Minority Entrepreneurs Are Succeeding the Most in San Francisco and the Least in Cleveland

Written by Alaya Linton

Edited by Dan Shepard

Updated on:

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Nearly 20% of U.S. employer businesses in 2020 were minority-owned, according to Census Bureau estimates. In addition, the past decade has seen increases in minority-owned companies in some industries, as well as a general increase of Hispanic-owned ones. However, the quantity still doesn’t match the country’s racial diversity proportionately — the impact of opportunity gaps, prohibitive practices and other systemic barriers.

The number of minority-owned businesses is one indicator of success, but other factors impact the progress of entrepreneurs of color. LendingTree researchers analyzed various metrics across the largest U.S. metros to assess where and why some minority entrepreneurs thrive, and where and why others don’t.

Our analysis shows that minority-owned businesses are experiencing the most success in San Francisco and the least in Cleveland. We’ll also highlight the individual metrics in which minority entrepreneurs are (or aren’t) prospering.

Key findings

Minority entrepreneurs are succeeding the most in San Francisco. This California metro ranks no lower than 13th across the 45 metros we tracked. The metro has the fourth-highest number of minority-owned businesses per 1,000 minority residents, while its home state has the second-highest percentage of minority residents who identify as self-employed. California occupies five of the top 10 spots, with Los Angeles, Riverside, San Diego and San Jose joining the mix.
Minority entrepreneurs are succeeding the least in Cleveland. Across the 45 metros we tracked, Cleveland finishes 40th or worse in three of our four metrics. This Ohio metro has the second-worst number of minority-owned businesses per 1,000 minority residents and the fourth-worst percentage of minority-owned businesses in operation for six or more years. The Midwest occupies seven of the bottom 10 spots, with Ohio, Missouri, Minnesota, Indiana, Illinois and Wisconsin represented.
Different metros occupy the No. 1 spots across the metrics we tracked. Miami has the highest number of minority-owned businesses per 1,000 minority residents, while Pittsburgh has the highest percentage of minority-owned businesses in operation for six or more years. In addition, Albany, N.Y., has the highest percentage of minority-owned businesses with revenues of at least $500,000 and Honolulu (via the state of Hawaii) has the highest percentage of minority residents who identify as self-employed.
Different metros also occupy the bottom spots across the metrics we tracked — including one with a top ranking. Louisville, Ky., has the lowest number of minority-owned businesses per 1,000 minority residents, Albany has the lowest percentage of minority-owned businesses in operation for six or more years, St. Louis has the lowest percentage of minority-owned businesses with revenues of at least $500,000 and Milwaukee (via the state of Wisconsin) has the lowest percentage of minority residents who identify as self-employed.

3 things to know about our study

According to the Annual Business Survey methodology, minority-owned businesses are firms in which the owner or owners have 51% or more of the stock or equity in the business and are any combination of race or ethnicity except for non-Hispanic and white.
The latest Annual Business Survey covers 2020, meaning the data included in this study is from the early stages of the coronavirus pandemic. Our study doesn’t include metros in which data wasn’t available across each of our four metrics or where results were unclear.
One of our metrics — the percentage of minority residents who identify as self-employed — isn’t available at the metro level, so metros are assessed based on their states’ rankings.

Minority entrepreneurs are succeeding the most in San Francisco

San Francisco took the No. 1 spot in our study, ranking 13th or higher in the four metrics we measured. The metro, which includes Oakland and Hayward, has 17.26 minority-owned businesses per 1,000 minority residents — the fourth-highest in our study. Over half of the minority-owned businesses in the area (58.2%) have operated for six or more years, while 43.1% of minority-owned businesses earn revenues of $500,000 or more. In addition, California boasts the second-highest percentage of minority residents who identify as self-employed — 12.47%.

San Francisco and the surrounding Bay Area serve as a global center for business, arts, culture, education and more. Many prominent companies in tech, health care, finance, real estate and other industries have their headquarters there. Still, despite being a magnet for big business, San Francisco is also small-business-friendly. Notably, 37% of San Francisco metro-area companies are minority-owned.

The city has experienced a slower recovery from the coronavirus pandemic than other large cities, partly due to the departure of major retailers and companies and a population decline. However, it still has many initiatives to attract and support small businesses and entrepreneurs.

Additional high-scoring metros

Other metros ranking high in our study include Los Angeles and Honolulu, taking the second and third spots, respectively. Los Angeles has 18.57 minority-owned businesses per 1,000 minority residents — the second-highest in our study. Plus, 57.0% of minority-owned firms in the area, which includes Long Beach and Anaheim, have operated for six years or longer.

Honolulu scores high due in part to Hawaii’s high percentage of minority residents who identify as self-employed — 12.53%, the highest in our study. In addition, 71.8% of minority-owned businesses in the Honolulu area have operated for six or more years.

3 metros where minority entrepreneurs are succeeding the most

Rank	Metro	Minority-owned businesses per 1,000 minority residents	% of minority-owned businesses in operation for 6+ years	% of minority-owned businesses with revenues of at least $500,000	% of minority residents who identify as self-employed	Score
1	San Francisco, CA	17.26	58.2%	43.1%	12.47%	100.00
2	Los Angeles, CA	18.57	57.0%	40.3%	12.47%	91.94
3	Honolulu, HI	13.52	71.8%	39.2%	12.53%	90.32

Source: LendingTree analysis of U.S. Census Bureau Annual Business Survey and American Community Survey data.

California is well-represented in the top 10, occupying five spots. In addition to San Francisco and Los Angeles, Riverside, San Diego and San Jose earn high marks.

Notably, the Midwest is the country’s only region not represented at the top, as Miami, two Texas metros (San Antonio and Dallas) and Hartford, Conn., complete the top 10.

Minority entrepreneurs are succeeding the least in Cleveland

Among the 45 large metros we tracked, minority entrepreneurs are thriving the least in Cleveland. This Midwest metro — which includes Cuyahoga, Geauga, Lake, Lorain and Medina counties — earns the bottom spot with low scores in three of our four metrics.

Greater Cleveland has only 6.62 minority-owned businesses per 1,000 minority residents — the second-to-last ranking in our study. It also has the fourth-worst percentage of minority-owned firms operating for six or more years, at 43.2%. Plus, Ohio has a low rate of self-employed minority residents — 6.52%, the sixth-lowest in our study. Still, one area where Cleveland has a mediocre — but not bottom — score is revenue. In the metro, 37.4% of minority-owned businesses report revenues of at least $500,000, placing Cleveland 28th for that metric.

Cleveland is a business, cultural and entertainment center for Northeast Ohio and home to the much-acclaimed Cleveland Clinic. However, the city struggles with a high poverty rate. According to the latest Census Bureau estimates, 31.4% of Cleveland’s population lives in poverty — significantly higher than the national rate of 11.6%. The median income in Cleveland is $33,678, less than half of the national median income of $69,021. (Notably, though, the poverty rate has shown declines in recent years.)

Additional low-scoring metros

Rounding out the bottom three metros where minority entrepreneurs are succeeding the least are St. Louis and Salt Lake City. St Louis has the second-worst total score, ranking last or near-last in three of our four metrics. This metro has the lowest percentage of minority business owners earning at least $500,000 in revenue — 28.3%.

Meanwhile, Salt Lake City has the third-lowest total score and the second-worst ranking for the number of entrepreneurs with $500,000 or more in revenue — 30.7%.

3 metros where minority entrepreneurs are succeeding the least

Rank	Metro	Minority-owned businesses per 1,000 minority residents	% of minority-owned businesses in operation for 6+ years	% of minority-owned businesses with revenues of at least $500,000	% of minority residents who identify as self-employed	Score
1	Cleveland, OH	6.62	43.2%	37.4%	6.52%	0.00
2	St. Louis, MO	12.12	41.8%	28.3%	6.50%	3.23
3	Salt Lake City, UT	11.79	48.1%	30.7%	8.16%	14.52

Source: LendingTree analysis of U.S. Census Bureau Annual Business Survey and American Community Survey data.

As noted, the Midwest is the only region not represented in the top 10. In contrast, it has a heavy representation in the bottom 10, occupying seven spots. In addition to Cleveland and St. Louis, the Minneapolis, Indianapolis, Cincinnati, Chicago and Milwaukee metros score poorly.

Philadelphia and Las Vegas join Salt Lake City as the only non-Midwestern metros in the bottom 10.

Different metros occupy No. 1 spots across tracked metrics

We looked at four separate metrics to arrive at our rankings. Remarkably, different metros hold the No. 1 spot for each metric. Meanwhile, the Midwest failed to place in the top three of any of the metrics.

Highest number of minority-owned businesses per 1,000 minority residents

Miami — which ranks fifth overall — takes the top spot for the number of minority businesses, with 23.28 per 1,000 minority residents. Notably, 38% of the companies in the Miami metro (including Fort Lauderdale and West Palm Beach) are minority-owned. The percentage reflects the area’s diverse population — although not proportionately. In Miami-Dade County, 69.1% of the population is Hispanic or Latino and 17.1% is Black.

3 metros with the highest number of minority-owned businesses per 1,000 minority residents

Rank	Metro	Minority-owned businesses per 1,000 minority residents
1	Miami, FL	23.28
2	Los Angeles, CA	18.57
3	San Jose, CA	17.65

Source: LendingTree analysis of U.S. Census Bureau Annual Business Survey data.

Highest percentage of minority-owned businesses in operation for 6+ years

Pittsburgh takes the top spot for longevity, with 78.0% of minority-owned businesses operating for six or more years. This comes despite the metro earning poor rankings for revenue, with only 32.2% of minority-owned businesses earning $500,000 or more.

3 metros with the highest percentage of minority-owned businesses in operation for 6+ years

Rank	Metro	% of minority-owned businesses in operation for 6+ years
1	Pittsburgh, PA	78.0%
2	Honolulu, HI	71.8%
3	Baton Rouge, LA	66.0%

Source: LendingTree analysis of U.S. Census Bureau Annual Business Survey data.

Highest percentage of minority-owned businesses with revenues of at least $500,000

In Albany, N.Y., 54.2% of minority-owned businesses report revenues of $500,000 or more — placing the area first for this metric. Notably, Albany also has the worst ranking for businesses in operation for six or more years (more on this in the next section).

3 metros with the highest percentage of minority-owned businesses with revenues of at least $500,000

Rank	Metro	% of minority-owned businesses with revenues of at least $500,000
1	Albany, NY	54.2%
2	Dallas, TX	48.8%
3	Baton Rouge, LA	47.9%

Source: LendingTree analysis of U.S. Census Bureau Annual Business Survey data.

Different metros also occupy bottom spots across tracked metrics

As with the top rankings, no single metro occupies the bottom spot across the metrics we tracked. In addition, each region of the country — Northeast, South, Midwest and West — is represented in the lowest rankings across the metrics.

Lowest number of minority-owned businesses per 1,000 minority residents

Louisville, Ky., ranks last for the number of minority-owned businesses in proportion to minority residents. The metro — which includes counties in neighboring Indiana — has only 5.97 per 1,000 minority residents.

The percentage of minority-owned businesses in the area is vastly disproportionate to its minority population. For example, according to the Louisville-Jefferson County Metro Government, 23.4% of Louisville’s population is Black; however, per reports from the Louisville mayor’s office, only 2.4% of the businesses are Black-owned. (A LendingTree study earlier in 2023 found that figure to be 1.7%).

3 metros with the lowest number of minority-owned businesses per 1,000 minority residents

Rank	Metro	Minority-owned businesses per 1,000 minority residents
1	Louisville, KY	5.97
2	Cleveland, OH	6.62
3	Cincinnati, OH	7.22

Source: LendingTree analysis of U.S. Census Bureau Annual Business Survey data.

Lowest percentage of minority-owned businesses in operation for 6+ years

In Albany, longevity is a significant challenge among minority-owned businesses, according to our data — only a third have been in operation for six or more years. However, as noted, revenue is a strength for the metro. Albany ranks first for the percentage of minority-owned businesses with revenues of $500,000 or more (54.2%).

3 metros with the lowest percentage of minority-owned businesses in operation for 6+ years

Rank	Metro	% of minority-owned businesses in operation for 6+ years
1	Albany, NY	33.8%
2	Las Vegas, NV	41.5%
3	St. Louis, MO	41.8%

Source: LendingTree analysis of U.S. Census Bureau Annual Business Survey data.

Lowest percentage of minority-owned businesses with revenues of at least $500,000

St. Louis holds the bottom spot for businesses earning at least $500,000 in revenue (28.3%). Notably, Missouri has one of the worst self-employment rates among minority entrepreneurs in our study — 6.50%.

3 metros with the lowest percentage of minority-owned businesses with revenues of at least $500,000

Rank	Metro	% of minority-owned businesses with revenues of at least $500,000
1	St. Louis, MO	28.3%
2	Salt Lake City, UT	30.7%
3	Pittsburgh, PA	32.2%

Source: LendingTree analysis of U.S. Census Bureau Annual Business Survey data.

Full rankings

Metros where minority entrepreneurs are succeeding the most/least

Rank	Metro	Minority-owned businesses per 1,000 minority residents	% of minority-owned businesses in operation for 6+ years	% of minority-owned businesses with revenues of at least $500,000	% of minority residents who identify as self-employed	Score
1	San Francisco, CA	17.26	58.20%	43.10%	12.47%	100
2	Los Angeles, CA	18.57	57.00%	40.30%	12.47%	91.94
3	Honolulu, HI	13.52	71.80%	39.20%	12.53%	90.32
4	Riverside, CA	12.01	54.30%	44.90%	12.47%	81.45
5	Miami, FL	23.28	58.50%	36.60%	11.33%	79.84
6	San Antonio, TX	12.46	56.10%	45.90%	11.06%	79.03
7	Dallas, TX	12.58	53.20%	48.80%	11.06%	76.61
7	San Diego, CA	15.73	55.80%	36.80%	12.47%	76.61
9	San Jose, CA	17.65	44.30%	42.10%	12.47%	73.39
10	Hartford, CT	10.52	58.90%	46.00%	9.76%	70.97
11	Tampa, FL	15.97	56.30%	35.80%	11.33%	70.16
12	Sacramento, CA	13.35	52.00%	39.70%	12.47%	65.32
13	Houston, TX	12.3	51.20%	46.00%	11.06%	64.52
13	Baltimore, MD	10.96	53.70%	47.20%	10.41%	64.52
15	Portland, OR	16.05	53.60%	35.60%	11.99%	63.71
16	Washington, DC	13.62	54.50%	40.90%	8.27%	61.29
17	Austin, TX	14.84	46.90%	42.80%	11.06%	60.48
17	Albuquerque, NM	11.52	63.40%	42.30%	8.15%	60.48
19	Baton Rouge, LA	7.35	66.00%	47.90%	7.04%	54.84
20	Denver, CO	12.76	49.00%	38.30%	12.23%	54.03
21	Seattle, WA	14.89	51.70%	36.80%	11.09%	52.42
22	New York, NY	15.91	53.20%	34.50%	10.42%	51.61
22	Phoenix, AZ	8.87	53.90%	45.90%	9.44%	51.61
22	Albany, NY	11.71	33.80%	54.20%	10.42%	51.61
25	Louisville, KY	5.97	65.20%	46.20%	7.06%	50.81
26	Boston, MA	11.85	53.40%	41.40%	9.02%	50
27	Atlanta, GA	12.69	49.10%	40.20%	10.02%	45.97
27	Orlando, FL	15.91	49.00%	34.40%	11.33%	45.97
29	Oklahoma City, OK	11.79	57.50%	35.20%	9.68%	45.16
30	Greenville, SC	10.36	53.10%	44.00%	7.29%	41.94
31	Charlotte, NC	10.11	52.30%	44.40%	7.74%	40.32
31	Kansas City, MO	8.84	63.70%	41.40%	6.50%	40.32
33	Pittsburgh, PA	10.08	78.00%	32.20%	7.09%	33.06
34	Detroit, MI	7.85	64.90%	36.90%	6.84%	30.65
35	Nashville, TN	9.98	52.90%	40.50%	7.51%	29.84
36	Milwaukee, WI	8.97	62.00%	37.30%	5.70%	29.03
37	Las Vegas, NV	10.3	41.50%	41.20%	9.15%	27.42
38	Chicago, IL	12.02	49.40%	36.20%	7.57%	25.81
39	Cincinnati, OH	7.22	52.10%	42.50%	6.52%	20.16
40	Indianapolis, IN	8.15	55.10%	37.10%	5.91%	18.55
41	Philadelphia, PA	10.23	52.70%	36.20%	7.09%	17.74
42	Minneapolis, MN	8.48	54.30%	33.10%	7.28%	15.32
43	Salt Lake City, UT	11.79	48.10%	30.70%	8.16%	14.52
44	St. Louis, MO	12.12	41.80%	28.30%	6.50%	3.23
45	Cleveland, OH	6.62	43.20%	37.40%	6.52%	0

Source: LendingTree analysis of U.S. Census Bureau Annual Business Survey and American Community Survey data. Note: Each metric is weighted equally.

4 tips to help support minority entrepreneurs

Entrepreneurs face universal challenges as they build businesses, such as securing startup funding, following a profitable business model and sustaining growth. Those challenges are heightened for minority entrepreneurs by access gaps, limited resources and additional barriers.

“As much as our country has evolved over time, racism and discrimination remain alive and well today,” LendingTree chief consumer finance analyst Matt Schulz says. However, by acknowledging the challenges minority entrepreneurs face and taking steps to counter them, consumers, businesses, governments and policymakers can support minority-owned businesses and help entrepreneurs of color succeed.

Challenge the model of the successful entrepreneur. The entrepreneurs often highlighted as models of success don’t always reflect the diversity of today’s entrepreneurs and small business owners. This not only does a disservice to current entrepreneurs but also affects whether future generations see owning a business and working for themselves as a possibility. Shining a bigger spotlight on the success of entrepreneurs in the Asian, Black, Latino, Native American, Pacific Islander and other underrepresented communities and the various pathways to owning a business can help widen the model of successful entrepreneurship.
Increase funding opportunities. “Funding is a challenge for most people who are starting a business, but it can be an even bigger challenge for entrepreneurs of color,” Schulz says. Federal Reserve Bank of New York data shows that Latino- and Black-owned small businesses are less than half as likely as white-owned small businesses to be fully approved for financing. “Add in the fact that families of color are less likely to benefit from generational wealth … and that lack of access to lender financing is even a bigger problem,” Schulz says. By increasing business incubators, small business grants and small business loans — and widening their access — minority entrepreneurs can benefit from a greater share of support.
Increase awareness of resources. “It’s important to continue to grow the number of resources available to help entrepreneurs of color, but it’s also crucial to ramp up efforts to get the word out about them,” Schulz says. “There are for-profit businesses, nonprofit businesses, federal, state and local government programs and many other resources aimed at supporting minority-owned businesses. These groups and programs can give hope to a small businessperson who might’ve been ready to give up on their dream of starting a business, but they can’t help if no one knows about them.”

Resources for minority business owners

U.S. Small Business Administration	The SBA provides small businesses and entrepreneurs counseling, training, business development programs and funding options via local offices and resource partners.
Minority Business Development Agency	A part of the U.S. Department of Commerce, the MBDA supports minority business enterprises by connecting them with funding sources, contracts and market exposure. The agency operates a network of MBDA Business Centers in areas that have a large concentration of minority populations and businesses.
National Minority Supplier Development Council Inc. (NMSDC)	The NMSDC serves as a growth engine for minority-owned businesses by creating connections to corporations, consumers and other entrepreneurs. The agency has 23 regional affiliates nationwide.
State and local governments	Many local and state government agencies provide entrepreneurs of color training, resources, minority-owned business certification and additional support.

Patronize minority-owned businesses. One of the simplest and most effective ways to help minority business owners and entrepreneurs is to become a customer and support their companies financially. Initiatives like the Fifteen Percent Pledge challenge consumers to review and diversify their spending — and urge businesses to reevaluate their supply chains and systems to ensure minority-owned businesses are appropriately represented.

Methodology

LendingTree researchers analyzed various data across the largest U.S. metropolitan statistical areas (MSAs) to determine where minority entrepreneurs are succeeding the most and least. Our data is from 2020 — the start of the coronavirus pandemic — so we removed the metros where data wasn’t available across our four metrics and where results were unclear.

Our four metrics are:

Minority-owned businesses per 1,000 minority residents. The business data is from the U.S. Census Bureau 2021 Annual Business Survey, which covers 2020. The population data is from the Census Bureau Decennial Census of Population and Housing from 2020.
Percentage of minority-owned businesses in operation for six or more years. This is from the U.S. Census Bureau 2021 Annual Business Survey, which covers 2020 data. This is limited to firms with paid employees designated as minority-owned.
Percentage of minority-owned businesses with revenues of at least $500,000. This is from the U.S. Census Bureau 2021 Annual Business Survey, which covers 2020 data. This is limited to firms with paid employees designated as minority-owned.
Percentage of minority residents who identify as self-employed. This is from U.S. Census Bureau 2020 American Community Survey microdata hosted on Integrated Public Use Microdata Series (IPUMS). Because of data availability on IPUMS, this data is at the state rather than metro level. We used two decimal points with this metric to avoid multiple tiebreakers.

Researchers assigned the metros a rank in each of the four metrics. We then found each metro’s average ranking and assigned a score based on these average rankings.

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Key findings
Minority entrepreneurs are succeeding the most in San Francisco
Minority entrepreneurs are succeeding the least in Cleveland
Different metros occupy No. 1 spots across tracked metrics
Different metros also occupy bottom spots across tracked metrics
Full rankings
4 tips to help support minority entrepreneurs
Methodology

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