The number of U.S. businesses grew 2 percent between 2007 and 2012 as the country weathered the financial crisis and entered the first three years of economic recovery. Yet, while overall business growth over this period was muted, growth in the number of minority-owned firms boomed. According to data from the Census Bureau's Survey of Business Owners, the number of minority-owned firms jumped by 38 percent to 8 million.
Hispanic firms accounted for the lion's share of that increase (47.7 percent) and were 12 percent of all U.S. businesses, up from 8.3 percent in 2007. The number of Hispanic-owned businesses climbed to 3.3 million between 2007 and 2012, an increase of 46.3 percent and faster growth than for any other race or ethnic group.1 By 2012, these shares and trends mirrored population trends for the Hispanic adult population which between 2007 and 2012 increased 15.1 percent to 33.5 million, and Hispanics grew to account for 14.2 percent of the U.S. total adult population.
Characteristics of Owners
While men owned over 56 percent of Hispanic businesses in 2012, women drove the growth in this category. Between 2007 and 2012, the number of female Hispanic-owned businesses grew an incredible 87 percent, from 800,000 to 1.5 million firms. This is the largest increase in female business ownership of any race or ethnic group.
Owners of Hispanic businesses were relatively young. More than half (55.4 percent) of firm owners2 were between ages 35 and 54, compared to 44.7 percent for firms owned by non-Hispanics. Owners under 25 to 34 years old accounted for 20.4 percent of all Hispanic owners, larger than the 13 percent share for non-Hispanic firms. In other words, this pattern of business ownership echoes the general age distribution of Hispanics in the country, which is pretty young.
Hispanic-owned businesses play an increasingly important role in our economy, as employment grew at these firms grew 22.1 percent to 2.3 million jobs between 2007 and 2012 and revenues grew 35.1 percent to $473.6 billion during this same period. Hispanics-owned businesses ranked second in employment and sales receipts among minority groups, with Asians taking the lead in both categories that year. Despite the impressive expansion, Hispanic businesses remain disproportionately small in revenue and jobs. Hispanic-owned businesses account for 12 percent of all firms, but just a tiny 1.4 percent ($473.6 million) of total U.S. firms' sales and receipts ($33.5 trillion) in 2012. In addition, average gross receipts for Hispanic firms declined 7.7 percent from 2007 to 2012, while Asian American businesses, for example, saw revenues rise 12 percent.
The low sales and receipt figures for Hispanic firms can be attributed, at least in part, to the types of industries in which many operate. Most firms are in the other services sector, which include businesses engaged in activities such as equipment and machinery repairing, dry-cleaning and laundry services, personal care services, death care services, pet care services, photofinishing services, temporary parking services, and dating services. In 2012, 16.7 percent (553,065 firms) of Hispanic-owned businesses operated in the other services sector with average revenues of $36,615 per firm, compared to $143,271 across all industries. Administrative and support and waste management and remediation services was the next leading industry with a 16 percent share of Hispanic-owned firms and average receipts of $50,312. Health care and social assistance, another sector with modest average receipts ($83,162) also accounted for a significant portion (10.5 percent) of Hispanic-owned businesses.
In summary, the growth of Hispanic-owned businesses has been impressive, but they still lag Non-Hispanic firms in both sales and revenue. This gap underscores the importance to continue valuable support by agencies such as the Minority Business Development Agency within the Department of Commerce to further strengthen our nation's rich minority business community.
1 These five categories are not all mutually exclusive. The Black or African American, American Indian & Alaska Native, Hispanic, and Native Hawaiian & Pacific Islander race categories include persons of Hispanic and non-Hispanic ethnicity. The Hispanic ethnicity category includes persons of all races.
2 These figures are based on the 1.6 million of the 3.3 million Hispanic-owned firms who responded to the owner's age question on the survey.