Prepared by Research and Innovation Team for Ronald N. Langston, National Director, MBDA. For full report, visit www.mbda.gov.

September 21, 2001

On July 12, 2001, The U.S. Department of Commerce, through the Census Bureau and the Minority Business

Development Agency, released the 1997 Survey of Minority Owned Business Enterprises (SMOBE) Report and

MBDA’s The State of Minority Business. MBDA’s report noted (in brief):

High Growth Rates

The growth rates in both number and gross receipts of minority-owned firms substantially exceeded those of

nonminority business between 1992 and 1997.

7

26 40 33

179

84 68

30 49 30

0

50

100

150

200

Number of Firms Growth

Rate (%)

Receipts Growth Rate (%)

All U.S. Firms

African American

American Indian, Alaska

Native

Asian, Pacific Islander

Hispanic

Growth rates are the aggregate rate of growth for the five year period 1992 to 1997 for each group in accordance with methodology described in

Census Bureau, 1997 Economic Census, Survey of Minority-Owned Business Enterprises, pp 3-8.

Low Average Size

The average size of minority-owned businesses is substantially lower than nonminority firms in terms of both gross

receipts and employment. [See below chart and Table 1]

Table 1: 1997 Total Firms, Total Gross Receipts, Average Gross Receipts and Total Employees

Group Number of Firms Gross Receipts Average Gross Receipts Employees

(in millions)

African American 823,500 $71.2 billion $86,500 0.7

American Indian and Alaska Native 197,300 $34.3 billion $174,000 0.3

Asian and Pacific Islander 913,000 $306.9 billion $336,200 2.2

Hispanic 1,199,900 $186.3 billion $155,200 1.4

All Minority 3,039,000 $591.3 billion $194,600 4.5

Nonminority 17,782,900 $18.0 trillion $1,010,100 98.8

All U.S. Firms 20,821,900 $18.6 trillion $891,000 103.3

NOTE: Detail on this table does not add to total (All Minority and All U.S. Firms) because of duplication of some firms. A Hispanic firm may be of any

race and, therefore, may be included in more than one minority group.

1992-1997

Growth

Rates

1997

Minority

Population

and

Business

Shares of

Total U.S.

(percent) 0.0

10.0

20.0

30.0

%

Minority 27.3 14.6 4.4 3.2

Population Firms Employment Receipts

The State of

 Minority Business
Prepared by Research and Innovation Team for Ronald N. Langston, National Director, MBDA. For full report, visit www.mbda.gov.

September 21, 2001

Lower Entrepreneurial Activity

Minority-owned business activity (measured by number of firms, receipts and employment) in the United States

continues to be significantly smaller than minority representation of the Nation’s population. [See Table 2]

Table 2: Comparison of 1997 Demographic and Firm Characteristics Distributions

Group Percent of Total U.S

Population

Percent of Total U.S.

Firms

Percent of Total U.S.

Gross Receipts

Percent of Total U.S.

Employees

African American 12.7 4.0 0.4 0.7

American Indian and Alaska Native 0.9 0.9 0.2 0.3

Asian and Pacific Islander 3.8 4.0 2.0 2.1

Hispanic 10.9 6.0 1.0 1.3

All Minority 27.3 14.6 3.2 4.4

NOTE: Detail on this table does not add to total (All Minority) because firms and individuals can be counted in multiple groups. A Hispanic firm may

be of any race and, therefore, may be included in more than one minority group.

Achieving Entrepreneurial Parity – The Opportunity Gap

The state of minority business in 1997 would look radically different if parity had been achieved. Parity is defined as

reaching proportionality between minority population percentage and percentage share of business development

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

Number of MBEs (in millions)

3.0

5.7

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1997 Actual 1997 Parity

Number of Firms, 1997 Actual and 1997 Parity

Business Gross Receipts, 1997 Actual and

1997 Parity

MBE Employment ( in millions )

4.5

28.2

0

5

10

15

20

25

30

1997 Actual 1997 Parity

Minority-Owned Business Employment, 1997

Actual and 1997 Parity

MBE Rece ipts ( in $ trillions )

0.6

5.1

0

1

2

3

4

5

6

1997 Actual 1997 Parity

In this scenario, the number of

minority-owned businesses would

have been almost twice the actual

number, or 5.7 million firms, rather

than 3 million firms.

Parity in minority-owned business

receipts would have resulted in more

than eight times the actual number –

from $0.6 trillion to $5.1 trillion.

Employment in minority-owned firms

would jump from 4.5 million to 28.2

million in the parity scenario.