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MBDA Focuses on Closing the Gap

Recently, MBDA and the U.S. Census Bureau announced that the number of minority-owned firms increased by 46 percent to 5.8 million between 2002 and 2007 according to data from the Preliminary Estimates of Business Ownership by Gender, Ethnicity, Race and Veteran Status: 2007, from the U.S. Census Bureau’s 2007 Survey of Business Owners.

 “It is encouraging that the minority business community is growing and making progress relative to all U.S. firms, but economic parity remains elusive,” says MBDA National Director David A. Hinson.  “While the number of minority-owned businesses continues to grow, they are still smaller in size and scale compared to non-minority-owned firms.”

Hinson is right.  In 2007, average gross receipts for minority-owned firms increased to $179,000 from $167,000 in 2002 – still well below gross receipts for non-minority-owned firms, which had average gross receipts of $490,000.

“We must continue to close this gap,” Hinson said. “It is unacceptable, particularly during an economic crisis that disproportionately affects the minority business community, to have this ongoing disparity.”

And closing the gap is exactly what MBDA is focused on achieving.  Over the last year, MBDA has been promoting a new model of growth for minority-owned firms, moving away from organic growth one contract at a time to growth through joint ventures, strategic partnerships, mergers and acquisitions.  This model allows minority-owned firms to grow bigger and grow faster.

But the economic impact of the minority business community doesn’t stop with gross receipts.  Minority-owned firms also create jobs.  Between 2002 and 2007, employment at minority-owned firms grew more than 26 percent compared to less than one percent for non-minority-owned firms over the same period.  Investing in the minority business community is a long-term investment in lowering the unemployment rate in all of our communities. Over the next decade, it’s expected that minorities and women will fuel much of the job growth.

And as the nation’s population demographics change, the data show that the United States business community has also changed.  Specifically:

  • Between 2002 and 2007, the number of minority firms grew by 46 percent, compared to 18 percent for all U.S. firms, and compared to 13.7 percent growth for the minority population age 18 and older, during the same period.
  • Minority-owned firms employed approximately 5.9 million people in 2007, up from 4.6 million in 2002.
  • Asian-owned firms grew 41 percent to 1.6 million from 2002. Asian-owned firms continue to generate the highest annual gross receipts at $510.1 billion in 2007, increasing 56 percent from 2002.
  • The number of Hispanic-owned businesses totaled 2.3 million in 2007, up 44 percent from 2002.  Receipts for Hispanic firms increased 55 percent to $343.3 billion.
  • Black, or African-American-owned businesses grew to 1.9 million firms in 2007, up 61 percent from 2002 - the largest increase among all minority-owned companies; and generated $135.6 billion in gross receipts, up 53 percent from 2002.
  • There were 237,203 American Indian and Alaska Native-owned businesses in 2007, up 18 percent from 2002, generating $34.2 billion in gross receipts, an increase of 27 percent.
  • Native Hawaiian- and Other Pacific Islander-owned businesses totaled 38,854 in 2007, up 34 percent from 2002.  While these firms’ reported the largest increase in receipts among all minority-owned firms in 2002 (63 percent), the total amount reached only $7 billion.

“The data on minority business growth clearly shows that minority-owned firms are a significant contributor to the long term health of the United States economy,” Hinson said. “We must aggressively grow minority-owned firms and assist them in contributing to President Obama’s goal of doubling exports over the next five years.” 

The Obama Administration established the National Export Initiative earlier this year to support export and domestic jobs – an Administration initiative MBDA has been supporting through new programs, including the recently launched Global Construction Program.

Additionally, the Administration established the Interagency Task Force on Federal Contracting Opportunities for Small Businesses. With MBDA’s input, this task force will make recommendations to the President on how to increase government contracting opportunities for small and minority-owned businesses.

Minority-owned firms help fuel the engine that drives our economy and job creation.  Success of the minority business community leads to the creation of more jobs, an expanded tax base, community benefits and global competitiveness.  Their success will ultimately help drive the success and recovery of the American economy.