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VOL. 131 | NO. 21 | Friday, January 29, 2016

Black-Owned Business Revenue Drops in Memphis

By Madeline Faber

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Bad has turned to worse, according to the latest data from the U.S. Census Bureau's Survey of Business Owners.

Memphis’ population is majority African-American, but black-owned establishments earn only 0.83 percent of business revenue citywide.

“In terms of time span, we can say we’ve been languishing for more than the past decade in this dilemma.”

–Darrell Cobbins
Universal Commercial

The most-recent numbers, which reflect 2012 data, were released in December 2015 as part of the U.S. Census Bureau’s Survey of Business Owners.

The comparison between the 2012 data and the prior study released in 2012 based on 2007 data is stark.

In looking at the recent survey, the number of black-owned firms increased 100.4 percent. Total receipts, or operating revenue for services or goods provided, in Memphis increased 38.5 percent. But the amount of business garnered by black-owned firms decreased from 1.08 percent in 2007 to 0.83 percent 2012.

The 0.83 percent figure has to account for Memphis’ blow after the Great Recession, but it also shows both the private and public sectors’ priority, or lack of one, in growing the wealth and opportunity of Memphis’ largest population sector, according to local leaders.

“This is what ‘voluntary’ has produced in the larger economy,” said Darrell Cobbins, CEO of real estate firm Universal Commercial, of the private sector’s willingness to contract with minorities.

“Most likely the 2003 to 2006 economic activity feeds into the 2007 numbers,” said Cobbins. “In terms of time span, we can say we’ve been languishing for more than the past decade in this dilemma.”

That 1.08 percent figure was a catalyst for a renewed call in June 2014 for minority business growth efforts.

The call, which began at the National Civil Rights Museum, included a new generation of African-American business leaders such as Cobbins.

The ongoing push for minority business growth is different than past efforts over several decades in its focus on private-sector business-to-business contracts.

Between 2007 and 2012, the number of African-American-owned businesses increased to 39,864, comprising 56 percent of all businesses in Memphis. But out of the $128 billion flowing through as revenue, only $1 billion, or 0.83 percent, went to black-owned establishments.

Of the nearly 40,000 African-American firms, 798 reported having employees other than the owner. The number of paid employees, as of March 2012, came in at 7,664, with a total annual payroll of $171,632,000, or $22,394 per person.

“If we don’t change this, we’re not going to make a sizeable dent in the poverty rate over time,” said Phil Trenary, president and CEO of the Greater Memphis Chamber.

Trenary has said that growing minority- and women-owned businesses through programming is a top priority for the year. Others want to see greater policing of diversity requirements when companies promise to contract a certain percentage with minority- and women-owned businesses to gain tax incentives.

Read more about how decreased contracts are affecting everyday Memphians and what the big players are doing about it in next week’s Memphis News, on stands Jan. 29 through Feb. 4.

PROPERTY SALES 101 603 9,602
MORTGAGES 92 538 10,616
BUILDING PERMITS 215 1,282 20,958
BANKRUPTCIES 51 408 6,108