Regional Report: State of Black Business 2022
Second Black business report provides new data, recommendations for Arizona
The second annual State of Black Business Report quantifies more data around Black-owned businesses and entrepreneurship in Greater Phoenix. The Black/African American community is the state’s fastest-growing demographic, with 33% growth from 2010-2020, heightening the importance of investing in the community to allow Arizona to reach its full potential.
“Everybody wins when we invest in our Black businesses and our neighbors. For Arizona to thrive, attract industries and to be a place where people want to live, work and raise their families, we cannot afford to leave anyone out,” said Teniqua Broughton, Executive Director of State of Black Arizona. “This is not about helping one group at the expense of others, but we must continue our fight to make intentional target investments in political, social and business capital to aid in our priorities of building a better ecosystem for black-owned businesses and entrepreneurs.”
There are major knowledge gaps in data about entrepreneurship at the national level. The first two State of Black Business reports attempt to fill those gaps and create new recommendations for growth and methods of information gathering.
The report was built in partnership between the State of Black Arizona and the Greater Phoenix Economic Council with collaboration from the Arizona Center of Economic Progress, Black Philanthropy Initiative, Black Chamber of Arizona and Center for the Future of Arizona. It was launched at a GPEC Regional Report on Aug. 24. Speakers on the panel were:
- Teniqua Broughton, Executive Director, State of Black Arizona
- Chris Camacho, President & CEO, GPEC
- Drew Callow, Consultant, State of Black Arizona; Senior Field Research Analyst, CBRE
- Maria Laughner, Deputy Economic Development Director, City of Tempe
- Kristen Stephenson, Senior Vice President, Research & Analytics, GPEC
- Robin Reed, President & CEO, Black Chamber of Arizona (Moderator)
“If we want to build an economy that is truly reflective of our community, and truly reflective of an ambitious, regional strength in economy around entrepreneurship … we must support all types of entrepreneurs in our community,” Camacho said.
The COVID-19 pandemic brought to the forefront disparities around access to capital. In the first round of PPP loans, companies that had existing relationships with banks were most successful. Black-owned businesses were under-represented in the programs, providing further evidence that a lack of access to capital corresponds with the low entrepreneurship rate among this demographic.
Currently, there are 1,019 Black-owned firms in Greater Phoenix, making up about 1% of all firms despite 4.7% of the population being Black/African American. If Black-owned businesses reached parity, there would be an additional 4,945 businesses and more than 132,000 new jobs.
More than 50% of Black business owners surveyed cited access to capital as a challenge faced, compared to 30% of the rest of the people surveyed. Black entrepreneurs are twice as likely as White and Asian entrepreneurs to start their business with less than $10,000 in capital.
“There aren’t quite those strong relationships to the banking and other financial resources as you see with the overall population,” Stephenson said.
The report reviews four resources that have been used in different cities around the U.S., including fintech, which played a local funding role during the months in which PPP loans were distributed.
“We would like to see that kind of opportunity carried forward in day-to-day lives where these fintech companies fill that gap,” Stephenson said. “It is an issue that, right now, very much needs to be addressed.”
Advancements since the first report
One recommendation from the inaugural report, launched in March 2021, was to create a comprehensive database of Black-owned businesses in Arizona. The State of Black Arizona is in the process of developing a research database and tool with information that tracks successes, industry comparisons, business geography, demographic comparisons and other metrics to provide a broad picture of Black businesses and their impact to the region — a complement to consumer-based directories such as that of BLAX FRIDAY.
“Existing national data is highly [lacking] – not many organizations and markets have this type of localized initiative yet,” Callow said. “(We) want to create something that can be replicated at the local level, or the state level, in other markets across the U.S.”
State of Black Business scraped local business directory info from Google to track businesses, contact info, services and products, and other pieces of information available via public information. After finding 600 companies through the first comb, State of Black Business verified 425 Black-owned businesses in Arizona.
Once launched in full, the website will feature interactive maps and other high-level analysis that can be applicable to businesses, investors, CDFIs, government, academia and other organizations.
“If you can’t measure it, you can’t manage it, and you can’t help it improve,” Callow said.
Tempe’s Micro-Manufacturing Program
One piece of the 2021 report stood out to Laughner: There was an alarming lack of Black-owned manufacturing companies. Despite Greater Phoenix’s emergence as an international hub in manufacturing, Black entrepreneurs were not getting an equitable chance in the industry.
After months of work, Tempe received $500,000 in federal grant money and committed $300,000 to a micro-manufacturing entrepreneurship program for Black, Indigenous and People of Color. The money will help address challenges in acquiring space, capital and raw materials.
Tempe’s partner pool in this project grew to include more people with connections to the business community and evolved into a chance to help with training and network opportunities.
“It’s hard to do things in a vacuum, and when you are one of a few, you need to be able to lean on each other,” Laughner said.
The new report makes four recommendations:
- Increase access to startup capital
- Generate new venture funding opportunities
- Fix terms of credit for Black-owned businesses
- Close the financial institution gap
The report found only seven Black-owned businesses have received venture capital funding in Arizona since 1996. By drawing more VC funding from outside the state, more connections can be made and more capital can flow.
“Economic benefits to the overall economy work when we all succeed,” Broughton said.
Read the report for more information.