Closing the Opportunity Gap Between Blacks and Whites

If such things were decided purely on numbers, the face of American entrepreneurship in 2004 would be black. African-Americans are 50 percent more likely than whites to attempt to start a new business. And Hispanic Americans are 20 percent more likely than their white counterparts to take the plunge. Of course, the entrepreneurial spirit - that burning, gut-level drive to create a viable venture out of one’s own vision, ambition, sweat and talent — knows no race. It is without color or gender, and cuts across all socioeconomic barriers.

But start to peel away the layers of this colorless, genderless ideal, and a disheartening reality emerges. Numbers and race in entrepreneurship matter a great deal at every stage of the process–the initial dream, the viable idea, the months and years of development and hard work.

The truth is that white African-Americans, Hispanic Americans and other minorities are driving the pace of entrepreneurial activity, the face of business success remains disproportionately white.

Minorities represent 27 percent of the American population, but minority-owned firms account for just 14 percent of all U.S. businesses. Of that share, African-Americans own only 4 percent. Even more telling: Black-owned firms take in a meager .4 percent of all U.S. business receipts.

It’s not a question of ability. When given the opportunity to tap resources others often take for granted, minority entrepreneurs deliver the goods. A 2002 study of minority firms backed by venture capital revealed that the average return on investment - 20 percent - exceeded that of the Standard & Poor 500 during the same time period.

But minorities have a much harder time than whites getting their busienss of the ground. And, once started, they struggle to grow their firms to optimal scale. Minorities’ share of the venture captial pie is minuscule, less than 5 percent. The daunting hurdles that slow many white entrepreneurs — such as securing financing, quality training and useful business connections — frequently detour into dead-ends for minorities.

Sadly, the entrepreneurial achievement gap between whites and monorities isn’t news, but at this late date it ought to be history. And in light of the demographics in this country, it ought to be an economic priority.

Relegating this unfortunate legacy of inequality and limited opportunity to the past, where it belongs, is the goal of a new national initiative recentlly announced in Washington D.C., by a powerful consortium of public and private organizations.

Called the Urban Entrepreneur Partnership, the effort brings together the National Urban League, the White House National Economic Council, the Kauffman Foundation, the Small Business Administration and Business Roundtable. Together, we aim to set off a nationwide movement to close the gap between aspiration and success for America’s minority entrepreneurs.

The initiative calls for the development of one-stop economic empowerment centers that provide business training, counseling, prcurement advice and financing to minority business owners in historically neglectedc and economically underserved urban areas.

In its first phase, centers will be launched through local Urban League affiliates in five pilot cities: Atlanta, Cincinnati, Cleveland, Jacksonville and Kansas City. By the end of 2006, the partnership expects to have 15 centers operational throughout the country.

The Urban Entrepreneur Partnership represents an unprecedented effort to mobilize the resources of corporate America, the nonprofit sector and the federal government to help make the business dreams of minority Americans an economic reality.

To be sure, not every entrepreneur can or should succeed. But every individual who burns with entrepreneurial fire is entitled to a fair shot at success, where race is neither a hindrance nor an advantage.

Written by: Carl J. Schramm and Marc H. Morial
Tuesday November 16, 2004
The Plain Dealer
Ewing Marion Kauffman Foundation

Schramm is president and CEO of Ewing Marion Kauffman Foundation of Kansas City. Morial is president and Ceo of the National Urban League

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