Black-Owned Businesses Blossoming in the Suburbs
African American-owned companies are becoming a stronger presence in suburban areas of Southern California, nearly eclipsing their traditional base in South Los Angeles, a new study shows.
South Los Angeles is still home to the majority of African American-owned firms in Los Angeles County, but the percentage is dropping. In 2000, the figure was 58%, down 12 percentage points from the 1980 figure of 70%.
In that same period, the percentage of black-owned firms in both the San Fernando and San Gabriel valleys doubled: from 3% to 6%. And the proportion of firms in Los Angeles County, outside of South Los Angeles, grew from 23% in 1980 to 30% in 2000.
Moreover, the study by the Los Angeles-based Community Development Technologies Center, a nonprofit research group, found that black-owned businesses in outlying areas are significantly outpacing those in South Los Angeles in terms of revenues.
“It repeats the economic shift where big business moved out of South L.A. and took many of the jobs with them,” said Reginald Chapple, executive director of the Dunbar Economic Development Corp. in South Los Angeles.
Chapple, however, voiced concern that African Americans who remain in historically black neighborhoods may have a harder time finding employment because of the trend.
“We’re seeing another kind of shift, where local folk may not be employed at local jobs. It can be difficult for African Americans to find work at Latin firms,” he said, noting that many of the shops abandoned by outbound black entrepreneurs have been taken over by other ethnic groups.
“We tend to hire our own and want to cater to our own.”
In part, the migration of African American businesses away from the city’s center mirrors broader population trends that have seen blacks in increasing numbers settle in suburban areas, especially the Inland Empire.
In the 1990s, Moreno Valley, for example, gained 27,500 African Americans, according to census data.
A need to be close to tech clusters within Orange County prompted Martha Daniel to open her information technology company--Information Management Resources Inc.--in Irvine, and later move it to Costa Mesa.
“My relationships were in Orange County,” said Daniel, who opened her business 10 years ago. “I never thought of putting the business someplace else.”
As a woman and a minority-group member in a field still dominated by white men, Daniel finds her status a plus.
“We can’t all compete for the same small piece of pie in L.A.” said the Memphis native. “It makes sense to look for other areas where we ... have the ability to capture a greater market share.”
Daniel is one of the growing number of blacks finding gold in the tech sector.
The report showed that although 60% of black firms remain in the services sector, only 22% were in the personal services field, such as beauty and barber shops and laundry services--where blacks traditionally have found small-business opportunities. About 18% were in business services, including technology-related firms, and 15% were in engineering, accounting or research.
“How many African American nail shops do you know of,” said Denise Fairchild, president of the CDTC and author of the report, noting the influx of Asian entrepreneurs in that service sector. “Black barber shops are still around, but it’s a dying breed. The competition, even in the personal-services sector, is quite substantial.”
Fairchild said she hopes the report prompts government officials as well as business advocacy groups to address the question of where to put funding emphasis.
“Do you fund businesses that are succeeding and growing? Then you’re funding businesses that are not in the central city,” she said.
The report, based on surveys of 130 African American entrepreneurs, census data and other reports, was funded by Merrill Lynch as a more detailed analysis of trends identified in its California Minority Business Atlas, a comprehensive look at minority-owned businesses that was published in November 2000.
The report recommends that a public/private partnership look for ways to help central city firms continue to serve their core markets, while at the same time using technology to reach out to customers regionally and nationally.
The study found that black-owned businesses in outlying areas also are outpacing their urban counterparts in revenue.
Because of both the mix of businesses and the wallet size of the customer base, the median sales volume of black-owned firms in Orange County was $500,000 in 2000, more than double the $195,000 figure for South Los Angeles, according to the report.
A stumbling block to increased economic development in South Los Angeles is the space crunch, said Dean Jones, executive director of the South Los Angeles Economic Development Partnership.
“San Gabriel has more industrial space for people to move their businesses to,” said Jones, who would like to see more light manufacturing in South-Central.
In addition, he said, many of the buildings in South L.A. are old, with floor plans that make them poor contenders for tech-firms seeking structures with wide-open floor plans and broadband or fiber-optic capabilities.
