Statistics Canada study on Black-owned businesses suggests systemic challenges hold them back

The number of Black-owned enterprises in Canada is growing, but still represent a tiny fraction of the country's business landscape, and they tend to be smaller and less profitable than other businesses.

Those are some of the main takeaways from a recent Statistics Canada study that looked at the state of entrepreneurship among Black Canadians between 2001 and 2018. 

The study amalgamated a series of different reports — including census data for 2001, 2006 and 2016; the 2011 National Household Survey and the 2018 Employer-Employee Dynamics Database — and analyzed them to see how the status for Black entrepreneurs has changed over the better part of two decades.

It found there were approximately 66,880 Black-owned businesses in Canada as of 2018; about 2.1 per cent of the more than 3.1 million businesses in total across the country. 

According to the latest census data, 4.3 per cent of Canadians, or more than 1.5 million people, identify as Black. 

Almost three-quarters of Black-owned businesses are owned by men, while the percentage of self-employment grew from 1.8 at the start of the study period to 3.5 per cent by 2018. That's greater than the growth in self-employment among Black women, which went from 1.3 per cent to 2.2. 

While Black-owned businesses are growing, the data suggests they are not meeting their full potential as they tend to be smaller and less profitable than other businesses.

More than 95 per cent of unincorporated Canadian businesses owned by Black people have fewer than one employee, and even among those that are large and complex enough to want to incorporate, more than 91 per cent have fewer than five.

"Black-owned businesses are almost half as likely as White-owned businesses to have five or more employees," the study found.

They're less lucrative, too. Among male business owners, Black men earned an average of $56,100. That's $9,500 less than their counterparts from other racialized groups and $43,300 less than what average white male business owners earned in 2018. Black women business owners, meanwhile, earn the same as other racialized groups, but $16,000 less than white women.

Black-owned businesses tend to be less profitable, with profit margins averaging 8.5 per cent, versus 14.9 at white-owned firms. The study says that white-owned businesses tend to "have a better ability to profit from their activities and have more room to maneuver to cope with rising costs or competition," but stops well short of suggesting any systemic disadvantages are solely to blame for that discrepancy. 

But Carlton-James Okaswe, a business professor at Mount Royal University, says the numbers clearly suggest there are systemic challenges holding Black-owned business from reaching their full potential. 

"Black-owned enterprises ... have a harder time getting bank loans ... and even at what interest rates they might get," he told CBC News. "That needs to be explored."

In 2021, the federal government created the Black Entrepreneurship Loan Fund, a $265 million commitment to help entrepreneurs with loans of up to $250,000. Okaswe says programs like that and others are a step in the right direction, but he still hears from Black-owned businesses all the time who say their biggest challenge is funding.