Black businesses in state lag in size, sales report says

December 06, 1990|By Michelle Singletary | Michelle Singletary,Evening Sun Staff

The good news is that Maryland ranks first in the nation in the proportion of black-owned businesses compared with all businesses in the state.

The bad news is the businesses are smaller and on the average have sales that are 28.7 percent less than the average black-owned firm nationally.

The news comes from a report released yesterday by the state's Department of Economic and Employment Development.

The report is the first time the state has taken data collected by the U.S. Census Bureau and analyzed how black-owned businesses in the state compared with those in the rest of the nation. The figures, prepared by DEED's Office of Research, are based on census data from 1982 to 1987 and are the latest statistics available.

J. Randall Evans, secretary of DEED said he couldn't explain why Maryland businesses tend to be smaller and have less sales than their counterparts nationwide.

But Evans said the state plans to take steps to improve accessibility to capital and procurement opportunities in both the private and public sectors for minority firms.

"We have a tremendous amount of resources in this state but our challenge is to help the businesses grow," Evans said yesterday after announcing the results of the report at a small business conference at the Stouffer Harborplace Hotel.

Evans said he plans to pull together government, private industry and academic institutions to brainstorm on how to help the growth of black-owned businesses in the state.

In January, Evans said the state will identify 10 to 20 black-owned firms that have the highest potential for growth and provide those firms with tailor-made business advice.

" . . . Black-owned businesses are still underdeveloped and underutilized economic resources," he said. "We must put forth a greater effort to upgrade the skills of our minority business entrepreneurs to further ensure their success."

Evans said there will also be a greater emphasis on marketing the state's financial programs including a new acquisition program operated by the Maryland Small Business Development Financing Authority (MSBDFA).

The acquisition program is designed to help small businesses that lack adequate capital and can't get conventional financing to purchase an existing business.

However, after six months in existance MSBDFA has not been able attract any black businessmen or women to take advantage of the program.

"Part of the problem is blacks don't view acquisition as a way to go into business," said Stanley Tucker, MSBDFA's executive director. "But the trend is to buy a business that is up and running with a good cash flow and customer base. It just makes sense."

Tucker said buying a successful business may be one of the quickest ways blacks will be able to break into industries such as manufacturing and wholesaling.

According to the report, the majority of black-owned firms are concentrated in the service industries. Business services, health services and personal services were prominent.

Black-owned manufacturing firms grew most rapidly -- 163 percent -- among all black-owned businesses in Maryland. During 1982 and 1987 the number of black-owned manufacturing firms went from 72 to 189.

In Maryland, the proportion of black-owned firms was 8.9 percent of the state's total number of businesses, significantly above the national average of 3.1 percent.

In 1987 Maryland had 21,678 black-owned businesses, placing it fifth among the states in the total number of black-owned firms. From 1982 to 1987, the number of black-owned businesses in Maryland increased 57 percent compared with a national growth rate of 38 percent for black-owned businesses.

But the difference between black-owned firms and all firms is less dramatic in terms of annual sales. On average Maryland firms had $169,590 in annual sales, while black-owned companies averaged only $33,200.

Maryland's black-owned firms had lower annual receipts than their national counterparts in every industry sector except construction. Contractors made on average $73,400 in annual sales, 24 percent higher than the national average of $59,100.

The difference in average annual sales was greatest in the wholesale trade where black-owned firms took in $67,600 per year compared with a national average of $240,500.

In Baltimore City, the firms had average sales of $32,782, 1.3 percent lower than the statewide average and 30 percent lower than the national average.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.