According to the U.S. Census, there are more than 120,000 black-owned businesses operating today and about 15,000 of them (roughly 12 percent of the total) are using Thumbtack to find new customers and grow their businesses.
In celebration of Black History Month, we wanted to learn about this growing segment of the American economy that, per the latest Census data (as of 2016), collectively employs more than 1.1 million workers and produces more than $100 million in annual revenue. To do this, we surveyed 2,919 black small business owners over the past twelve months to hear how black small business owners are feeling both about current economic trends as well as what it’s like to run your own business as a black professional in America.
Our survey respondents spanned 46 states (including DC) and 14 industries, ranging from those in the Accommodations and Food Services sector (eg caterers and personal chefs) to Professional Services (eg lawyers and accountants) to Construction (eg plumbers and carpenters). These businesses also range from in size, though all fit in the SBA definition of a small business (under 500 employees): 59 percent work without any paid employees besides themselves, 35 percent have two to five employees, and six percent have more than five employees.
Widespread economic optimism
Despite this wide range in the types of business owners that we heard from, there was a striking commonality among this group: a majority have very positive expectations of general business conditions and very few are worried about the prospect of an economic downturn in the near-term.
- 59 percent expect business conditions in the general economy to improve, 10 percentage points higher than the average among non-black respondents, and only 7 percent expect them to worsen.
- 43 percent say the economy is currently better than it was a year ago, compared to only 14 percent that say the opposite.
And while economic expectations are generally high everywhere for the black small business owners we heard from, they’re particularly positive in the South. At the top of the list of metro areas with the most economically optimistic black business owners is Austin, TX, where 73 percent of our respondents there expect business conditions to improve in the near-term. Eight of the other top ten are also in the South (including two others in Texas), with Las Vegas being the lone exception to this pattern. Interestingly, San Francisco, the home of a booming tech scene, is at the bottom of the list (ranking last out of the 25 metros we examined), with only 47 percent of our respondents there reporting positive economic expectations.
The challenges of being a black small business owner
When asked about the most challenging problem facing their business today, the most common response among the black business owners that we heard from was “acquiring new customers”. 38 percent selected that choice. And, unfortunately, our black respondents told us that this challenge is often made worse by their race. In fact, more of our respondents told us that their race made it harder to win new clients (48 percent) than played no role (45 percent). Only 7 percent said that their race made it easier to win new clients; most of those were in the events sector.
Access to credit was the second most commonly cited primary business challenge among our respondents (selected by 15 percent), with a full 30 percent calling it a problem they face in doing business. That’s almost double the rate of our overall sample (16 percent).
Among the black business owners that we heard from that were interested in acquiring credit (55 percent of the total), only 22 percent sought and received most or the full amount desired. That’s almost 5 percentage points less than the average across all respondents. The black small business owners we heard from were also more likely to either not seek credit because they didn’t think their loan application would be approved (36 percent, compared to 32 percent overall) or apply for credit but be turned down or denied (22 percent, compared to 20 percent overall).
The benefits of being a black small business owner
Despite these challenges, the vast majority of our back respondents reported that working for themselves was far more preferable than working for someone else. 70 percent said that working for themselves allowed them to have a better hourly rate, 61 percent said they had a greater taker home income, and 73 percent said they had more potential for career growth. And despite the common challenge that our black respondents report having in finding new customers, exactly half of them say that working for themselves decreases the likelihood of facing workplace racial discrimination, compared to 16 percent who say the opposite.
Most importantly, the vast majority of our black respondents are happy that they made this plunge: 93 percent say they’re proud to be running their own small business, 80 percent are happy to be in their current job, and 80 percent also say they’re satisfied with their career.
While these data show both the upsides and challenges of being a black small business owner in America today, perhaps the best, most humanizing way to understand this topic is through the words of Roger Perry, who runs a bartending business in Las Vegas. He summed up his experience as a black small business owner this way:
In a city, where I know there are few executives that look like me, and equally few bartenders, I try not to be offended when I receive surprised reactions when guests find out that “I own the company” or when I hear “you are so articulate.” Overall, I feel incredibly empowered working for myself and grateful my business endeavors continue to attract success. I take my work seriously and am honored to have the opportunity to provide the type of service I desired as a patron of other businesses. Many customers have gone out of their way to let me know they chose my services based on my professionalism and I always appreciate these acknowledgments.
These data were collected via the Thumbtack Economic Sentiment Survey, which captures the attitudes and perspectives of thousands of business owners from across the country every month to gauge how they are feeling about the economy, their businesses, and their careers. For this particular study, we focused on the 2,919 black respondents that completed surveys conducted between March 2018 and February 2019.