52nd Street in West Philadelphia is one of the few corridors in the city with a high rate of black business ownership. (Jessica Griffen/Philadelphia Media Network)
Blacks make up 44% of the population in the Philadelphia area. In a perfect world, 44% of the businesses in the area would be Black owned, although the national average is 9.3%. A new study, however, put the percentage of Black owned businesses in the region at a mere 2.5%. That number didn’t sit well with people on the ground, who argue that the “official” count is missing a few critical things. When those factors are considered, the number is actually 25%.
The Pew Charitable Trusts’ annual “State of the City” report indicated that only 2.5% of the businesses in the Philadelphia region were Black owned — just 1 in 40. Not everyone agrees with Pew’s findings, however. Donovan Sterling West serves as president of the African American Chamber of Commerce of Pennsylvania, New Jersey and Delaware, the city’s largest organization for Black owned businesses. The problem with the Pew study, which cites most recent census figures, is that it doesn’t include businesses with no paid employees. When sole proprietors are considered, Black owned businesses account for 25.1% of the region’s businesses.
Most Black owned businesses, nationally, are sole proprietorships. That means the founder singlehandedly runs the company and is responsible for all debts. These types of businesses have no payroll and naturally, would elude census counts. Common examples of “one man shows” might include caterers, daycare providers, construction workers, subcontractors, and people in the gig economy. While these businesses are a great launching pad for Black entrepreneurs to escape the conventional 9 to 5, they do have limitations. In the first place, sole proprietors have no legal protection if things go wrong — they are personally responsible for all debts and other liabilities. Further, it is much harder to access capital and other government incentives, without scaling up.
The numbers in Philly are encouraging and at the same time, cautionary. Sole proprietorship is the starting line of business development and should be celebrated. Still, the goal is to grow, scale and hire more employees from the community. Those things can happen but our sole proprietors need the support of the community.