According to the U.S. Census Bureau’s Annual Survey of Entrepreneurs, California is leading all states in minority-owned and women-owned employer firms—and by a good margin. When it comes to numbers, California is expected to run up big scores because it is the most populous state. But, the mix of minorities in the state who take on businesses means California not only outscores other states in overall numbers but California makes up almost one-quarter of all minority owned businesses in the entire country.
California’s total of over 228,000 minority-owned businesses was almost 23% of the United States total. The national figures, reflecting 2015 totals, showed a nearly 5% increase from the previous year with nearly one-million businesses employing eight million workers.
The survey was a public-private partnership between the Census Bureau, the Ewing Marion Kauffman Foundation and the Minority Business Development Agency.
California led all states in the number of women-owned firms, as well, with approximately 140,817 businesses. That number equaled nearly 13% of all women-owned firms in the United States.
As a percentage of all the state’s businesses, minority-owned firms were about a third at 32.6%. That was second in the nation to Hawaii’s 55.9% of minority-owned businesses. But California beat rival Texas, which finished third in this category at 27%.
So what does all this mean for the Golden State?
California is certainly open for minority business ownership as people from all backgrounds try to grab a piece of the American Dream. Many of these minority owned businesses are relatively new. Time will tell how many hold on, especially if there is a national economic downturn.
California lawmakers can make sure not to discourage these new businesses with excessive regulation and difficult paperwork. California is already an expensive and difficult place to do business as multiple surveys show.
The Thumbtack annual small business survey of small business friendliness still grades California poorly. In the five years the survey has collected data, California received a grade of F for Overall Friendliness four out of the five years, including the last three consecutive years. The Thumbtack survey rates 11 categories in the survey. California got an F grade in nine of the 11, only rising above that score in Ease of Hiring (C) and Training & Networking Programs (B-).
Of course, California is an expensive state, confirmed by the Tax Foundation’s newest report on the relative value of $100 in each state. California ranked 47th where $100 can buy only $88.18 in goods and services, according to the Tax Foundation calculations, again in relative terms.
While it is impressive that California is welcoming and encouraging to minority businesses, allowing those businesses to thrive depends on government not building a roadblock to success.