The Asian Majority

Minority-owned businesses are a fast-growing segment of the small business market. According to a United States Small Business Administration report released in 1999,12 the number of minority-owned firms increased 168 percent from 1987 to 1997. Overall revenue of minority-owned firms grew twice as fast—343 percent—and employment leaped by 362 percent.

But not all minority-owned small businesses are created equal.

From a marketer's perspective, the Asian market represents the most attractive investment in the minority-owned business marketplace. Consider the numbers: although they represented just one-third of all minority-owned businesses, Asian-owned businesses accounted for a majority ($275 billion or 56 percent) of the $495 billion in annual revenue that all minority-owned businesses generated in 1997. Hispanic-owned businesses accounted for 42 percent of minority-owned businesses and 33 percent of the revenue pie. Although Afro-American-owned businesses represented 26 percent of the total, they generated 11 percent of the revenue (see Figure 1.8).

12. U.S. Small Business Administration, Office of Advocacy, Minorities in Business (Washington D.C.: SBA, 1999).

Number Of Small Businesses %

Revenue Generated %

Afro American

Asian J Hispanic J

Figure 1.8 Percentage of U.S. Small Business Market and Revenue Generated by Ethnicity of Business Owner

Source: Office of Advocacy of the U.S. Small Business Administration, Minorities in Business, Washington, D.C., 1999.

In short, Asian-owned businesses tend to be larger, more successful enterprises than other kinds of minority-owned firms. Asian-owned businesses generated an average of $250,000 in gross revenue, Hispanic-owned firms pulled down $130,000, while the average Afro-American-owned business had an average of $70,000 in annual revenue.

The survival rate of Asian-owned businesses is also significantly higher than that of other minority-owned businesses. Of all the minority-owned firms in operation in 1992, 75.5 percent were still in business in 1996. Asian-owned businesses were more likely to survive, with a full 79.2 percent still going after five years compared to a survival rate of 74.3 percent and 68.9 percent among Hispanic and Afro-American-owned businesses, respectively (see Figure 1.9).

The story continues when you look at the average number of people (not including the owner) employed by minority-

Percentage Of Small Businesses Surviving from 1992-1996

Percentage Of Small Businesses Surviving from 1992-1996

Asian Hispanic Afro-American Average Survival

Rate for All Small Ethnicity of Business Owner Businesses

Asian Hispanic Afro-American Average Survival

Rate for All Small Ethnicity of Business Owner Businesses

Figure 1.9 Small Business Survival Rates by Ethnicity of Business Owner (1992-1996)

Source: Office of Advocacy of the U.S. Small Business Administration, Minorities in Business, Washington, D.C., 1999.

owned firms: for every owner, the average Asian-owned firm employs 1.8 people, whereas the average Hispanic-owned firm has 1.06 employees and the Afro-American-owned firms averaged 0.66 employees (see Figure 1.10).

Finally, when we look at the percentage of all firms employing more than five people, 16.4 percent were Asian-owned businesses, while 13.6 percent were Hispanic-owned and 5.9 percent were Afro-American owned (see Figure 1.11).

All socioeconomic implications of this study aside, the Asian market represents a disproportionately attractive sector for your marketing investment.

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