Nationally, less than 3% of businesses are Black-owned. However, over the past two years, the number of Black-owned businesses has grown by 8.52%, according to Census Bureau data. This exceeds the rate at which all businesses are growing (0.46%). Some parts of the country provide a more favorable environment for Black entrepreneurs to set up shop.
In this study, SmartAsset crunched the numbers to find the best places for Black entrepreneurs. We compared 57 of the largest metro areas across three categories and a total of nine metrics. They include Black-owned business success (number of Black-owned businesses, two-year change in number of Black-owned businesses and percentage of Black-owned businesses), new business environment (percentage of new businesses, start-up survival rate and percentage of businesses with sales exceeding $250,000) and economic situation (median Black household income, 2019 Black unemployment rate and December 2021 unemployment rate). For more information on our data or how we put together our findings, read our Data and Methodology section below.
Key Findings
- Texas metro areas rank well. Three of the top 10 places for Black entrepreneurs are in Texas. They include Dallas-Fort Worth-Arlington, San Antonio-New Braunfels and Houston-The Woodlands-Sugar Land. All three metro areas rank particularly well for the “new business environment” category, with a favorable start-up early survival rate in the state and most businesses reporting sales exceeding $250,000 annually.
- The number of Black-owned businesses rose over time in most metros, but declined sharply in others. From 2017 to 2019, the number of Black-owned business grew by more than 20% in 23 metro areas and by more than 40% in 11 areas. However, in seven metros, the number of Black-owned businesses dropped by more than 20% from 2017 to 2019, with the largest decreases taking place in Knoxville, Tennessee and St. Louis, Missouri-Illinois.
1. San Francisco-Oakland-Hayward, CA
Across the three categories we considered, California’s San Francisco-Oakland-Hayward metro area ranks 15th-highest for Black-owned business success, first for new business environment and seventh-best for the economic situation. Within the Black-owned business success category, San Francisco-Oakland-Hayward has the 13th-highest number of Black-owned businesses (2,087) and 11th-best two-year change in the number of Black-owned businesses (40.54%). For new business environment, the area has the best start-up early survival rate (81.83%). Finally, the median Black household income is about $61,700 (fourth-highest), and the 2019 Black unemployment rate was 6.5% (12th-lowest).
2. Nashville-Davidson—Murfreesboro—Franklin, TN
Nashville-Davidson—Murfreesboro—Franklin, Tennessee ranks as a top place for Black entrepreneurs due to its favorable new business environment and positive economic situation for Black households and individuals. Close to 74% of businesses in the area reported sales exceeding $250,000 in 2019 – the seventh-highest rate in our study. Additionally, the 2019 Black unemployment rate stood at 4.5% and more recently, the general unemployment rate clocked in at 2.7%, the 13th-lowest across all 57 metro areas.
3. Atlanta-Sandy Springs-Roswell, GA
Atlanta-Sandy Springs-Roswell, Georgia ranks in the top 10 metro areas for six individual study metrics. The metro area has the third-highest number of Black-owned businesses (7,539) and percentage of Black-owned businesses (6.67%). New businesses as a percentage of total businesses make up the fifth-highest percentage in our study, at roughly 31%. Finally, Atlanta-Sandy Springs-Roswell ranks particularly well for all three economic situation metrics, with the ninth-highest median Black household income ($56,245), sixth-lowest Black unemployment rate (5.9%) and sixth-lowest December 2021 unemployment rate (2.3%).
4. Washington-Arlington-Alexandria, DC-VA-MD-WV
The nation’s capital ranks as the fourth-best place for Black entrepreneurs looking to start up their own business, with more than one in four businesses formed in the past three years. Black entrepreneurs in Washington-Arlington-Alexandria may also have additional savings to put towards their new business. The median Black household income in the area is the second-highest in our study, at $77,813, and Black unemployment rate is 19th-lowest, at 6.9%.
5. Dallas-Fort Worth-Arlington, TX
Black entrepreneurs may appreciate the new business environment in Dallas-Fort Worth-Arlington, Texas. With a start-up early survival rate of almost 80%, close to one in three businesses in the area have been formed in the past three years. Additionally, many businesses report high profits. According to Census Bureau data, 70.90% of businesses had sales and receipts exceeding $250,000 in 2019.
6. San Antonio-New Braunfels, TX
San Antonio-New Braunfels, the second of three Texas metro areas in our top 10, has the 12th-highest percentage of new businesses (29.64%) and median Black household income ($55,009). Additionally, in 2019, the Black unemployment rate was the third-lowest across all 57 metro areas (5.2%).
7. Los Angeles-Long Beach-Anaheim, CA
Los Angeles-Long Beach-Anaheim, California ranks sixth-best for the Black-owned business success category and fifth-best for the new business environment. Specifically, the number of Black-owned businesses has increased by more than 41% over the past two years so that in 2019, there were a total of 7,200 Black-owned businesses. New businesses in Los Angeles-Long Beach-Anaheim also make up a large percentage of total businesses, at 30.09%.
8. Richmond, VA
Across all 57 metro areas in our study, Virginia’s Richmond ranks first when it comes to Black-owned business success. The roughly 1,700 Black-owned businesses in the area make up almost 7% of all businesses. Additionally, the number of Black-owned businesses is growing rapidly. Census Bureau data shows that from 2017 to 2019, the number of Black-owned businesses grew by almost 54% – the sixth-highest rate in our study. Beyond this, the median Black household income is 22nd-highest, at $47,445, and the Black unemployment rate is 19th-lowest, at 6.9%.
9. Houston-The Woodlands-Sugar Lands, TX
Houston-The Woodlands-Sugar Lands, Texas ranks in the top 10 metro areas for two individual metrics: the number of Black-owned businesses (roughly 4,000) and new businesses as a percentage of total businesses (30.85%). Additionally, across all 50 states and the District of Columbia, the Lone Star state ranks 11th-highest for its start-up early survival rate (79.63%).
10. Charlotte-Concord-Gastonia, NC-SC
Charlotte-Concord-Gastonia, North Carolina-South Carolina rounds out our list of the top 10 places for Black entrepreneurs. It ranks highly in the categories of Black-owned business success and economic situation. Close to 4% of businesses in the area are Black-owned and over the past two years, the number of Black-owned businesses grew by 10.30%. When it comes to the economic situation, Charlotte-Concord-Gastonia has the ninth-lowest Black unemployment rate (6.2%) and 23rd-highest median Black household income ($46,548).
Data and Methodology
To find the best places for Black entrepreneurs, SmartAsset looked at the 100 largest metro areas in the U.S. Only 57 of those areas had complete data available, and we compared them across three categories that include nine individual metrics:
- Black-owned business success. 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 2017 and 2019.
- New business environment. This category includes the percentage of new businesses, start-up survival rate and percentage of businesses with sales exceeding $250,000. Data comes from the Census Bureau’s Annual Business Survey (2019) and the Kaufmann Indicators of Entrepreneurship report (2020). To note, the metric start-up survival rate is reported at the state level.
- Economic situation. To create this score, we looked at the median Black household income, 2019 Black unemployment rate and December 2021 unemployment rate. Data comes from the Census Bureau’s 2019 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.
Editors’ Note: SmartAsset published this study in celebration and recognition of Black History Month. We are aiming to raise awareness surrounding economic inequities and provide personal finance resources and information to all individuals.
Financial Tips for Black Entrepreneurs
- Invest in professional advice. If you are looking for help with your money or your business, consider finding a financial advisor to help you. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three 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.
- Taxes don’t always have to be taxing. Knowing your tax burden is key to a successful financial life and running your business efficiently. Use SmartAsset’s free tax calculator to see what you might owe. Additionally, check out this helpful article on what it takes to start a business.
Questions about our study? Contact us at press@smartasset.com
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