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Minority-owned businesses in the IE have largely bounced back from pandemic

Minority-owned businesses are thriving in Riverside and San Bernardino counties, a recently released study has found.

Of the Inland Empire’s 60,280 businesses, 35 percent – 21,261 – were owned by minority entrepreneurs at the end of last year, according to the State of Entrepreneurship Minority Report, compiled by the Inland Empire Center for Entrepreneurship at Cal State San Bernardino.

Sixteen percent of those businesses, – a total of 9,395  – were owned by Latinos, while 20 percent were owned by other ethnicities:  Native American, Asian Islander, and Asian Indians.

Only one percent – 681 businesses – were owned by African-Americans, the report found.

“Over the past six years, entrepreneurship among underrepresented minorities) has been healthy and an important driver of economic growth in the Inland Empire,” said Mike Stull, director of the Center for Entrepreneurship, in an e-mail interview. “The rate of startup activity for minority-owned firms in the Inland Empire has outpaced the state and national trend during that same period of time.”

The report, based on responses from 1,401 business owners, was released in June. It’s an addendum to the center’s report on all entrepreneurship in the Inland Empire, which was released in February.

Both studies are based on data from several sources, including the U.S. Bureau of Labor Statistics and the Current Population Survey, which is sponsored by the labor bureau and the U.S. Census Bureau;

Virtually all of the minority business owner’s reports cover six years, from 2017 through 2022. In a few instances, the information used only went up to 2021, according to Stull.

The rate of minority entrepreneurship dropped in the two-county region during the pandemic but it has made a strong recovery that is still in progress. The same trend has happened in California and the United States, according to the study.

Businesses owned by minorities have created 4.7 million jobs, and were responsible for about half the start-up businesses in the United States during the last 10 years, according to the U.S. Senate Committee on Small Business and Entrepreneurship.

Despite that, only 18 percent of the businesses in the United States are owned by minorities, even though 32 percent of the country’s population is either minority citizens or minority residents.

Businesses owned by minorities face many of the same hurdles non-minority-owned business face, according to the survey.

Minority business owners in the Inland region reported that inflation, controlling costs, competition, and too much regulation – common complaints among California business owners – were among their primary concerns.

Those issues were similar to those raised by non-minority business owners. However, minority-owned firms said they don’t believe their businesses are as profitable as those owned by non-minorities, and that they keep a closer watch on their company’s finances than businesses owned by non-minorities.

“Overall, minority-owned businesses in the Inland Empire have done incredibly well, especially when you factor in the pandemic,” Stull said. “They face a lot of obstacles, starting with getting access to capital. Minority-owned businesses don’t always have good access to capital, but we have to make sure they do get capital. They’re going to drive business growth, not only in the Inland Empire but in a lot of places.”

A large number of minority business owners – 82.5 percent – said they used their own money as a primary means to get their business started, about the same percentage as a full sample of business owners.

Nearly 63 percent of the minority business owners surveyed reported needing less than $25,000 to get their business started. That was about eight percent more than the full sample of business owners who said they got their business up and running with less than that.

Only 20 percent of the minority owners said they did not seek outside funding to get their business off the ground. Of those that did seek such funding  62 percent said they had a difficult time securing that financing.

Seventy-four percent of all African American business owners in Riverside and San Bernardino counties said they struggled to secure outside funding.

“There’s no question that minority-owned businesses have often been more aggressive in finding outside sources of capital, like grants from the U.S. Small Business Administration, to get themselves started,” Stull said.

There are several reasons why business owners, especially small business owners, use their own money to stay in business or expand, said Barbara Sirotnik, director of the Institute of Applied Research and Policy Analysis at Cal State San Bernardino.

“Smaller businesses have to do everything themselves, and they don’t have a lot of money to help them keep going if something goes wrong,” said Sirotnik, a member of the seven-person team that researched and wrote both entrepreneurial reports. “They don’t have the time to fill out the forms, and they don’t have a lot of confidence that they will get the loan anyway. So very often they don’t bother.”

One reason minority-owned businesses in the Inland Empire are outperforming similar businesses in other markets is that the Inland region provides them with a support system – including the Center for Entrepreneurship and the center’s Small Business Development Center – that not all markets have, Sirotnik said.

Despite that, minority business owners still need help from the private sector, which makes clear.

“We feel like the report shines a light on the situation,” Sirotnik said. “We hope it gets the attention of the people in government who provide funding for business growth.”




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