Best & Worst U.S. Cities for Minority-Owned Businesses

Minority-owned businesses are a growing and important part of the U.S. economy. According to a Business Journal survey from 2017, there are 11 million minority-owned small businesses with employees in the United States today, nearly twice the number as a decade ago. These businesses generate $1.8 trillion in annual revenue and employ nearly 6.5 million people nationwide.

That said, minority-owned businesses are not thriving everywhere. The number of long-lived, financially successful minority-owned firms is growing in some states, while in other parts of the country, they’re scrambling to keep up. Lending Tree recently looked at 50 metropolitan areas and scored them based on the number and relative success of minority-owned businesses located there.

Scoring Methodology

To conduct its analysis, Lending Tree looked at four key metrics:

  • The percentage of self-employed minorities in each area.
  • The “minority business owner parity index,” which compares the percentage of minority-owned businesses with the percentage of minorities living in a given metro area. A score of 100 means the percentage of minorities living in the area is equal to the percentage of minorities who own businesses. A score below 100 means that there is a greater percentage of minorities living in the area than there are minority business owners. The greater the disparity, the lower the score. Similarly, it the percentage of minority-owned businesses is higher than the percentage of minorities in the population of a given area, the score will be greater than 100. Again, the greater the disparity, the higher the score.
  • The percentage of minority-owned businesses that made at least $500,000 in annual revenue
  • The percentage of minority-owned businesses who had been in operation for at least six years.

Based on these metrics, each city received a score of between 100 and zero, with 100 being the highest score possible and zero the lowest.

Here are some of the key takeaways. 

Best Cities for Minority-Owned Businesses in the U.S.

Not surprisingly, three of the top four metro areas on the survey are located in California. The most populous state in the nation, California is home to over 39 million people, nearly 40 percent of whom are Latino. Another 13 percent of California residents are Asian, and 5.8 percent are African American, making it one the country’s most diverse states. Add to that California’s huge, thriving economy, and it makes sense that its a great place for minority entrepreneurs.

Topping Lending Tree’s list was the San Francisco metro area, with an overall score of 83.9 and a parity index of 68. Next on the list was San Jose, the largest city in Northern California, with a total score of 83.2. San Jose’s parity index was just a tad higher than San Francisco’s, at 73. But both areas had the same percentage of minority-owned businesses that generated over $500,000 in annual revenue (42.6 percent) and had been in business for six or more years (56 percent.)

Coming in fourth below Washington D.C. was Los Angeles, with an overall score of 78.7 and a parity index of 68. The rest of the Top-10 were:

#5. Seattle, Washington

#6. Portland, Oregon

#7. Sacramento, California

#8. Pittsburgh, Pennsylvania

#9. Atlanta, Georgia

#10. Cincinnati, Ohio

Worst Cities for Minority-Owned Businesses

Of the 50 metro areas that scored the worst on the Lending Tee survey, many were in the Midwest. The two lowest-scoring cities were Missouri’s Kansas City and St. Louis, both of which are known for high levels of poverty, unemployment and crime. Milwaukee, Wisconsin, which ranked 47th on the Lending Tree list, was also ranked by USA Today as the second worst metro area in the United States for Black Americans) due to the huge disparities in income, unemployment, home ownership and incarceration rates between minorities and whites.

The other 10 cities ranking worst on the survey were:

#40. Phoenix, Arizona

#41. Denver, Colorado

#42. Orlando, Florida

#43. Detroit, Michigan (tied)

#44. Jacksonville, Florida (tied)

#45. Buffalo, New York

#46. Providence, Rhode Island

#48. Cleveland, Ohio

If you’re a minority entrepreneur or an established business owner looking to expand, these numbers may help you decide where you have the best — and worst — chance for success.

About The Carmoon Group

The Carmoon Group Ltd. is a minority-owned insurance brokerage headquartered in Hicksville, New York. Through our large network of nationwide affiliates, we offer risk management solutions and comprehensive insurance programs for businesses in a wide range of industries. We have the expertise and experience to provide you optimal coverage at the best possible price. So why not give us a call today to set up an appointment for your insurance review? Or if you prefer, just reach out online and we’ll get back to you at a convenient time.

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