Research Summary

Number of Minority Women-Owned Businesses Expected to Reach 1.2 Million in 2002

Center for Women’s Business Research  ·  December 18, 2001

Sponsored by Kauffman Center for Entrepreneurial Leadership, the Center’s report, “Minority Women-Owned Businesses in the United States, 2002” analyzes data published by the U.S. Bureau of the Census and presents the most up-to-date information currently available on majority-owned, privately-held firms owned by women of color in the United States.

“Women of color continue to start businesses at a faster rate than other women and all businesses, ” said Nina McLemore, Chair of Center for Women’s Business Research and President of Regent Capital. “The number of minority women-owned firms increased 31.5% between 1997 and 2002, more than twice as fast as all women-owned firms, and more than four times the national average. Further, based on recent growth rates, in 2002 there will be 14,116 minority women-owned firms with revenues of $1 million or more, and 111 with 100 or more employees.”

As of 2002, the Center estimates that there are 470,344 Hispanic women-owned firms, 365,110 African American women-owned firms, 358,503 firms owned by women of Asian or Pacific Islander heritage, and 77,483 firms owned by women of Native American or Alaska Native heritage. Between 1997 and 2002, the number of these firms will have grown by 39.3%, 16.7%, 44.6%, and 44.6%, respectively.

“There has been growth in women’s entrepreneurship among every major ethnic group,” said Jasmin Rodriguez, Manager of Women’s Initiatives for Kauffman Center. “This is a positive sign, not only for these women business owners but for the United States as a whole. Through our research we’ve learned that greater participation in entrepreneurship among people from a variety of backgrounds can play an important role in facilitating economic growth.”

Businesses owned by women of color represent nearly one-third of all of the firms owned by persons of color, according to the report. In comparison, all majority-owned, privately held women-owned firms comprise 28% of all U.S. businesses. Businesses owned by women of color now represent 20% of all women-owned firms, meaning that one in five women-owned firms is owned by a woman or women of color. More than one-half of minority women-owned firms (58%) are in the service sector, which also had the greatest growth (33% between 1997 and 2002). Other industries with the greatest growth were transportation/communications/public utilities (21%) and agriculture (7%). The 10 states with the greatest number of minority women-owned firms in 2002 are: 1) California; 2) New York; 3) Texas; 4) Florida; 5) Illinois; 6) Georgia; 7) Maryland; 8) New Jersey; 9) Virginia; and 10) North Carolina.

The 10 states with the fastest growth in the number of minority women-owned firms from 1997 to 2002 are: 1) Montana 2) North Dakota; 3) Maine; 4) Oklahoma; 5) South Dakota; 6) Vermont; 7) West Virginia; 8) Idaho; 9) New Hampshire; and 10) Alaska.

The 10 states where minority women-owned firms comprise the greatest share of all women-owned firms are: 1) Hawaii (60%); 2) District of Columbia (40%); 3) California (35%); 4) New Mexico and New York (tied – 32%); 6) Texas (29%); 7) Maryland and Florida (tied – 28%); 9) Alaska, Georgia and Oklahoma (tied – 24%).

“Due to a more restrictive definition of a woman-owned business in the most recent Census and to the limitations that caused when comparing data from previous years, we know that our estimates are conservative,” said McLemore. “Thus, we know that actual growth rates and estimates for sales and employment are higher than reported (18.8% and 5.7%, respectively). Since the Census Bureau is only counting privately-held, majority-owned firms, and is no longer counting women who own 50% of a business as it did in the past, the data were not directly comparable to data gathered previously. Nonetheless, despite these limitations, we are pleased to see continued growth in the number of women of color in business and growth in their economic contributions as well. These trends will likely continue at solid rates into the future.”

Editor’s Note: When referring to the reports, they should be called “Minority Women-Owned Businesses in the United States, 2002,” published by Center for Women’s Business Research (founded as the National Foundation for Women Business Owners).

The report, “Minority Women-Owned Businesses in the United States, 2002,” is available for $130.

Center for Women’s Business Research, founded as the National Foundation for Women Business Owners, is the premier source of knowledge about women business owners and their enterprises worldwide. The Center provides original, groundbreaking research to document the economic and social contributions of women-owned firms. To maximize the benefits of this knowledge, the Center has a comprehensive strategy to disseminate its research through the media, publications, seminars and consulting. Corporations, government policy makers, educators, organizations, the media, and individuals rely on the Center’s leading-edge knowledge to strengthen their support of women business owners.

Kauffman Center for Entrepreneurial Leadership takes an innovative approach to accelerating entrepreneurship through educational programming and research. The Kauffman Center is the largest organization solely focused on entrepreneurial success at all levels ﷓ from elementary students to high growth entrepreneurs. The Kauffman Center is funded by the Ewing Marion Kauffman Foundation.

METHODOLOGY NOTE: The 2002 estimates are derived by using growth rates calculated from data published by the U.S. Bureau of the Census. Due to changes in the way the Census Bureau defined a woman-owned business, the “1997 Survey of Minority-Owned Business Enterprises” does not count some firms that were included in the past – those in which a woman owns 50% of the business. Since the agency is now counting only privately-held, majority-owned firms, the data are not directly comparable to data gathered previously. The Center adjusted the 1992 number of firms, employment and sales to exclude equally-owned firms in order to calculate growth from 1992 to 1997.

Additionally, in the “1992 Survey of Minority-Owned Business Enterprises,” estimates for minority-owned business enterprises for a part of the sample could not be allocated by industry and geography and were, therefore, not included in detailed tables of the reports. Thus, to provide a growth rate from 1992 to 1997, Center for Women’s Business Research adjusted 1992 data on number of firms, employment and sales to add the undercounted firms.

The “1997 Survey of Minority-Owned Business Enterprises” includes C corporations; prior to 1997, only subchapter S corporations, partnerships and sole proprietorships were included. The Center adjusted the 1997 number of firms, employment and sales to exclude C corporations in order to calculate growth from 1992 to 1997, and applied these growth rates to the 1997 to 2002 period.

Finally, the “1997 Survey of Minority-Owned Business Enterprises” separates Asian & Pacific Islander firms and Native American & Alaska Native firms; prior to 1997, these two groups were combined. The Center estimated growth in the number of firms, employment and sales by combining the groups in 1997 and then applied the same growth rates to each individual group. In cases where the Census Bureau was unable to report the number of firms, employment or sales for either Asian & Pacific Islander or Native American & Alaska Native women business owners (due to numbers not meeting publication standards) data for the group that was available is used to calculate growth rates for that group.

Based on these adjustments, Center for Women’s Business Research projects the 1997 published Census data forward to 2002, using the following general assumptions: 1) the growth rates between 1992 and 1997 would continue at similar rates through 2002 (growth rates in the number of firms, employment and sales are projected linearly); 2) the growth rates in the number, employment and sales of C corporations would equal the growth rates of other firms; 3) the percentage of women-owned minority-owned firms that are C corporations within each minority group would equal the percentage of all women-owned minority-owned firms that are C corporations; 4) the percentage of women-owned (and all) minority-owned firms that are C corporations at the state level would equal the percentage of women-owned (and all) minority-owned firms that are C corporations at the national level.

There were some instances in which the Census Bureau could not report a 1992 to 1997 growth rate for women-owned firms in general, since the confidence interval for the rate included 0 and could have been slightly positive or slightly negative. In these cases, as noted, the assumption was made that the growth rate was 0 for all minority women-owned firms as well.

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