Black Americans are the third-largest racial or ethnic group in the U.S., making up just over 12% of the population. But less than 3% of all businesses are Black-owned. Some places outperform others, however, when it comes to the prevalence, success, and financial health of Black-owned companies and business owners.
In celebration and recognition of Black History Month, SmartAsset analyzed the best places for Black entrepreneurs. We considered 39 of the largest metro areas across three categories and a total of nine metrics on topics such as the prevalence of Black-owned businesses, new business success, and income and job security. For more information on our data or how we put together our findings, read our Data and Methodology section below.
Note: Our rankings are based solely on business and employment data and do not take into account the social climate or other factors that may contribute to racial inequality in a place.
This is SmartAsset’s second study on the best places for Black entrepreneurs. Check out the previous edition here.
Key Findings
- The number of Black-owned businesses grew by more than 100% in some areas. The Toledo, Ohio, metro area, which ranks No. 33 on our list, has the highest percent change between 2018 and 2020 (107.76%). Toledo is followed by the No. 1 ranking Austin, Texas, metro area (88.27%) and the No. 25 ranking Providence, Rhode Island, metro area (65.46%).
- The proportion of Black-owned businesses is more than double the national average in six areas. The Atlanta, Georgia, metro area has the highest percentage (7.42%). It is followed by the District of Columbia (7.01%); Virginia Beach, Virginia (6.83%); Memphis, Tennessee (6.42%); Richmond, Virginia (5.88%) and Charlotte, North Carolina (4.94%). An additional 14 metro areas exceed the national average of 2.44%.
- The Seattle, Washington, metro area is the only Western metro area to crack the top 10. Six California and Oregon metro areas also made it into our list, but none rank higher than No. 18. All three Western states, however, can offer Black entrepreneurs potential opportunities to start a new business, with a startup early survival rate above 78%.
1. Austin-Round Rock-Georgetown, TX
The fourth-largest metro area in Texas has seen an 88.27% increase in the number of Black-owned businesses between 2018 and 2020 (ranking second-highest for this metric). In that fast-growing environment, more than a third of total businesses are younger than three years in the Austin metro area (ranking No. 1 for this metric). Additionally, the area does well for Black American job security, offering the lowest Black unemployment rate study-wide (6.6%).
2. Charlotte-Concord-Gastonia, NC-SC
The Charlotte, North Carolina, metro area has an above-average presence of Black-owned businesses (the sixth-highest percentage). Black entrepreneurs may also find a welcoming climate for new businesses, which make up 27.59% of all businesses here (10th-highest). Additionally, the startup early survival rate in the state as a whole is just over 82% (ranking No. 5 across the country).
3. Atlanta-Sandy Springs-Alpharetta, GA
The Atlanta, Georgia, metro area has the highest percentage of Black-owned businesses (7.42%, or 8,663 in total). And this number of Black-owned businesses has gone up by almost 17% between 2018 and 2020. For Black residents in the area, both the median Black household income ($60,966) and the Black unemployment rate (7.9%) rank in the top 10.
4. Boston-Cambridge-Newton, MA-NH
While the Boston, Massachusetts, metro area doesn’t have the highest percentage of Black-owned businesses, the area has seen major growth over the past two years. Between 2018 and 2020, the number of Black-owned businesses has increased by more than 36% (fifth-highest increase). Additionally, close to 70% of all businesses in the area report sales and receipts exceeding $250,000 (11th-highest).
5. Washington-Arlington-Alexandria, DC-VA-MD-WV
The District of Columbia metro area, which offers destinations highlighting the contributions of Black Americans (such as the Smithsonian’s museum of African American history), also ranks near the top for Black entrepreneurship. The prevalence of Black-owned businesses ranks in the top five - both as a percent (7.01%) and as a gross figure (7,933). For additional context, this figure is up 11.04% between 2018 and 2020.
6. Indianapolis-Carmel-Anderson, IN
Home to the Landmark of Peace memorial, the Indianapolis, Indiana, metro area also offers an environment conducive to Black entrepreneurs. Approximately 3.25% of businesses are Black-owned, which has gone up 32.50% between 2018 and 2020 (sixth-highest increase). And with nearly 14% of all businesses being younger than three years in this metro area, it’s reassuring that Indiana as a whole has a startup early survival rate of 83.59% - third-highest in the nation.
7. Miami-Fort Lauderdale-Pompano Beach, FL
The epicenter of South Florida has a solid presence of Black entrepreneurs. Recent data shows there are roughly 7,072 Black-owned businesses in the area, which make up close to 4% of all businesses. This is an increase of more than 16% over the two-year time period between 2018 and 2020. The Miami, Florida, metro area also offers a business environment that is welcoming for new business owners: 30.35% of all businesses are younger than three years.
8. Huntsville, AL
There are roughly 295 Black-owned businesses in the Huntsville, Alabama, metro area, which is the lowest number in the top 10. However, relative to the total number of businesses in the area, Huntsville is on par with larger metro areas: roughly 3.7% are Black-owned (12th-highest). Over the two-year period between 2018 and 2020, the number of Black-owned businesses in the area has increased by 37.21% (fourth-highest). Additionally, Huntsville has the second-lowest Black unemployment rate study-wide (7.1%).
9. Raleigh-Cary, NC
The Raleigh-Cary, North Carolina, metro area is located in a state with the fifth-highest startup early survival rate (82.74%). As can be expected, new businesses within the metro area have a noteworthy presence - more than 1 in 4 businesses is younger than three years (11th-highest). Black-owned businesses also make up 3.52% of all businesses (or in gross figures, just under 1,000 businesses) in the Raleigh-Cary area.
10. Seattle-Tacoma-Bellevue, WA
The Seattle, Washington, metro area ranks No. 17 for both its total number of Black-owned businesses (1,269) and the two-year growth between 2018 and 2020 for the aforementioned figure (18.05%). Additionally, Black workers in the area earn the sixth-highest median household income study-wide ($63,155). As a whole, Washington state offers a startup climate that can benefit early survival - more than 89% of new businesses are still active after one year of operation (ranking No. 1).
Data and Methodology
To find the best places for Black entrepreneurs, SmartAsset looked at the 200 largest metro areas in the U.S. Only 39 of those areas had complete data available, and we compared them across three categories that include nine individual metrics:
- Prevalence of Black-owned businesses. For our Black-owned business success score, we analyzed the number of Black-owned businesses, two-year change in number of Black-owned businesses and percentage of Black-owned businesses. Data comes from the Census Bureau’s Annual Business Surveys and is for the years 2018 and 2020.
- New business success. This category includes the percentage of new businesses, startup survival rate and percentage of businesses with sales exceeding $250,000. Data comes from the Census Bureau’s Annual Business Survey (2020) and the Kaufmann Indicators of Entrepreneurship report (2021). Note: The metric startup survival rate is reported at the state level.
- Income and job security. To create this score, we looked at the median Black household income, 2021 Black unemployment rate and November 2022 unemployment rate. Data comes from the Census Bureau’s 2021 1-year American Community Survey and the Bureau of Labor Statistics’ Local Area Unemployment Statistics program.
First, we ranked each metro area in each metric, assigning equal weight to every metric. Then we averaged the rankings across the three categories listed above. For each category, the metro area with the highest average ranking received a score of 100. The metro area with the lowest average ranking received a score of 0. We created our final ranking by calculating each metro area’s average score for all three categories.
Financial Tips for Black Entrepreneurs
- Understand the tax benefits and implications for business owners. Businesses come in all shapes and sizes and so do the taxes that apply. Read our article on tax obligations, deductions and credits for small businesses here and learn seven tax planning tips to help you manage tax season.
- Work with a finance professional. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Questions about our study? Contact press@smartasset.com.
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