to provide additional information that can shape programs in 

support of MBEs. 

35
Appendix B: Maps 

Chart 12: U.S. Map of Minority Firms, by State Concentration, 2002 

 

 

 

 

 

 

 

 

 

36
Chart 13: U.S. Map of Change in Concentration of Minority Firms by State, 2002 

37
Chart 14: U.S. Map of Change in Gross Receipts of Minority Firms by State, 2002 

38
Appendix C: Additional Tables on Industry

Table 9a: Number of Firms by Industry Division, 200228

Native American Hawaiian Classifiable African Indian and Industry All Minority Asian Hispanic and Other 

 

28 S = Estimates are suppressed when publication standards are not met. The term ‘classifiable firms’ refers to all 

U.S. firms less publicly held firms, foreign firms, non-profits and other firms whose ownership cannot be classified in 

terms of race, ethnicity, and/or gender. Available relative standard errors for the data in this table are found in Table 

9b on page 46.

Firms American Alaska Pacific Native Islander 

Total for all sectors 22,480,432 4,105,785 1,197,661 201,387 1,104,189 1,573,600 28,948 

Forestry, Fishing and 

Hunting, and Agricultural 

Support Services 

246,640 24,829 3,724 4,594 6,261 9,710 540 

Mining 98,462 3,385 325 1,028 456 1,473 103 

Utilities 14,965 1,738 508 287 225 717 1 

Construction 2,751,575 361,364 75,020 32,253 38,742 212,496 2,853 

Manufacturing 580,261 71,076 10,084 6,004 23,716 30,948 324 

Wholesale Trade 685,863 97,869 12,498 4,252 46,554 34,188 377 

Retail Trade 2,551,811 429,270 102,123 20,494 151,551 151,501 3,601 

Transportation and 

Warehousing 964,799 288,507 99,341 9,958 52,046 125,750 1,412 

Information 298,331 43,856 14,319 2,618 12,092 14,516 311 

Finance and Insurance 860,878 97,151 28,324 4,925 30,041 33,282 579 

Real Estate and Rental and 

Leasing 2,039,557 206,992 52,375 9,277 74,666 68,823 1,851 

Professional, Scientific, and 

Technical Services 3,244,829 434,089 115,765 22,505 154,235 138,345 3,239 

Management of Companies 

and Enterprises 17,862 960 178 66 478 235 3 

Administrative Support, 

Waste Management, and 

Remediation Services 

1,550,032 401,596 121,143 15,712 53,254 208,125 3,362 

Educational Services 385,560 64,414 25,256 3,609 15,518 19,589 442 

Health Care and Social 

Assistance 1,943,974 575,561 245,767 24,428 123,689 181,677 S 

Arts, Entertainment, and 

Recreation 943,518 136,068 54,430 9,249 26,543 44,168 1,678 

Accommodation and Food 

Services 654,332 182,489 25,326 3,605 104,978 48,069 511 

Other Services 2,658,541 675,099 210,498 26,651 188,673 249,277 S 

Unclassified 27,705 3,491 1,012 112 1,201 1,166 S 

39
Table 10: Distribution of Firms by Group and Industry, 200229

Native American Hawaiian Classifiable All African Indian and Industry Asian Hispanic and Other 

 

29 The term ‘classifiable firms’ refers to all U.S. firms less publicly held firms, foreign firms, non-profits and other firms 

whose ownership cannot be classified in terms of race, ethnicity, and/or gender. N = Not available or not comparable.

Firms Minority American Alaska Pacific Native Islander 

Forestry, Fishing and Hunting, and 

Agricultural Support Services 1.1% 0.6% 0.3% 2.3% 0.6% 0.6% 1.9% 

Mining 0.4% 0.1% 0.0% 0.5% 0.0% 0.1% 0.4% 

Utilities 0.1% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 

Construction 12.2% 8.8% 6.3% 16.0% 3.5% 13.5% 9.9% 

Manufacturing 2.6% 1.7% 0.8% 3.0% 2.1% 2.0% 1.1% 

Wholesale Trade 3.1% 2.4% 1.0% 2.1% 4.2% 2.2% 1.3% 

Retail Trade 11.4% 10.5% 8.5% 10.2% 13.7% 9.6% 12.4% 

Transportation and Warehousing 4.3% 7.0% 8.3% 4.9% 4.7% 8.0% 4.9% 

Information 1.3% 1.1% 1.2% 1.3% 1.1% 0.9% 1.1% 

Finance and Insurance 3.8% 2.4% 2.4% 2.4% 2.7% 2.1% 2.0% 

Real Estate and Rental and 

Leasing 9.1% 5.0% 4.4% 4.6% 6.8% 4.4% 6.4% 

Professional, Scientific, and 

Technical Services 14.4% 10.6% 9.7% 11.2% 14.0% 8.8% 11.2% 

Management of Companies and 

Enterprises 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 

Administrative Support, Waste 

Management, and Remediation 

Services 

6.9% 9.8% 10.1% 7.8% 4.8% 13.2% 11.6% 

Educational Services 1.7% 1.6% 2.1% 1.8% 1.4% 1.2% 1.5% 

Health Care and Social Assistance 8.6% 14.0% 20.5% 12.1% 11.2% 11.5% N 

Arts, Entertainment, and 

Recreation 4.2% 3.3% 4.5% 4.6% 2.4% 2.8% 5.8% 

Accommodation and Food 

Services 2.9% 4.4% 2.1% 1.8% 9.5% 3.1% 1.8% 

Other Services 11.8% 16.4% 17.6% 13.2% 17.1% 15.8% N 

Unclassified 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% N 

40
Appendix D: Relative Standard Error 

Table 1b: Relative Standard Error of Estimate (Percent) for Total Firms, Total Gross 

 Receipts and Total Paid Employees, 1997 - 200230

RSE of RSE of 

RSE of SE of SE of SE of 

 

30 RSE = Relative standard error; SE = Standard error; NA = Not available; - represents zero. 

Group Year 

Estimate 

(Percent) 

for Number 

of Firms 

Percent 

Change in 

Number of 

Firms

Estimate Estimate 

(Percent) 

for Gross 

Receipts 

($1,000)

Percent Percent (Percent) Change in Change in for Gross Number of Number of Receipts Employees Employees

2002 1 1 3 African American 2 2 NA 

1997 1 2 4 

American Indian & 2002 1 4 3 

Alaska Native NA NA NA 

1997 2 6 13 

2002 - 2 1 Asian 1 5 NA 

1997 1 4 5 

2002 1 2 3 Hispanic 4 20 NA 

1997 - 3 3 

Native Hawaiian and 2002 3 8 10 

Other Pacific Islander 8 9 NA 

1997 6 5 10 

2002 NA NA NA All Minority NA NA NA 

1997 NA NA NA 

Non-Minority Firms, 2002 NA NA NA 

excludes publicly held NA NA NA 

1997 NA NA NA 

All U.S. Firms, excludes 2002 NA NA NA 

publicly held NA NA NA 

1997 NA NA NA 

All U.S. Firms, includes 2002 - - - 

publicly held - - - 1997 - - - 

41
Table 3b: Relative Standard Error of Estimate (Percent) for the Top Five States for 

 Minority Firm Concentration, 200231

Relative Standard Error of Relative Standard Error of 

 

31 NA = Not available 

State Estimate (Percent) for 

Ranking State Estimate (Percent) for Number Percentage of Firms in Minority of Firms Group 

All Minority 

1 California NA NA 

2 Texas NA NA 

3 New York NA NA 

4 Florida NA NA 

5 Illinois NA NA 

 Total NA NA 

African American 

1 New York 1 NA 

2 California 2 NA 

3 Florida 2 NA 

4 Georgia 2 NA 

5 Texas 2 NA 

 Total NA NA 

American Indian & Alaska Native 

1 California 3 NA 

2 Oklahoma 4 NA 

3 Texas 6 NA 

4 New York 6 NA 

5 Florida 6 NA 

 Total NA NA 

Asian 

1 California 1 NA 

2 New York 1 NA 

3 Texas 2 NA 

4 New Jersey 1 NA 

5 Hawaii 1 NA 

 Total NA NA 

Hispanic 

1 California 1 NA 

2 Texas 1 NA 

3 Florida 1 NA 

4 New York 1 NA 

5 New Jersey 3 NA 

 Total NA NA 

Native Hawaiian & Other Pacific Islander 

1 Hawaii 6 NA 

2 California 9 NA 

3 New York 14 NA 

4 Florida 20 NA 

5 Texas 25 NA 

 Total NA NA 

42
Table 5b: Relative Standard Error of Estimate (Percent) for Minority Firms by State 

 and Race or Hispanic Origin, 200232

State All 

Minority 

African 

American 

American Indian and 

Alaska Native Asian Hispanic Native Hawaiian and Other Pacific Islander 

.Alabama NA 2 14 5 10 48 

.Alaska NA 10 7 6 6 46 

.Arizona NA 5 10 7 3 26 

.Arkansas NA 3 16 5 4 54 

.California NA 2 3 1 1 9 

.Colorado NA 5 8 3 3 20 

.Connecticut NA 4 9 3 5 50 

.Delaware NA 6 S 7 8 72 

.District of Columbia NA 3 22 7 7 S 

.Florida NA 2 6 2 1 20 

.Georgia NA 2 9 3 4 29 

.Hawaii NA 14 20 1 10 6 

.Idaho NA 19 18 15 10 39 

.Illinois NA 2 12 2 3 22 

.Indiana NA 3 8 6 5 52 

.Iowa NA 9 14 5 9 27 

.Kansas NA 5 11 6 6 39 

.Kentucky NA 5 17 6 8 65 

.Louisiana NA 3 11 4 7 S 

.Maine NA 20 15 10 31 S 

.Maryland NA 2 10 3 4 32 

.Massachusetts NA 2 17 2 3 S 

.Michigan NA 2 8 2 5 54 

.Minnesota NA 5 14 3 6 S 

.Mississippi NA 3 12 7 18 68 

.Missouri NA 3 7 5 4 50 

.Montana NA 30 14 28 14 62 

.Nebraska NA 5 23 7 7 15 

.Nevada NA 6 8 4 3 20 

.New Hampshire NA 15 26 7 18 28 

.New Jersey NA 3 14 1 3 37 

.New Mexico NA 9 4 5 3 53 

.New York NA 1 6 1 1 14 

.North Carolina NA 2 8 4 6 24 

.North Dakota NA 17 9 22 26 0 

.Ohio NA 2 13 2 4 S 

.Oklahoma NA 4 4 5 5 33 

.Oregon NA 5 6 3 6 18 

.Pennsylvania NA 2 S 2 6 29 

.Rhode Island NA S 23 6 6 S 

.South Carolina NA 2 19 5 10 34 

.South Dakota NA 23 15 18 16 54 

.Tennessee NA 2 6 4 5 S 

.Texas NA 2 6 2 1 25 

.Utah NA 14 23 5 7 18 

.Vermont NA 28 17 24 23 S 

.Virginia NA 2 9 3 4 26 

.Washington NA 5 7 3 6 16 

.West Virginia NA 9 18 6 17 45 

.Wisconsin NA 4 8 5 7 69 

.Wyoming NA 18 12 20 10 84 

 

32 NA = Not available

43
Table 7b: Relative Standard Error of Estimate (Percent) for the Top Five Combined 

 Statistical Areas (CSAs) for Minority Firm Concentration, 200233

RSE of 

Estimate CSA CSA (Percent) for Ranking Number of 

Firms 

African American 

1 New York-Newark-Bridgeport, NY-NJ-CT-PA - CSA 1 

2 Washington-Baltimore-Northern Virginia, DC-MD-VA-WV - CSA 1 

3 Los Angeles-Long Beach-Riverside, CA - CSA 3 

4 Atlanta-Sandy Springs-Gainesville, GA-AL - CSA 2 

5 Chicago-Naperville-Michigan City, IL-IN-WI - CSA 2 

American Indian & Alaska Native 

1 Los Angeles-Long Beach-Riverside, CA - CSA 5 

2 New York-Newark-Bridgeport, NY-NJ-CT-PA - CSA 5 

3 San Jose-San Francisco-Oakland, CA - CSA 9 

4 Tulsa-Bartlesville, OK - CSA 11 

5 Washington-Baltimore-Northern Virginia, DC-MD-VA-WV - CSA 7 

Asian 

1 Los Angeles-Long Beach-Riverside, CA - CSA 1 

2 New York-Newark-Bridgeport, NY-NJ-CT-PA - CSA 1 

3 San Jose-San Francisco-Oakland, CA - CSA 3 

4 Washington-Baltimore-Northern Virginia, DC-MD-VA-WV - CSA 3 

5 Chicago-Naperville-Michigan City, IL-IN-WI - CSA 2 

Hispanic 

1 Los Angeles-Long Beach-Riverside, CA - CSA 2 

2 New York-Newark-Bridgeport, NY-NJ-CT-PA - CSA 1 

3 Miami-Fort Lauderdale-Miami Beach, FL - MeSA 1 

4 Houston-Baytown-Huntsville, TX - CSA 2 

5 San Jose-San Francisco-Oakland, CA - CSA 3 

Native Hawaiian & Other Pacific Islander 

1 Honolulu, HI - MeSA 7 

2 New York-Newark-Bridgeport, NY-NJ-CT-PA - CSA 17 

3 Los Angeles-Long Beach-Riverside, CA - CSA 14 

4 San Jose-San Francisco-Oakland, CA - CSA 17 

5 Hilo, HI - MiSA 16 

 

33 RSE = Relative standard error

44
Table 8b: Relative Standard Error of Estimate (Percent) for the Top Five Industry Sectors 

 for Minority Firm Concentration, 200234

 

34 NA = Not available

Industry 

Sector 

Ranking 

Industry Sector 

Relative Standard Error of Relative Standard Error Estimate (Percent) for of Estimate (Percent) Percentage of Firms in for Number of Firms Minority Group 

All Minority 

1 Other Services NA NA 

2 Health Care and Social Assistance NA NA 

3 Professional, Scientific, and Technical Services NA NA 

4 Retail Trade NA NA 

Administrative Support, Waste Management, and 

Remediation Services 5 NA NA 

Total NA NA 

African American 

1 Health Care and Social Assistance 1 NA 

2 Other Services 1 NA 

Administrative Support, Waste Management, and 

Remediation Services 3 2 NA 

4 Professional, Scientific, and Technical Services 1 NA 

5 Retail Trade 2 NA 

 Total NA NA 

American Indian & Alaska Native 

1 Construction 2 NA 

2 Other Services 2 NA 

3 Health Care and Social Assistance 4 NA 

4 Professional, Scientific, and Technical Services 3 NA 

5 Retail Trade 6 NA 

 Total NA NA 

Asian 

1 Other Services 1 NA 

2 Professional, Scientific, and Technical Services 1 NA 

3 Retail Trade 1 NA 

4 Health Care and Social Assistance 1 NA 

5 Accommodation and Food Services 2 NA 

 Total NA NA 

Hispanic 

1 Other Services 1 NA 

2 Construction 1 NA 

Administrative Support, Waste Management, and 

Remediation Services 3 1 NA 

4 Health Care and Social Assistance 1 NA 

5 Retail Trade 1 NA 

 Total NA NA 

Native Hawaiian & Other Pacific Islander 

1 Retail Trade 9 NA 

Administrative Support, Waste Management, and 

Remediation Services 2 14 NA 

3 Professional, Scientific, and Technical Services 10 NA 

4 Construction 12 NA 

5 Real Estate and Rental and Leasing 12 NA 

 Total NA NA 

45
Table 9b: Relative Standard Error of Estimate (Percent) for the Number of Firms by 

 Industry Division, 200235

Native American Hawaiian Indian Classifiable All African and Industry 

 

35 The term ‘classifiable firms’ refers to all U.S. firms less publicly held firms, foreign firms, non-profits and other firms 

whose ownership cannot be classified in terms of race, ethnicity, and/or gender. NA = Not available; - represents 

zero.

Firms Minority American and Asian Hispanic Other Alaska Pacific Native Islander 

Total for all sectors NA NA 1 1 - 1 3 

Forestry, Fishing and Hunting, and 

Agricultural Support Services NA NA 6 8 4 4 23 

Mining NA NA 12 14 8 11 80 

Utilities NA NA 17 17 13 15 - 

Construction NA NA 2 2 3 1 12 

Manufacturing NA NA 2 6 2 2 24 

Wholesale Trade NA NA 3 4 1 3 14 

Retail Trade NA NA 2 6 1 1 9 

Transportation and Warehousing NA NA 1 6 2 1 11 

Information NA NA 2 10 2 3 25 

Finance and Insurance NA NA 1 6 3 2 23 

Real Estate and Rental and Leasing NA NA 2 5 2 2 12 

Professional, Scientific, and Technical 

Services NA NA 1 3 1 2 10 

Management of Companies and 

Enterprises NA NA 17 39 20 10 - 

Administrative Support, Waste 

Management, and Remediation Services NA NA 2 5 2 1 14 

Educational Services NA NA 3 11 4 4 27 

Health Care and Social Assistance NA NA 1 4 1 1 S 

Arts, Entertainment, and Recreation NA NA 2 9 4 3 15 

Accommodation and Food Services NA NA 3 8 2 4 30 

Other Services NA NA 1 2 1 1 S 

Unclassified NA NA 13 27 14 11 S 

46
Appendix E: List of Tables and Charts 

List of Tables 

Table 1a: Total Firms, Total Gross Receipts and Total Paid Employees, 1997 - 2002 8 

Table 1b: Relative Standard Error of Estimate (Percent) for Total Firms, Total Gross 

 Receipts and Total Paid Employees, 1997- 2002 41 

Table 2: Change in Average Gross Receipts, 1997- 2002 10 

Table 3a: Top Five States for Minority Firm Concentration, 2002 16 

Table 3b: Relative Standard Error of Estimate (Percent) for the Top Five States for 

 Minority Firm Concentration, 2002 42 

Table 4: Share of Minority Firms and Minority Population by State, 2002 17 

Table 5a: Minority Firms by State and Race or Hispanic Origin, 2002 8 

Table 5b: Relative Standard Error of Estimate (Percent) for Minority Firms by State, 

 Race, and Hispanic Origin, 2002 43 

Table 6: Change in Minority Firms, Gross Receipts and Population, 1997 - 2002 19 

Table 7a: Top Five Combined Statistical Areas for Minority Firm Concentration, 2002 20 

Table 7b: Relative Standard Error of Estimate (Percent) for the Top Five Combined 

 Statistical Areas (CSAs) for Minority Firm Concentration, 2002 44 

Table 8a: Top Five Industry Sectors for Minority Firm Concentration, 2002 23 

Table 8b: Relative Standard Error of Estimate (Percent) for the Top Five Industry 

 Sectors for Minority Firm Concentration, 2002 45 

Table 9a: Number of Firms by Industry Division, 2002 39 

Table 9b: Relative Standard Error of Estimate (Percent) for the Number of Firms by 

 Industry Division, 2002 46 

Table 10: Distribution of Firms by Group and Industry, 2002 40 

47
List of Charts 

Chart 1: Change in Number of Firms and Gross Receipts, 1997-2002 9 

Chart 2: Number of Minority Firms (in millions), Total Receipts (in $ trillions), and 

 Paid Employment (in millions) for Minority Firms 12 

Chart 3: Percentage of Minority Population, Number of Firms and Gross Receipts 13 

Chart 4: Parity Comparison for Number of Minority Firms (in millions) 14 

Chart 5: Parity Comparison for Total Receipts for Minority Firms (in $ trillions) 14 

Chart 6: Parity Comparison for Paid Employment for Minority Firms (in millions) 14 

Chart 7: Industries Distribution for Minority-Owned Firms, 2002 24 

Chart 8: Industries Distribution for Classifiable Firms, 2002 24 

Chart 9: Industries with the Highest Average Gross Receipts for Minority Firms 26 

 Compared to Classifiable Firms 

Chart 10: SGI and Non-SGI Firms as a Percentage of All Minority Firms, 2002 28 

Chart 11: Change in Number of Firms, Gross Receipts, Average Gross Receipts, 

 and Paid Employment for Minority and Non-Minority Firms, 1997-2002 29 

Chart 12: U.S. Map of Minority Firms, by State Concentration, 2002 36 

Chart 13: U.S. Map of Change in Concentration of Minority Firms, by State, 2002 37 

Chart 14: U.S. Map of Change in Gross Receipts of Minority Firms by State, 2002 38 

48
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