Florida Leads Nation In Number Of Minority-Owned Businesses

FLORIDA — Small businesses make up 99.8 percent of all businesses in Florida, 2.5 million businesses in all. But a new study released by the national law firm, Edwards Kirby, revealed that Florida has the third most businesses owned by Black, indigenous and people of color.

Using Small Business administration profiles, Edwards took a look at small businesses and found that, although small, their economic contributions to the economy were anything but small. Edwards called them nurturers of creative opportunity, community and local economy, and may even encourage property development and home-buying in underfunded, underutilized areas.

Unfortunately, due to their size, small businesses, particularly BIPOC-owned businesses, also had less access to resources to allow them to weather the economic impacts of the coronavirus pandemic.

Small businesses shuttered by the thousands at the height of the COVID-19 pandemic due in part to their reliance on in-person shoppers. With store closures and shelter-in-place mandates, many small-business owners thought it better to close permanently rather than risk bankruptcy while others worked to weather the last year through creative marketing, flexible services and dedicated customers.

Even without the stormy conditions created by an unprecedented global virus, minority-owned small businesses face structural and societal challenges to their viability and success, according to Edwards. Limited access to credit, less start-up capital and a concentration of BIPOC business ownership in the service and retail industries threaten these businesses.

"Shopping local and small are more important now than ever before in order to help restore the small-business economy to its pre-pandemic output, but also to protect the diversity of those businesses and their ownership," concluded the Edwards report.

To find out which states have significant numbers of thriving minority-owned small businesses, and which states don’t, the law firm turned to the Small Business Administration’s small business profiles to develop a snapshot of BIPOC small-business ownership across the country. It analyzed the number of BIPOC-owned small businesses and self-employed BIPOC men and women to determine which states had the highest and lowest percentages of each as compared to overall small businesses, small-business owners and state population.

Total numbers of BIPOC-owned small businesses in every state ranged from the millions in states like Texas, New York, California and Florida, to the low thousands in Vermont and North Dakota.

In Florida, BIPOC individuals account for over a quarter of the population (25.9 percent) and BIPOC-owned small businesses are just shy of a million in total, at 926,002. California has the most with 1,600,000 BIPOC businesses and Texas was second with 1,100,000.

For the most part, the states with the most BIPOC-owned small businesses by percentage form the southern border of the United States. Midwestern representation was limited to Illinois, at 26 percent, while New England was left off the list entirely.

In contrast to the states with the most BIPOC-owned small businesses, those with the least cover much of America’s heartland and northernmost areas. Maine and Vermont, with only 6.4 percent of each state’s population identifying as nonwhite, ranked first and second among the states with the lowest percentages of BIPOC-owned small businesses. The first six spots remained under 5 percent BIPOC small business ownership; the last state on the list, Pennsylvania, revealed a meager 12 percent—6.7 percent lower than Alaska, the final state in the top 20 states with the most BIPOC-owned small businesses.

Limited BIPOC-owned small business representation in these low-ranking states may be due in part to the lesser diversity of demographics and lower overall populations in many Midwestern and Northeastern states.

Still, Evans said analysts don’t yet know the full impact of the coronavirus pandemic on small businesses across the United States and how the small business landscape may have shifted.

The one conclusion that can be drawn from this data, according to Kirby, is that BIPOC-owned small businesses are as American as apple pie, with representation in all 50 states and the District of Columbia.

The Small Business Administration said Florida, in particular, is dependent on these small businesses, many of which focus on Florida's biggest industry — tourism.

According to the SBA, 3.4 million people across the state are employed at small businesses, of which 556,089 have fewer than 20 employees.

The SBA estimates that small businesses support half of the state's economy, create nearly three out of every four new jobs, employ more than 40 percent of the state’s private sector workforce and contribute to nearly 44 percent of the state GDP.

By 2030, Florida is projected to add four million more residents. To sustain and economically support this rate of growth, the Florida Small Business Development Center estimates will need to assist its existing businesses and add 500,000 net new small businesses to create the additional 1.2 million new jobs needed.

Unfortunately, minority-owned small businesses are also more likely to fail.

According to the U.S. Small Business Administration Office of Advocacy, only 50 percent of businesses that opened in 2020 will be open by 2025, and only one-third will still exist in 2030.

The reasons vary, however, the majority close their doors due to a lack of business knowledge and resources, according to Michael W. Myhre, CEO of the Florida SBDC Network.

He said that's the major reason the Florida SBDC was formed by state statute. The network provides access to the expertise small businesses need to help mitigate common entrepreneurial pitfalls.

"Small businesses are best positioned for sustained success through a cohesive support system of organizations and service providers," he said. "In communities across the country, this concept is referred to as an 'entrepreneurial ecosystem.'"

Businesses that take advantage of these support systems are far more likely to succeed.

The five-year small business start-up success rate for businesses in Florida ranks among the best in the country — 50.2 percent. Montana has the highest rate at 56 percent followed by Massachusetts at 55.7 percent.

While minority businesses face more challenges in establishing and cultivating a successful small business, they are also more likely to have ties in and are willing to invest in the communities they serve, thus building customer loyalty.

"It’s our responsibility, both as consumers and community members, to support them with our purchasing power—now more than ever," said Edwards.

For BIPOC-owned businesses seeking help to recover from the impact of the pandemic or seeking services to enhance their businesses, click here.

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