Inner-City Black Businesses Most Successful, Says UF Researcher

January 2, 1997

GAINESVILLE — Black businesses can defy stereotypes and thrive in inner-city neighborhoods, even earning more money than their suburban counterparts, a new University of Florida study finds.

“Some of the largest and most profitable firms owned by blacks are found in the inner city, despite research suggesting that only mom and pop’ businesses exist there,” said Russell Benjamin, a UF graduate student in political science, who surveyed 102 black-owned businesses in Jacksonville and Daytona Beach.

Also, many of the black businesses are not in traditionally black fields such as retailing, nightclubs and beauty or barber shops but in emerging areas such as law, medicine, insurance and real estate, he said.

“Not all of the inner city is an entrepreneurial and social wasteland,” Benjamin said. “Some black businesses in emerging fields stay in the inner city and do well. Perhaps this is because many of the government offices designed to assist black business development are located either in the inner city or very near to it.”

In the UF survey, the median 1993 sales figures for black businesses in the inner cities of Jacksonville and Daytona Beach was $161,000 compared with $105,00 for those on the outskirts. Many inner-city businesses drew their customers from outside the inner city.

The emergence of black businesses in unexpected fields such as finance, insurance and real estate is surprising because many experts have assumed those could not survive and prosper in the inner city, said James Button, a UF political science professor who supervised Benjamin’s work.

“Despite the prevailing belief that inner-city black businesses are disadvantaged because they are cut off from good markets and customers who have money, this research shows that such firms can be successful,” Button said. “That’s important because healthy businesses in the inner city can not only beef up the area’s tax base — providing money for education and other services — but raise the standard of living by producing more jobs for inner city residents, who are disproportionately poor and black.”

Black entrepreneurs still faced formidable obstacles, however.

Two-thirds of the respondents surveyed (67 percent) said they received no help from local public officials, black or white, Benjamin said. In fact, entrepreneurs in Daytona Beach were particularly scornful of black officials, finding them even less helpful than their white counterparts. Forty percent of the respondents reported they had received at least some assistance from white officials, compared with 19 percent for black ones, he said.

Benjamin said he was surprised by this finding because Daytona Beach is a New South city founded after the Civil War, while Jacksonville is an antebellum city that experienced slavery, Reconstruction and the Jim Crow era. Overall, black businesses in Daytona Beach also make less money than those in Jacksonville, perhaps because the city is less urbanized and has fewer government agencies, he said.

However, bitter battles over racial issues, including school desegregation and the exemption of some high-profile construction contracts from minority set-aside programs, threaten to derail what economic progress has been made in Jacksonville, Benjamin said. In April, the U.S. Commission on Civil Rights released a report giving Jacksonville a failing grade — Florida’s lowest — in race relations, he said.

Fifty-nine percent of the respondents in both cities said they got no help from government agencies, and two-thirds said public officials did nothing to reduce failure rates for black businesses. Client referral and workshops on government contracts and low-interest loans are forms of assistance black businesses found useful when they did receive help, he said.

Lack of minority set-aside contracts, exclusion from good ol’ boy’ networks and difficulty getting loans when banks redline’ poor black communities are problems the entrepreneurs cited.

“Black-owned businesses have the potential for long-term survival and growth,” Benjamin said. “However, issues such as financing and a deep lack of black entrepreneurial confidence in local officials and institutions could hurt their ultimate success.”