Preface

America's entrepreneurs play a vital role in the stability and prosperity of our national

economy. They take the risks necessary to create wealth and jobs, develop innovative

products, and introduce new business practices into the marketplace. This importance

extends far beyond America's borders, as U.S. firms significantly impact and contribute to the world

economy. Given the ongoing U.S. demographic changes, it is critical that we use the entrepreneurial

talent available in all of our communities to maintain a growing national economy. The 1997 Survey

of Minority Owned Business Enterprises (SMOBE) report suggests that minority businesses have

dramatically increased their participation in the domestic free enterprise system, and are a critical

component of the U.S. business community. However, there remain significant disparities between

minority and nonminority owned firms. We must invest more aggressively in the continued growth

of minority businesses.

In this report, the Minority Business Development Agency (MBDA) provides its initial interpretation

of the newly released SMOBE data. The SMOBE is conducted and released every five years by the

Census Bureau for the tax reporting years ending in 2 and 7. The 1997 report indicates minorityowned and operated business grew at significant rates since 1992 as compared to their nonminority

counterparts. This good news, however, needs to be interpreted in the context of the historical

disparity between these groups, and the large gap that still remains.

The important story that is emerging from this report and other data is that: 1) entrepreneurial

activity in minority populations continues to be far below the nonminority population, despite the

dramatic increase in minority population; and that 2) we need to bridge the "capital gap" that

currently exists. For example, in 1997 minorities accounted for twenty-eight percent of U.S.

population, but only three percent of the nation's gross business receipts.

Our research clearly shows that disparity is pronounced for minority businesses as a whole. America

would benefit substantially from increased participation and activity by minority entrepreneurs.

With the support and leadership of President Bush and Secretary Evans, I will implement new

policies to empower minority businesses to achieve higher levels of success by directing MBDA to

be more innovative and entrepreneurially focused.

Ronald N. Langston

National Director

Minority Business Development Agency

This report was prepared by the Minority Business Development Agency, Research and Innovation Team. Richard Stevens

served as the team leader with assistance from Frances Douglas, Darlene Giles, Kevin Matthews and Jerry Miller.

1 See publication - "Democratizing Capital for Emerging Domestic Markets" on the MBDA website at www.mbda.gov for

a discussion of the capital gap in business investment.
Executive Summary

The 1997 Survey of Minority-Owned Business Enterprises (SMOBE) provides a snapshot of

the status of minority-owned businesses for that year for the Nation, as a whole, as well as

specific regions and communities. The SMOBE data,in itself,cannot explain why some groups

and/or places outperform others. Further research is required to fully understand the reasons for

these variations. The preliminary analysis of the SMOBE data by the Minority Business Development

Agency indicates the following:

Findings

■ Growth rates in both numbers and gross receipts of minority-owned firms substantially exceeded

those of nonminority firms between 1992 and 1997. This is consistent with the dramatic increases

in minority population and minority purchasing power. (See items 6, 7 and 8 in Sources, page 12

of this report.)

■ Minority-owned businesses are heavily concentrated in a several states. For example, 55 percent

of minority businesses are located in four states (California,Texas, New York and Florida) and 80

percent are located in just fifteen states.

■ The business growth rates among the four major race/ethnic groups vary significantly.

■ Minority-owned business activity in the United States continues to be significantly smaller than

minority representation of the Nation's population. This is the case for both absolute number of

firms and their gross receipts and employment size.

■ The average size of minority-owned businesses is substantially lower than nonminority firms in

terms of both gross receipts and employment.

■ There is considerable regional variation in the number and size of minority business.

■ Business participation rates (the number of businesses per 1,000 persons) are generally much

lower throughout the country for minority groups than for nonminority groups.

Additional Research 

■ Further investigation of data for Native American- and Alaska Native-owned businesses is required

to explain the reported high growth rates since 1992.

■ More research is required in order to explain the reasons why some groups and communities have

had relatively more success in business growth.

■ More frequent, timely and comprehensive data about the minority business sector are required to

support informed decision-making.

Policy Implications

■ Innovative policies, programs and strategies should be developed to significantly accelerate the

level of entrepreneurial activity with minority businesses.

■ Strategic partnerships should be developed with state and local governments, business

associations, corporations and academic institutions with entrepreneurship programs, to leverage

all available business development resources.

U.S. Department of Commerce

Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001) 1
General Observations

S

tatistics from the 1997 SMOBE are the most recently available from the Federal Government.

They offer a unique snapshot of the state of minority-owned businesses in the United States,

particularly when presented in the context of rapid changes occurring in the racial and ethnic

composition of the nation's population.

■ In 1997,there were 3,039,033 minority-owned firms in the United States generating $591.3 billion

in gross receipts and 4.5 million employees. [Table 1] 

■ The range in average (mean) gross receipts is considerable -- from a low for African American firms

($86,500) to a high for Asian and Pacific Islander firms ($336,145). Minority firms as a group

($194,555) have average gross receipts only one-fifth the size of the nonminority category

($1,010,071). [Table 1]

■ By most measures,minority firms continue to be proportionately underrepresented in comparison

to population percentages in terms of number of firms, and to a greater extent for gross receipts

and employment. In 1997 minorities represented 27 percent of U. S. population, but only 15

percent of firms, 3 percent of gross receipts and 4 percent of employment. [Table 2 and Charts 2,

3 and 4]

■ In general, minorities are making substantial progress in terms of number of firms owned, but will

remain substantially behind until entrepreneurial and business ownership levels reach parity with

minority population percentages. The exception is for both the American Indian and Alaska Native,

and Asian and Pacific Islander groups, where proportionality with population has been attained

according to SMOBE data. (Note: This observation must be further researched, including

investigation of likely variation within sub-groups.) [Table 2]

Detail on these tables 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.

U.S. Department of Commerce

2 Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001)

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

Group Number of Firms Total Gross

Receipts

 Average Gross

Receipts  Employees

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



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

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



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

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

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

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

Table 2: Comparison of 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 

2 All data tables are for 1997 unless otherwise indicated.
■ All minority groups had a 1992-1997 growth rate in number of firms that substantially exceed the

growth rate for all U.S. firms (7 percent).American Indian- and Alaska Native-owned firms had a

dramatic 84 percent increase. [Chart 1]

■ Three of the four minority groups, for 1992-1997, exceeded the all U.S. firms gross receipts growth

rate. American Indian- and Alaska Native-owned firms grew at 179 percent. Only African Americanowned firms had a gross receipts growth rate (33 percent) less than the all U.S. firm growth rate

of 40 percent. [Chart 1]

Chart 1: 1992-1997 Group Growth Rates

Achieving Entrepreneurial Parity 

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. [See the last row of Table 2]. Charts 2, 3 and 4 illustrate the

substantial increases required above actual conditions had there been parity in those three

measures.The parity numbers were developed using the 1997 minority share of U.S. population -

27.3 percent - and applying it to the total number of firms, gross receipts and employment.

Chart 2: Number of Firms, 1997 Actual and 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.

U.S. Department of Commerce

Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001) 3

7

40 26 33

84

30

68

179

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

It is important to

understand that the

1997 SMOBE, for the

first time, includes C

corporations, which

typically are larger

than Subchapter S

corporations; and

therefore aggregate

data for 1992 and

1997 are not directly

comparable.

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
Chart 3: Minority-Owned Business Gross Receipts,

1997 Actual and 1997 Parity

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.

Chart 4: Minority-Owned Business Employment,

1997 Actual and 1997 Parity

Employment in minority-owned firms would jump from 4.5 million to 28.2 million in the

parity scenario.

U.S. Department of Commerce

4 Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001)

MBE Receipts (in $ trillions)

0.6

5.1

0

1

2

3

4

5

6

1997 Actual 1997 Parity

MBE Employment (in millions)

4.5

28.2

0

5

10

15

20

25

30

1997 Actual 1997 Parity
Geographic Concentration

■ Minority-owned firms continue to be concentrated in a few states -- a pattern that is consistent

with demographic trends. [Map 1]

■ More than 24 percent of U.S. minority-owned firms are located in California. Texas ranks second

with 12 percent and New York and Florida rank third and fourth with 9 percent each. These four

states account for 55 percent of U.S. minority-owned firms. Eighty percent of minority-owned

firms are located in only 15 states. See Table 3 for a list of the states with their respective number

and share of minority-owned firms.

■ The minority population is somewhat less geographically concentrated than minority-owned

firms. California, again, ranks first with 22 percent of the U.S. total minority population. Texas is

second with almost 12 percent and New York and Florida rank third and fourth with 9 and 6

percent respectively. These four states account for 48 percent of minority population and 55

percent of minority-owned firms. [Table 4]

■ Additional research is necessary to determine if this concentration pattern is increasing or

decreasing over time. Geographic analyses will ultimately be conducted at the national, state,

metropolitan, rural, county, and city levels.

Map 1: Number of Minority-Owned Firms by State, 1997

U.S. Department of Commerce

Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001) 5

ME

VT

NH

MA

RI

NY

PA NJ

DE

WV MD

VA

NC

SC

MS AL GA

TN

KY

OH

IL IN

MO

IA

MN

ND

SD

NE

CO

WY

MT

ID

UT

NM

HI

Number of Minority Firms

1,530 - 50,000

50,000 - 500,000

500,000 - 738,000

AK

AZ

NV

CA

OR

WA

WI

MI

AR

TX LA

OK

KS

FL

CT
U.S. Department of Commerce

6 Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001)

Table 3: State Share of U.S. Minority Firms

State Rank State Number of Minority Firms State Share Cumulative Share 

1 CALIFORNIA 738,000 24.25% 24.25% 

2 TEXAS 365,450 12.01% 36.26% 

3 NEW YORK 296,523 9.74% 46.01% 

4 FLORIDA 286,885 9.43% 55.44% 

5 ILLINOIS 110,340 3.63% 59.06% 

6 NEW JERSEY 102,295 3.36% 62.42% 

7 GEORGIA 88,733 2.92% 65.34% 

8 MARYLAND 82,619 2.72% 68.05% 

9 VIRGINIA 71,705 2.36% 70.41% 

10 NORTH CAROLINA 61,551 2.02% 72.43% 

11 HAWAII 54,250 1.78% 74.22% 

12 MICHIGAN 51,751 1.70% 75.92% 

13 PENNSYLVANIA 49,455 1.63% 77.54% 

14 OHIO 49,430 1.62% 79.17% 

15 ARIZONA 43,337 1.42% 80.59% 

16 WASHINGTON 42,935 1.41% 82.00% 

17 LOUISIANA 41,734 1.37% 83.37% 

18 MASSACHUSETTS 39,039 1.28% 84.66% 

19 NEW MEXICO 37,497 1.23%  85.89% 

20 COLORADO 37,021 1.22% 87.10% 

21 TENNESSEE 32,524 1.07% 88.17% 

22 SOUTH CAROLINA 30,753 1.01% 89.18% 

23 OKLAHOMA 28,509 0.94% 90.12% 

24 ALABAMA 28,292 0.93% 91.05% 

25 MISSOURI 26,558 0.87% 91.92% 

26 INDIANA 22,761 0.75% 92.67% 

27  MISSISSIPPI 21,997 0.72% 93.39% 

28 CONNECTICUT 20,409 0.67% 94.07% 

29 OREGON 18,215 0.60% 94.66% 

30 MINNESOTA 15,258 0.50% 95.17% 

31 DISTRICT OF COLUMBIA 15,238 0.50% 95.67% 

32 NEVADA 15,187 0.50% 96.17% 

33 WISCONSIN 13,692 0.45% 96.61% 

34 ARKANSAS 13,023 0.43% 97.04% 

35 KENTUCKY 12,664 0.42% 97.46% 

36 KANSAS 11,663 0.38% 97.84% 

37 ALASKA 10,695 0.35% 98.19% 

38 UTAH 8,617 0.28% 98.48% 

39 DELAWARE 5,329 0.18% 98.65% 

40 IOWA 5,299 0.17% 98.83% 

41 IDAHO 5,164 0.17% 99.00% 

42 RHODE ISLAND 4,784 0.16% 99.15% 

43 NEBRASKA 4,632 0.15% 99.31% 

44 WEST VIRGINIA 4,290 0.14% 99.45% 

45 MONTANA 3,356 0.11% 99.56% 

46 NEW HAMPSHIRE 3,228 0.11% 99.66% 

47 MAINE 2,822 0.09% 99.76% 

48 WYOMING 2,146  0.07% 99.83% 

49 VERMONT 2,109 0.07% 99.90% 

50 SOUTH DAKOTA 1,653 0.05% 99.95% 

51 NORTH DAKOTA 1,530 0.05% 100.00%
U.S. Department of Commerce

Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001) 7

 Table 4: State Share of U.S. Minority Population

State Rank State Minority Population State Share Cumulative Share

1 CALIFORNIA 15,731,348 21.54% 21.54% 

2 TEXAS 8,438,501 11.55% 33.09% 

3 NEW YORK 6,187,556 8.47% 41.56% 

4 FLORIDA 4,530,673 6.20% 47.77% 

5 ILLINOIS 3,356,599 4.60% 52.36% 

6 GEORGIA 2,459,481 3.37% 55.73% 

7 NEW JERSEY 2,454,200 3.36% 59.09% 

8 NORTH CAROLINA 1,956,013 2.68% 61.77% 

9 MICHIGAN 1,836,821 2.51% 64.28% 

10 VIRGINIA 1,801,554 2.47% 66.75% 

11 MARYLAND 1,760,051 2.41% 69.16% 

12 PENNSYLVANIA 1,627,362 2.23% 71.39% 

13 OHIO 1,583,744 2.17% 73.56% 

14 LOUISIANA 1,568,591 2.15% 75.70% 

15 ARIZONA 1,432,118 1.96% 77.67% 

16 SOUTH CAROLINA 1,218,500 1.67% 79.33% 

17 ALABAMA 1,197,143 1.64% 80.97% 

18 MISSISSIPPI 1,039,361  1.42% 82.40% 

19 TENNESSEE 996,197 1.36% 83.76% 

20 WASHINGTON 907,890 1.24% 85.00% 

21 MASSACHUSETTS 898,176 1.23% 86.23% 

22 NEW MEXICO 885,383 1.21% 87.44% 

23 HAWAII 843,295 1.15% 88.60% 

24 COLORADO 815,735 1.12% 89.72% 

25 MISSOURI 757,874 1.04% 90.75% 

26 INDIANA 679,005 0.93% 91.68% 

27 OKLAHOMA 661,537 0.91% 92.59% 

28 CONNECTICUT 615,303 0.84% 93.43% 

29 WISCONSIN 525,771 0.72% 94.15% 

30 ARKANSAS 477,254 0.65% 94.80% 

31 NEVADA 459,777 0.63% 95.43% 

32 DISTRICT OF COLUMBIA 380,788 0.52% 95.96% 

33 MINNESOTA 379,782 0.52% 96.48% 

34 OREGON 377,151 0.52% 96.99% 

35 KANSAS 341,110 0.47% 97.46% 

36 KENTUCKY 340,227 0.47% 97.92% 

37 UTAH 221,410 0.30% 98.23% 

38 DELAWARE 178,114 0.24% 98.47% 

39 ALASKA 166,891 0.23% 98.70% 

40 NEBRASKA 163,323 0.22% 98.92% 

41 IOWA 147,860 0.20% 99.13% 

42 RHODE ISLAND 125,149 0.17% 99.30% 

43 IDAHO 114,867 0.16% 99.46% 

44 WEST VIRGINIA 77,855 0.11% 99.56% 

45 MONTANA 75,803 0.10% 99.67% 

46 SOUTH DAKOTA 73,799 0.10% 99.77% 

47 WYOMING 44,795 0.06% 99.83% 

48 NORTH DAKOTA 44,252 0.06% 99.89% 

49 NEW HAMPSHIRE 39,324 0.05% 99.94% 

50 MAINE 27,944 0.04% 99.98%

51 VERMONT 14,205 0.02% 100.00%
African American-Owned Firms

Four states accounted for 35 percent of the firms owned by African Americans. Three out of 10

African Americans reside in these four states.

■ New York (86,500)

■ California (79,100)

■ Texas (60,400)

■ Florida (59,700)

American Indian- and Alaska Native-Owned Firms

Four states accounted for 34 percent of the firms owned by American Indians and Alaska Natives.

Three out of 10 American Indians and Alaska Natives reside in these states.

■ California (26,600)

■ Texas (15,700)

■ Oklahoma (15,100)

■ Florida (10,500)

Asian- and Pacific Islander-Owned Firms

Four states accounted for 60 percent of the firms owned by Asians and Pacific Islanders. Six out of

10 Asians and Pacific Islanders reside in these states.

■ California (316,000)

■ New York (123,300)

■ Texas (60,200)

■ Hawaii (50,600)

Hispanic-Owned Firms

Four states accounted for 73 percent of the firms owned by Hispanics. Seven out of 10 Hispanics

reside in these four states.

■ California (336,400)

■ Texas (240,400)

■ Florida (193,900)

■ New York (104,200)

Firm Size 

Table 1 above includes average gross receipts and employment figures by group, but a full

understanding of the "size" issue will require substantially more data and analysis than is available

with the publication. Here are some initial observations about size:

■ Most firms do not have paid employees. This is generally true for minority and nonminority firms,

however the percentage of Asian- and Pacific Islander-owned firms with paid employees (32

percent) exceeds the all U.S. firms group (25 percent).

U.S. Department of Commerce

8 Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001)

Table 5: Number and Percentage of Firms with Paid Employees 

Group Firms with Paid Employees Percent of Group Total with Paid Employees

African American 93,200 11 % 

American Indian and Alaska Native 33,300 17 %

Asian and Pacific Islander 290,000 32 %

Hispanic 211,900 18 %

Total Minority 615,200 20 %

All U.S. Firms 5,295,200 25 %
■ Micro businesses, with annual receipts under $10,000, constitute 35 percent of all U.S. firms

(7,385,580), whereas:

■ About 28 percent (259,600) of Asian- and Pacific Islander-owned businesses had receipts under

$10,000.

■ About 40 percent (475,300) of Hispanic-owned businesses had receipts under $10,000.

■ About 41 percent (80,800) of American Indian- and Alaska Native-owned businesses had

receipts under $10,000.

■ About 49 percent (403,800) of African American-owned businesses had receipts of under

$10,000.

■ About 39 percent of all minority businesses had receipts of under $10,000.

■ Five percent of all U.S. firms had receipts in excess of $1 million, but only 2.7 percent of minority

firms exceeded $1 million.

Industry Characteristics

Table 7 compares the industry division distributions between all U.S. firms and minority

groups. A considerable amount of analysis will be required before a full understanding of

industry status emerges. For example, it is important to separate business and professional

services from personal services since the former represents a major economic growth sector. Also,

it is unfortunate that a full 45 percent of American Indian and Alaska Native-owned firms could not

be classified by industry type. This will limit our analysis of this group. Some initial observations

from this table:

■ American Indians and Alaska Natives and Hispanic businesses participate in construction at a

higher level than all U.S. firms.

■ African Americans participate in manufacturing at one-third the level of all U.S. firms.

■ Asian and Pacific Islanders participate in wholesale and retail trade at a higher level than all

U.S. firms.

■ All minority groups participate in the financial sector at lower levels relative to all U.S. firms.

U.S. Department of Commerce

Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001) 9

Table 6: Number of Firms with Receipts Above $1 Million (and % of total in group) and Employment Above 100

Group Gross Receipts > $1 million Employment > 100

African American 8,700 (1%) 900 

American Indian and Alaska Native 4,900 (2%) 400 

Asian and Pacific Islander 45,300 (5%) 2,100 

Hispanic 26,700 (2%) 1,100 

Total Minority 84,300 (2.7%) 4,400 

All U.S. Firms 1,050,400 (5%) 95,700 
Table 8 shows average gross receipts in thousands of dollars by industry division for each minority

group compared to all U.S. firms. Some initial observations are:

■ Minority businesses are short of parity as compared to all U.S. firms' average gross receipts by

industry division, excluding industries not classified.

■ In the manufacturing sector average gross receipts for African Americans and American Indians and

Alaska Natives are less than 10 percent of the all U.S. firms average.

■ Average gross receipts in the finance sector are much lower for all minority groups.

Business Participation Rates

Abusiness participation rate (BPR) is defined as the number of business owners in a specific

race/ethnic group for every 1,000 persons in that same group. For example, a nonminority

population BPR of 91 indicates that there are 91 nonminority business owners for every

1,000 nonminority persons. The BPR is a good measure for comparing entrepreneurial status across

groups, because it adjusts for population size and provides a common base of measurement.

U.S. Department of Commerce

10 Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001)

Table 7: Percent Distribution of Firms by Industry Division

Industry All U.S . 

Firms

All Minority 

Groups

African 

American

American Indian 

and Alaska 

Native 

Asian and 

Pacific Islander Hispanic

Agricultural services, forestry, 

fishing and mining 

 2% 3% 2% 5% 1% 3%

Construction 11% 8% 7% 14% 3% 13% 

Manufacturing 3% 2% 1% 3% 3% 2%

Transportation, communications, 

and utilities

4% 6% 9% 3% 4% 7%

Wholesale trade 4% 3% 3% 2% 6% 3%

Retail trade 14% 14% 11% 8% 21% 13% 

Finance, insurance, and real estate 11% 5% 5% 2% 8% 5%

Services 43% 44% 53% 17% 44% 42% 

Not classified 7% 14% 12% 45% 10% 13% 

Table 8: Average Receipts by Industry (in thousand dollars)

Industry

All U.S. 

Firms

All 

Minority 

Groups

African 

American

American Indian 

and Alaska 

Native

Asian and Pacific 

Islander Hispanic

All Industries 891 195 86 174 336 155

Agricultural services, forestry, 

fishing and mining 

386 57 35 91 102 65

Construction 405 164 136 196 270 144

Manufacturing 5,839 991 352 373 1,246 1,123

Transportation, communications, 

and utilities 

1,287 112 89 258 150 98 

Wholesale trade 5,352 1,659 717 723 2,093 1,283

Retail trade 917 265 158 313 347 208

Finance, insurance, and real estate 1,147 135 81 258 166 117

Services 294 101 59 152 167 78

Not classified 42 76 43 109 121 41
MBDA's initial analysis of the data computed BPRs for each race/ethnic group for the fifty states and

the District of Columbia. Future research will drill down to smaller geographic areas. The national

BPR for the nonminority population is 91. This could be the benchmark against which other groups

at the national and sub-national areas are measured. A review of Table 9 yields the following

observations:

■ Each minority group BPR at the national level falls below the nonminority BPR.

■ American Indians and Alaska Natives (85) and Asians and Pacific Islanders (90) have national BPRs

that approach the level of nonminorities.

■ African Americans have the lowest national BPR at 24, followed by Hispanics at 41.

■ There is considerable variation in BPRs at the state level. Nonminority state level BPRs range from

62 to 203, while minorities, as a group, range from 21 to 148.

■ The lowest BPR for African Americans is 17 in Alabama, Arkansas, Pennsylvania and Wisconsin and

the highest is 59 in Wyoming.

■ The lowest BPR for Hispanics is 21 in Nebraska and the highest is 175 in Vermont.

■ The lowest BPR for American Indians and Alaska Natives is 16 in South Dakota and the highest is

512 in Kentucky.

■ The lowest BPR for Asians and Pacific Islanders is 42 in Nebraska and the highest is 156 in the

District of Columbia.

Table 10 on the next page gives the business participation rate for each group by state in

alphabetical order. Similar tables will be constructed over the next several months for metropolitan

and rural areas, cities and counties. Please also refer to Appendices A through F (pp. 13-18) for

graphic illustrations of state BPRs.

Additional research into the variance in business participation rates by geographic areas and by

population groups will likely yield valuable insights and information about the causal factors

explaining relative levels of business success in some communities and groups. This type of

information can then be used to formulate specific entrepreneurship development strategies that

are tailored to the unique needs of population groups and places.

In addition, under development is an Index of Minority Business Development that relies on the use

of SMOBE data. The Index will provide a benchmark for comparing a community's level of minority

entrepreneurship with regional, state, and national levels.

U.S. Department of Commerce

Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001) 11

Table 9: Business Participation Rates

All U.S. 

Population

Nonminority 

Population

Minority 

Population

African 

American

Population

Hispanic 

Population

American Indian 

and Alaska Native 

Population

Asian and Pacific 

Islander Population

National Average 78 91 42 24 41 85 90

State Maximum 115 203 148 59 175 512 156

State Minimum 61 62 21 17 21 16 42
U.S. Department of Commerce

12 Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001)

Table 10: Business Participation Rates by Group and State

State All U.S.

Population

Nonminority 

Population

Minority 

Population

African 

American

Population

Hispanic

Population 

American 

Indian and 

Alaska Native

Population

Asian and 

Pacific

 Islander

Population

ALABAMA 66 82 24 17 74 231 119 

ALASKA 105 121 64 37 60 70 68 

ARIZONA 72 92 30 22 29 22 76 

ARKANSAS 77 88 27 17 58 171 85 

CALIFORNIA 80 111 47 32 34 87 82 

COLORADO 105 121 45 30 37 94 99 

CONNECTICUT 87 99 33 24 25 164 77 

DELAWARE 77 92 30 19 37 119 105 

DISTRICT OF COLUMBIA 86 203 40 33 57 40 156 

FLORIDA 89 100 63 27 90 190 131 

GEORGIA 76 95 36 26 57 257 131 

HAWAII 79 115 64 18 44 70 67 

IDAHO 91 95 45 24 34 76 77 

ILLINOIS 73 89 33 22 26 147 94 

INDIANA 70 75 34 23 31 201 91 

IOWA 80 82 36 24 25 111 49 

KANSAS 82 89 34 22 27 99 59 

KENTUCKY 72 75 37 20 49 512 100 

LOUISIANA 68 91 27 18 59 166 121 

MAINE 102 102 101 43 64 231 75 

MARYLAND 79 95 47 34 63 156 113 

MASSACHUSETTS 88 95 43 31 35 234 60 

MICHIGAN 69 79 28 18 39 97 77 

MINNESOTA 88 92 40 30 44 42 46 

MISSISSIPPI 61 86 21 18 45 111 135 

MISSOURI 76 83 35 23 50 199 86 

MONTANA 107 112 44 20 66 35 86 

NEBRASKA 84 90 28 24 21 54 42 

NEVADA 77 94 33 22 26 42 67 

NEW HAMPSHIRE 99 99 82 39 44 456 87 

NEW JERSEY 81 99 42 23 37 111 98 

NEW MEXICO 76 112 42 26 41 43 106 

NEW YORK 83 101 48 27 40 86 128 

NORTH CAROLINA 77 93 31 24 49 75 87 

NORTH DAKOTA 86 90 35 26 65 25 54 

OHIO 70 76 31 21 37 226 92 

OKLAHOMA 85 95 43 21 36 58 93 

OREGON 90 95 48 37 32 64 74 

PENNSYLVANIA 70 76 30 17 26 299 91 

RHODE ISLAND 82 88 38 26 35 126 50 

SOUTH CAROLINA 69 89 25 20 44 241 107 

SOUTH DAKOTA 90 97 22 32 33 16 66 

TENNESSEE 77 87 33 23 64 312 106 

TEXAS 79 106 43 25 43 169 114 

UTAH 82 87 39 25 36 49 47 

VERMONT 115 114 148 55 175 483 63 

VIRGINIA 71 83 40 25 58 179 95 

WASHINGTON 80 86 47 29 30 47 74 

WYOMING 103 109 48 59 44 46 74 
Conclusions

Minority-owned businesses experienced substantial growth between 1992 and 1997, but

continue to lag substantially in the generation of gross receipts and employment.The U.S.

Census Bureau is projecting that 90 percent of the net U.S.population growth over the next

fifty years will be in minority groups. As the demographic mix of our population changes it

becomes even more imperative that minority entrepreneurship must play an increasing role in

economic growth and competitiveness.

The findings in this initial analysis of the 1997 SMOBE data confirm anecdotal information as

expressed from business development practitioners about the state of minority business. Many

questions remain unanswered, and these will drive a comprehensive research agenda in the

immediate future.

It will be necessary to obtain more comprehensive, timely and frequent data about minority-owned

businesses including expanding the geographic scope to areas such as Puerto Rico and the Virgin

Islands. The data also need to be objectively analyzed by expert business and advocacy groups to

better differentiate between real business growth and other phenomena. Most importantly,research

is necessary to answer the "why" questions such as: Why do some groups and places outperform

others in business activity? Are there "best practices" that can be identified and replicated

throughout the Nation? Are existing programs adequate for "start up" firms, but not for "ready to

grow" firms? 

The challenges as we move forward include answering these questions:

■ How can these data provide value to the minority business community? 

■ How can this information help to build a foundation for future research? 

■ From this information, what should be the nature, scope and direction of minority business

development policies? 

These questions will be fully discussed at sessions during the 2001 Minority Enterprise Development

Week (MED Week) in Washington,DC on September 23 to 26. For registration and other information

go to http://www.medweek.gov/.

U.S. Department of Commerce

Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001) 13
Sources

1. U.S. Census Bureau. 1997 Economic Census, Survey of Minority-Owned Business Enterprises:

Hispanic. U.S. Department of Commerce,Washington, DC. Issued February 2001.

2. U.S. Census Bureau. 1997 Economic Census, Survey of Minority-Owned Business Enterprises:

Black. U.S. Department of Commerce,Washington, DC. Issued March 2001.

3. U.S. Census Bureau. 1997 Economic Census, Survey of Minority-Owned Business Enterprises:

American Indians and Alaska Natives.U.S. Department of Commerce,Washington, DC.

Issued May 2001.

4. U.S. Census Bureau. 1997 Economic Census, Survey of Minority-Owned Business Enterprises:

Asians and Pacific Islanders. U.S. Department of Commerce,Washington, DC. Issued May 2001.

5. U.S. Census Bureau. 1997 Economic Census, Survey of Minority-Owned Business Enterprises:

Summary. U.S. Department of Commerce,Washington, DC. Issued July 2001.

6. Minority Population Growth: 1995 to 2050. Prepared by Wan He and Frank Hobbs of the

Census Bureau for the Minority Business Development Agency, U.S. Department of Commerce,

Washington, DC. September 1999.

7. Dynamic Diversity: Projected Changes in U.S. Race and Ethnic Composition 1995 to 2050.

Prepared by Wan He and Frank Hobbs of the Census Bureau for the Minority Business

Development Agency, U.S. Department of Commerce,Washington, DC. September 2000.

8. Minority Purchasing Power: 2000 to 2045. Prepared by Wan He and Frank Hobbs of the

Census Bureau for the Minority Business Development Agency, U. S. Department of Commerce,

Washington, DC. September 2000.

Documents 1 through 5 are available online at http://www.census.gov/csd/mwb and

documents 6 through 8 are available online at http://www.mbda.gov/.

For Questions and Additional Information Contact:

Media Inquiries

Linda Richardson, 202.482.1029, Lrichardson@mbda.gov

Research and Analysis Inquiries

Richard Stevens, 202.482.4671, Rstevens@mbda.gov

Kevin Matthews, 202.482.4147,Kmatthews@mbda.gov

Also please visit MBDA's website at http://www.mbda.gov/ and the Census Bureau website

at http://www.census.gov/

U.S. Department of Commerce

14 Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001)
Appendix A: Nonminority Business Participation Rate

(Comparisons to particular group national BPR average)

U.S. Department of Commerce

Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001) 15

ME

VT

NH

MA

RI

NY

PA NJ

DE

WV MD

VA

NC

SC

MS AL GA

TN

KY

OH

IL IN

MO

IA

MN

ND

SD

NE

CO

WY

MT

ID

UT

NM

HI

Below National Average

National Average

Above National Average

AK

AZ

NV

CA

OR

WA

WI

MI

AR

TX LA

OK

KS

FL

CT
Appendix B: Minority Business Participation Rate

(Comparisons to particular group national BPR average)

U.S. Department of Commerce

16 Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001)

ME

VT

NH

MA

RI

NY

PA NJ

DE

WV MD

VA

NC

SC

MS AL GA

TN

KY

OH

IL IN

MO

IA

MN

ND

SD

NE

CO

WY

MT

ID

UT

NM

HI

Below National Average

National Average

Above National Average

AK

AZ

NV

CA

OR

WA

WI

MI

AR

TX LA

OK

KS

FL

CT
Appendix C: African American Business Participation Rate

(Comparisons to particular group national BPR average)

U.S. Department of Commerce

Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001) 17

ME

VT

NH

MA

RI

NY

PA NJ

DE

WV MD

VA

NC

SC

MS AL GA

TN

KY

OH

IL IN

MO

IA

MN

ND

SD

NE

CO

WY

MT

ID

UT

NM

HI

Below National Average

National Average

Above National Average

AK

AZ

NV

CA

OR

WA

WI

MI

AR

TX LA

OK

KS

FL

CT
Appendix D: Hispanic Business Participation Rate

(Comparisons to particular group national BPR average)

U.S. Department of Commerce

18 Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001)

ME

VT

NH

MA

RI

NY

PA NJ

DE

WV MD

VA

NC

SC

MS AL GA

TN

KY

OH

IL IN

MO

IA

MN

ND

SD

NE

CO

WY

MT

ID

UT

NM

HI

Below National Average

National Average

Above National Average

AK

AZ

NV

CA

OR

WA

WI

MI

AR

TX LA

OK

KS

FL

CT
Appendix E: Asian and Pacific Islander Business Participation Rate

(Comparisons to particular group national BPR average)

U.S. Department of Commerce

Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001) 19

ME

VT

NH

MA

RI

NY

PA NJ

DE

WV MD

VA

NC

SC

MS AL GA

TN

KY

OH

IL IN

MO

IA

MN

ND

SD

NE

CO

WY

MT

ID

UT

NM

HI

Below National Average

National Average

Above National Average

AK

AZ

NV

CA

OR

WA

WI

MI

AR

TX LA

OK

KS

FL

CT
Appendix F: American Indian and Alaska Native Business Participation Rate

(Comparisons to particular group national BPR average)

U.S. Department of Commerce

20 Minority Business Development Agency/Research and Innovation Team (revised 9/5/2001)

ME

VT

NH

MA

RI

NY

PA NJ

DE

WV MD

VA

NC

SC

MS AL GA

TN

KY

OH

IL IN

MO

IA

MN

ND

SD

NE

CO

WY

MT

ID

UT

NM

HI

Below National Average

National Average

Above National Average

AK

AZ

NV

CA

OR

WA

WI

MI

AR

TX LA

OK

KS

FL

CT