Surveys indicate minority businesses should do well in Colorado in 2005

The expansion, contraction and survival rates for minority-owned businesses are different from those of non-minority owned businesses according to a study released Feb. 23 by the Office of Advocacy of the U.S. Small Business Administration.

Dynamics of Minority-Owned Employer Establishments

Nationwide, the four-year survival rate for non-minority owned firms was 72.6 percent. The survival rate for Asian and Pacific Islander-owned establishments was 72.1 percent; 68.6 percent for Hispanic-owned businesses; 67 percent for American Indian and Native Alaskan-owned businesses and 61 percent for black-owned businesses, according to the study.

In Colorado, the four-year survival rate for all businesses was 68 percent, compared to 70 percent for the national average.

The four-year survival rate for black-owned businesses in Colorado was 49 percent, more than 10 points below the national average. Asian and Pacific Islander-owned establishments in Colorado had a 70 percent survival rate, just two points below the national average.

American Indian and Alaska Native-owned firms had a 60 percent survival rate in Colorado, seven points below the national average. Hispanic-owned businesses in Colorado had a 60 percent four-year survival rate, nearly nine points lower than the national rate.

Overall, I don't think Colorado is all that bad, said Dr. Ying Lowrey, senior economist for the Office of Advocacy and author of the study.

She pointed out that the survival rate for all businesses in Colorado is only 2 points lower than the national rate. But Lowrey said she did not know why black-owned businesses in Colorado had a survival rate 12 points lower than the national average.

She did, however, offer one hypothesis. Probably in Colorado, the black-owned businesses are very young. In general, young businesses' survival rates tend to be very low.

The survival rate for black-owned businesses in Colorado was stellar compared to the rate in Hawaii, which was only 13 percent for the four-year period. Wyoming boasted the highest four-year survival rate for black-owned firms - an impressive 93.5 percent.

Minority business expansion rates in Colorado were very close to the rates for the nation. The expansion rate for all businesses in Colorado was 31 percent, compared to a national expansion rate of 30 percent.

Black-owned businesses expanded 24 percent in Colorado from 1997 until 2001; Asian and Pacific Islander-owned firms expanded 28 percent; American Indian and Alaska Native-owned businesses grew by 26 percent; and Hispanic-owned employer establishments expanded by 27 percent.

We've steadily increased our efforts to reach out to the minority community, said James Henderson, regional advocate for the Office of Advocacy in Colorado.

In 2004, 175 Small Business Administration loans were given to minority business owners in Colorado. By comparison, 162 loans were provided in 1997 and 229 in 2000, the final year of the study.

In 2003, though, 398 small business loans were given to minorities in Colorado according to data from the Office of Advocacy. Henderson said he is seeing an increase in lending demand in Colorado.

The four-year contraction rates for minority-owned employer establishments in Colorado were 16 percent for black-owned businesses; 24 percent for Asian and Pacific Islander-owned firms; 20 percent for American Indian and Alaska Native-owned businesses and 18 percent for Hispanic-owned businesses.

It looks like Hispanics are doing very well, Lowrey said. People of Hispanic or Latino origin make up 17.1 percent of the population in Colorado according to 2000 U.S. Census Bureau data.

Henderson is optimistic that 2005 will turn out to be a good year for minority-owned businesses in Colorado.

There is gradually increasing growth in the job market, Henderson said. I think it's going to be a good year, 2005, for minority businesses and the business community in general.