Brief History of Minority-Owned Businesses and the Organisations That Support Them

Black entrepreneurship can be traced back to the 17th century, when African Americans were first brought to North America as slaves. Those who gained their freedom, often times, opened their own businesses. And those without freedom, also started their own businesses, both with and without their master’s approval.

It was not until the Reconstruction Era (1863-1877), however, after Emancipation and civil rights, that businessmen were allowed to participate and operate in the American legal structure.

“From the late 1880s, there was a remarkable development of Negro business – banks and insurance companies, undertakers and retail stores.... It occurred at a time when Negro barbers, tailors, caterers, trainmen, blacksmiths, and other artisans were losing their white customers. Depending upon the Negro market, the promoters of the new enterprises naturally upheld the spirit of racial self-help and solidarity.” (Meier, 1963)

The Jim Crow Laws racially segregated the Southern United States in the late 19th and early 20th centuries, but they pushed Blacks to flood into major cities like Atlanta, Chicago, and Durham, North Carolina, forming their own communities large enough to support their own businesses. Black business owners were able to take advantage of the constraints put on Black communities by tapping into a market of Black consumers who at the time did not have much purchasing power in white markets. The more they were cut off from white communities, the more Black businesses flourished by catering to a Black clientele. (Blakeney, 2008; Unbiasedtalk.com, 2013)

The National Negro Business League was founded in 1900 by Booker T. Washington, a well-known African American educator, author and the most prominent promoter of Black businesses. In the 1960s, it was renamed the National Business League and reincorporated in Washington, D.C. The league grew large, opening over 600 chapters across the country in cities with a significant Black population, and spinning off into other organisations, including the National Negro Retail Merchants' Association, the National Negro Press Association, the National Negro Bankers Association,  the National Negro Bar Association, and even the National Association of Negro Funeral Directors. (Hamilton, 1995; Proceedings of the National Negro Business League, 1901)

Juliet Walker, a historian, calls 1900-1930 the “Golden Age of Black Business” (Walker, 2009). According to the National Negro Business League, by 1920, there were tens of thousands of Black businesses, most of them small, however. Some of the most popular types of businesses at the time included, restaurants, drugstores, retailers, undertakers, barber shops and insurance companies. (Meier, 1963; Meier, 1962; (Du Bois, 1899)

Minority entrepreneurship entered the national agenda in the 1920s. Herbert Hoover, who was the Secretary of Commerce at the time, set up the Division of Negro Affairs to provide advice and information to white and Black businessmen on how to better reach Black consumers. The agency was later disbanded by President Eisenhower in the 1950s. But President Lyndon Johnson’s war on poverty helped set up special programs within the Small Business Administration (SBA) that helped promote minority business ownership. (Weems and Randolph, 2009)

The Great Depression, between 1929 and 1939, caused Blacks to lose their jobs, incomes to fall in the Black community, and inevitably, businesses to close their doors. This led many to seek jobs in Corporate America. 

Set aside programs were first created in 1953. The U.S. government passed a law “setting aside” five percent of all procurement contracts for disadvantaged small business owners. The SBA since then has defined and redefined who qualifies as “socially and economically disadvantaged,” adding and deleting different groups. African Americans, Hispanic Americans, Asian Pacific Americans, Native Americans, and other minorities were included under the original law. These programs created important points of entry for minority entrepreneurs and allowed them to diversify their businesses, for the first time ever.  (Definitions.uslegal.com, 2019)

Before the 1960s, most major companies disregarded the Black market and refused to do business with Black suppliers and vendors.

Due to the arrival of new immigrants to the United States after 1965, Asian communities and other minority communities proliferated. The growth of these ethnic communities led to a rise in minority-owned businesses as well. (Le, 2019)

The Office of Minority Business Enterprise (OMBE), later renamed the Minority Business Development Agency (MBDA) in 1979, was first established in 1969 by President Nixon, recognising the impact that minority-owned businesses had not only on the nation’s economy but also on the general welfare of the country, in an attempt to defuse racial tension. (Minority Business Development Agency, 2019)

When President Nixon signed the executive order creating the OMBE in 1969, the nation’s minority population was less than 40 million and minority-owned businesses only represented 4 percent of America’s businesses. (Ross and Childs, 2019)

Between the 1960s and 1980s, minority-owned businesses underwent significant transformations. Small-scale, personal-service businesses like beauty salons and barber shops were replaced by businesses in industries that minorities were once excluded from because of education, experience and race. Industries such as, finance, insurance and real estate. (Boston, 2001)

The 1970s, saw a surge of federal programs created to promote minority business activity. These programs offered minority-owned businesses new funding opportunities. (Definitions.uslegal.com, 2019)

By the early 1970s, the United States government also passed a set of regulations and laws that required private contractors with large government contracts to set aside a small percentage of their work for “socially and economically disadvantaged” and minority subcontractors. (Definitions.uslegal.com, 2019)

In 1971, the OMBE started offering grants to public and private organisations in order to provide management and technical assistance to minority-owned businesses. (Minority Business Development Agency, 2019)

In 1973, the OMBE provided seed funding to a number of minority advocacy and empowerment organisations: the Hispanic Chamber of Commerce, the National Minority Purchasing Council (now known as the National Minority Supplier Development Council or NMSDC), the National Economic Development Association, the Chicago Economic Corporation and more. (Minority Business Development Agency, 2019)

In 1977, Congress passed a law stating that 10 percent of “federal public works funds” would go to minority-owned businesses. (Encyclopedia.com, 2019)

In the 1970s and 1980s, minorities started gaining managerial and executive-level experience within the private sector, going to school and pursuing degrees in business in great numbers. Between 1976 and 1992, the number of Blacks receiving business degrees shot up by 92.9 percent and 161.3 percent for Blacks receiving engineering degrees. (Boston, 2001)

By the 1980s, securing procurement contracts was fundamental to minority-owned businesses, with 9.3 to 12.8 percent of their revenue coming from these opportunities. (Boston, 2001)

In 1983, President Reagan signed a Presidential Proclamation making the first week of October Minority Enterprise Development Week. (Census.gov, 2019)

By the late 1980s and early 1990s, a new generation emerged, one that was younger, more educated, and with more experience in managing businesses and supervising teams. For the first time, minorities emerged in industries closely tied to public sector procurement opportunities--construction, architecture, engineering, management, consulting, computer sales, public relations and other industries. (Boston, 2001)

In the 1990s, affirmative action and “set-aside” programs became a subject of considerable debate, with critics questioning whether or not they were still necessary. (Definitions.uslegal.com, 2019)

Since its establishment, the MBDA has established a national business service network, has opened regional and district offices across the United States to strengthen outreach and monitoring efforts, has coordinated and supported disaster recovery for minority-owned businesses, partnered with business schools to provide executive training for minority entrepreneurs, and has been at the forefront of minority business policy, training, funding, and opportunity. 

In 2005, the Office of Native American Entrepreneurship and Trade was created within the MBDA, promoting economic self-sufficiency and helping Native American business owners and entrepreneurs generate jobs and increase revenue. (Minority Business Development Agency, 2019)

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act requires that federal agencies all open an Office of Minority and Women Inclusion (OMWI) in order to track diversity efforts in both employment and procurement. (McKinney, 2012)

In more recent times, apps and online directories like Official Black Wall Street, Buy Latinx, and We Buy Black have been created to help consumers easily find and access a database of minority-owned businesses to support.