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Events and Tourism Review Vol. 7 No. 1 (2024), 34-44, DOI: 10.18060/27980                                                                                                  

               Copyright © 2024 Sotiris Hji-Avgoustis and Suosheng Wang 

  This work is licensed under a Creative Commons Attribution 4.0 International License. 

 

Events and Tourism Review                                     
 
December 2024                                                                                                                                          Volume 7 No. 1      

   

 

Small Business Ownership in Black-majority Indianapolis Neighborhoods 

 

 
Sotiris Hji-Avgoustis 
 

Ball State University 

 

 

Suosheng Wang 
 

Indiana University, Indianapolis 

 

 

Correspondence: shjiavgousti@bsu.edu (S. Hji-Avgoustis) 

 

 

 

 

 

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Recommended Citation 

Hji-Avgoustis, S. & Wang, S. (2024). Small Business Ownership in Black-majority Indianapolis 

Neighborhoods. Events and Tourism Review, 7(1), 34-44.  
 

 

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35 

Events and Tourism Review Vol. 7 No. 1 (2024), 34-44, DOI: 10.18060/27980                                                                                                  

               Copyright © 2024 Sotiris Hji-Avgoustis and Suosheng Wang 

This work is licensed under a Creative Commons Attribution 4.0 International License. 

 

 

 
 

 

 

Abstract 

 

The study explores the demographic characteristics of small business entrepreneurs, including 

their motivation to become entrepreneurs in Black-majority neighborhoods and the characteristics 

of their businesses.  The study also attempts to address barriers that may inhibit their success.  The 

research setting is fourteen Black-majority neighborhoods in Indianapolis whose demographic 

indicators, such as median household income and poverty rates, trail other neighborhoods in the 

city. 

 

Keywords: Black-majority Neighborhoods; Small Business; Business Motivation; Business 

Characteristics; Barriers 
 

 

 

Introduction 

 

Business ownership in the United States is often associated with individual and family 

wealth.  A Federal Reserve Bulletin (2020) points out that in 2019, Black households, which 

comprised nearly 16% of the US population, held just under 3% of overall wealth.  Unsurprisingly, 

the same study notes that out of the 5,771,292 employer firms in the country, only 2.3% were owned 

by Black business owners.  The US Census Bureau (2022) estimates that in 2019, there were just 

under 135,000 Black-owned businesses with more than one employee.   

A report (Perry et al., 2022) attempted to measure entrepreneurial activity by Black-owned 

businesses in 68 metropolitan areas using revenue and payroll data from the 2018 Census Bureau’s 

Annual Business Survey (Annual Business Survey, 2018) that covers the reference year 2017.  One 

of the regions reported was the Indianapolis Carmel Anderson metropolitan area.  The region has a 

Black population of 17.1%, with 915 Black-owned businesses representing only 3% of total 

businesses.  The same report notes that these businesses pay employees an average salary of 

$30,795.  This is not uncommon across the country.  No metropolitan area matches or exceeds the 

percentage of its Black population in terms of its number of Black-owned businesses.  These 

businesses create an average of 14 jobs each compared to 27 jobs for all businesses.  Regarding 

payroll, Black-owned businesses pay their employees 60% of what all businesses pay theirs 

($51,013).    

Stegman et al. (2002) argued that passing the Community Reinvestment Act (CRA), revised 

in 2020, remains one of the more promising strategies for helping underserved populations and 

communities accumulate savings and access credit.  CRA pressured commercial banks and thrifts to 

consider the credit needs of all borrowers, including those in low-income neighborhoods 

(Immergluck, 2004).  The pressure applied to banks resulted in a net increase in minority owners 

seeking financing to start or expand businesses in these neighborhoods (Bates & Robb, 2015). 

Black business owners are often wealthier than their peers and create business wealth faster 

than individuals involved in other types of employment (Gorman, 2017).  Gorman also points out 

that small businesses hire from within their communities.  This becomes even more important in 

Black-majority neighborhoods struggling with poverty and high unemployment rates.   

Several efforts to grow the Black business ecosystem are underway.  Path to 15|55 argues 

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Events and Tourism Review Vol. 7 No. 1 (2024), 34-44, DOI: 10.18060/27980                                                                                                  

               Copyright © 2024 Sotiris Hji-Avgoustis and Suosheng Wang 

This work is licensed under a Creative Commons Attribution 4.0 International License. 

 

 

that if 15% of Black-owned businesses hire one more employee, the country’s economy will grow 

by $55 billion (Path to 1555, 2022).  Operation Hope aims to create 1 million new Black-owned 

businesses by 2030 (Operation Hope, 2022).  Corporations also use their financial resources and 

business networks to generate business opportunities for Black-owned businesses.  Target 

Corporation committed at least $2 billion to grow Back-owned businesses by 2025 (Corporate 

Target, 2022).  JP Morgan Chase’s Advancing Black Pathways initiative aims to invest $30 billion 

by the end of 2025 to “help the Black community chart stronger paths toward economic success and 

empowerment” (JPMorgan et al., 2022,5). 

There are also encouraging signs that the 2020 pandemic and the civic and corporate efforts 

discussed above have led to a rise in the number of Black business owners nationwide.  Revised 

estimates from the University of California, Santa Cruz (2022), reported initially by Fairlie (2020), 

point to an increase of 38% in Black-owned businesses between February 2020 and August 2021.  

In Indianapolis, the Indy Black Chamber of Commerce reported a 33% increase in membership, 

adding eighty-two new small businesses to their organization in 2021 (Drenon, 2022; January 6).      

More research is needed about the characteristics of businesses in low-income areas, 

especially in Black-majority neighborhoods (Kugler et al., 2017).   Kugler and his team examined 

the characteristics of businesses operating in low-income areas.  They concluded that fewer 

businesses were operating in these areas relative to other areas and that these businesses had fewer 

employees and lower average payrolls than their peers.  Furthermore, they point out that existing 

literature focuses mainly on rural low-income regions.    

From this context, the study explores the demographic characteristics of business 

entrepreneurs, including their motivation to become entrepreneurs in Black-majority neighborhoods 

and the characteristics of their businesses.  Lastly, the study attempts to address some barriers that 

may inhibit success.   

 

Literature Review 

 

The discrimination experienced by Black entrepreneurs in this country has deprived them of 

access to capital while impoverishing their customer base (Unger et al., 2011; Waldinger et al.,1990) 

and is strongly related to closures and low levels of profitability (Bates & Robb, 2014).  A recent 

Forbes article addresses the barriers to Black entrepreneurship.  These barriers result from systemic 

racism that remains unrecognized by society and a persistent lack of adequate support and funding 

that prevents Black entrepreneurs from accessing the financial, social, and intellectual capital 

available to their non-Black peers (Snobar, 2021).    

Racial disparities in business ownership have been troubling for many years, especially 

when comparing the profitability of minority-owned businesses versus non-minority-owned 

businesses.  Auster (1998) used logit analyses to compare Black-owned and White-owned 

businesses in three U.S. metropolitan areas.  The study’s findings show that race, education, 

business size, and the residents' average income significantly affected business profitability but not 

business survival.  Bates (1989) points to weak internal markets, commercial bank redlining, and 

loss of entrepreneurial talent as the main culprits of suppressed business activity by Black business 

owners in Black neighborhoods.  Bates (1993) highlights the importance of access to credit to the 

viability of small businesses and advocates for targeting assistance toward Black-owned small 

businesses to halt the drain of financial and human capital often seen in minority neighborhoods.   

Fairlie et al. (2020) explored racial disparities in access to capital for new business ventures 

using data from the Kauffman Firm Survey.  Their findings point to issues surrounding racial 

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Events and Tourism Review Vol. 7 No. 1 (2024), 34-44, DOI: 10.18060/27980                                                                                                  

               Copyright © 2024 Sotiris Hji-Avgoustis and Suosheng Wang 

This work is licensed under a Creative Commons Attribution 4.0 International License. 

 

 

inequality in startup financing for Black-owned startups.  They often start smaller and remain small 

because of difficulties in raising external capital.  Disparities in creditworthiness also constrain 

black entrepreneurs.  Black entrepreneurs apply for loans less often than White entrepreneurs 

primarily because they expect to be denied credit, even when they have a good credit history, and 

the banks are eager to support new business development.   

Taylor (2018) reviewed three essays to address the gap in the literature surrounding the role 

of black and ethnic businesses in unlocking the potential for economic growth in minority 

neighborhoods.  Perry et al. (2018) point to the devaluation of assets in Black neighborhoods, 

resulting in Black homeowners accumulating lower wealth accumulation, making it more 

challenging to start and invest in businesses.  Aldrich (2019) called for increased black ownership of 

businesses in black neighborhoods.  He contemplated the impact of transferring white businesses to 

black owners or the creation of new black-owned businesses to address black underemployment.  

Bates (2014) examined immigrants' challenges when establishing businesses in minority 

neighborhoods.  Even though reduced discrimination and low capital requirements make it easier for 

entry, they face higher closure rates and lower profit margins as compared to doing business in 

white neighborhoods.   

Williams (2017) studied Atlanta’s 101 Neighborhood Statistical Areas to identify the 

economic and social characteristics that encourage Black business ownership.  The findings point to 

a relationship between neighborhood characteristics, such as more available jobs, higher median 

household incomes, and lower crime statistics, resulting in more Black businesses in proportion to 

the Black population.   Alperovitz et al. (2010) also highlighted the relationship between increased 

neighborhood economic activity and neighborhood prosperity.  Earlier research suggests that Black 

population density and retail scarcity are positively correlated (Delgado et al., 2010; Henderson & 

Welier, 2010).  Morlan et al. (2002) examined food deserts in low-income Black-majority areas in 

Mississippi, North Carolina, Maryland, and Minnesota.  Their findings point to a systemic problem 

that contributes to the creation of food deserts.  One example is that supermarkets in poorer 

neighborhoods represented only a quarter of what is available in White neighborhoods.  Access to 

alcohol, on the other hand, was three times higher than in White neighborhoods.   

Unfortunately, these issues continue to persist.  Gartner and Bhat (2020) point out that urban 

low-income areas face the same challenges as low-income rural areas.  The low concentration of 

businesses contributes to poverty and social ills, including increased crime rates, poor infrastructure, 

employees with lower workforce skills, and difficulties accessing capital.  The availability of 

essential services, including access to food, is also negatively impacted by location.  Residents of 

Black-majority urban neighborhoods struggle to access essential services that others in more 

affluent neighborhoods take for granted.   

Ramanadhan et al. (2023) used a team-based, thematic analysis approach to examine the role 

of small businesses as promoters of community health and well-being in a predominately Black 

neighborhood in Roxbury, Massachusetts.  Hji-Avgoustis and Wang (2023) point to the daily 

struggles many small businesses operating in Indianapolis’ Black-majority neighborhoods face as 

they struggle to survive, including access to financial and human capital, generating low revenue, 

and operating with few employees. 

 

Methodology 

 

According to the Center for Research on Inclusion and Social Policy (2020), 48% of Black 

Marion County residents live in a Black-majority neighborhood where 88% of the homes are valued 

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Events and Tourism Review Vol. 7 No. 1 (2024), 34-44, DOI: 10.18060/27980                                                                                                  

               Copyright © 2024 Sotiris Hji-Avgoustis and Suosheng Wang 

This work is licensed under a Creative Commons Attribution 4.0 International License. 

 

 

less than the county's median home value.  Our research setting is Indianapolis, the state of Indiana's 

capital, and Marion County's seat.  Indianapolis has a population of almost 900,000; 29% of the 

population is Black or African American (US Census Bureau, 2021).  The fourteen Black-majority 

neighborhoods that comprise the study's population are identified using Indy Vitals (2022).  This 

online community information system relies on population data from the US Census Bureau's 2020 

Decennial Census. 

We identified fourteen Black-majority neighborhoods whose demographic indicators, such 

as median household income and poverty rates, trail other neighborhoods in the city.  We adopted a 

mixed methods research design consisting of online structured questionnaires and informal 

observations from the study's participants.  This approach is considered suitable for studying 

business owner-operator goals and the performances of their firms (Newby et al., 2014).  Study 

participants were selected using purposive samplings, a non-probability sampling in which 

researchers rely on their judgments when choosing population members to participate in a study 

(Etikan, 2016).  The selection of participants was based on three criteria:  a) geographic sampling 

(14 Black-majority neighborhoods), b) institutional context (small business owners of diverse racial 

backgrounds), and c) small businesses with assets not to exceed $1 million. 

In collaboration with twenty-two community gatekeepers operating within the geographic 

boundaries of the fourteen neighborhoods, the lead author recruited the study participants and 

offered instructions on how to take the self-administered Qualtrics questionnaire online.  These 

community gatekeepers represent organizations that have already earned the trust of their respective 

communities (Kay, 2019), and their involvement in promoting the study allowed the researchers to 

gain confidence, establish rapport, and form empathetic, non-hierarchical relationships with 

neighborhood business owners. 

Since some small business owners spoke Spanish, the questionnaires were available in 

Spanish and English.  A total of 94 completed and valid surveys were collected.  The data were 

exported from Qualtrics to SPSS for quantitative data analyses, including descriptive statistics, 

independent samples t-tests, and Chi-square tests.  Specifically, respondents' demographic profiles 

and business backgrounds were explored with frequency analysis, including chi-square tests and t-

tests.  

 

Findings 

 

The study’s authors attempted to address how business entrepreneurs in these neighborhoods 

promote social entrepreneurship by overcoming existing barriers to contribute to revitalizing their 

neighborhoods.  This paper discusses the individual characteristics of these entrepreneurs, including 

the motivating factors behind their willingness to start a business in these low-income 

neighborhoods.  It also summarizes the business characteristics of these firms and the challenges 

they face daily.  

 

a) Respondent demographic characteristics 

Out of a total of 94 respondents, 88 shared their racial backgrounds.  Among them, 58% 

identified as African American, 27.3% as white, 11.4% as Asian, and 1.1% as Native Hawaiian or 

other Pacific Islanders.  By comparing the demographic profiles of the non-Black and Black 

respondents, the most frequent age range for non-Black (73%) and Black respondents (70%) falls 

between 50 and 59 years old.  Within the Black respondents, the gender distribution is relatively 

even (45.1% male to 54.9% female), while for non-Black respondents, the distribution is more 

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Events and Tourism Review Vol. 7 No. 1 (2024), 34-44, DOI: 10.18060/27980                                                                                                  

               Copyright © 2024 Sotiris Hji-Avgoustis and Suosheng Wang 

This work is licensed under a Creative Commons Attribution 4.0 International License. 

 

 

pronounced (67.6% male, 32.4% female). 

Regarding education attainment levels, non-Black and Black respondents commonly cite 

high school as their most frequent level of education (40.5% and 49%, respectively).  Notably, more 

Black respondents hold postgraduate degrees (11.8%) than non-Black respondents (5.4%).  The 

relationship status for both groups predominantly leans towards being 'married or in a cohabiting 

relationship' (43.2% non-Black, 39.2% Black), followed by 'single' (21.6% non-Black, 25.5% 

Black). 

Regarding business experience, a higher percentage of non-Black entrepreneurs (41.7%) 

possess over 15 years of experience than Black entrepreneurs (24%).  Regarding sources of finance, 

'personal savings' is a significant source for both groups (81.1% non-Black, 94.1% Black).  

However, non-Black businesses rely more on commercial banks (56.8%) compared to Black 

businesses (21.6%), while the latter tend to depend more on 'family and friends' (45.9% non-Black, 

64.7% black).  Only a few from both groups seek 'government assistance programs' (8.1% non-

Black, 5.9% Black), and very few individuals seek funding from 'venture capitalists' or engage in 

'joint ventures.' 

 

b) Business Characteristics 

Most businesses in both groups have been established for over five years (83.8% non-Black, 

60.6% Black).  However, a more significant percentage of newer businesses (less than five years 

old) are found among Black respondents (29.4%) compared to non-Black respondents (16.2%). 

Regarding business size, both groups commonly fall into the 'more than $100,000 but less 

than or equivalent to $500,000' category (34.3% non-Black, 43.1% Black).  However, a significant 

difference arises in larger business sizes ('more than $500,000 but less than or equivalent to $1 

million'), with 34.3% for non-Black and only 15.7% for black respondents. 

The stage of business differs slightly between the two groups, with the 'maturity stage' being 

the mode for non-Black (44.4%) and the 'growth stage' for Black entrepreneurs.  Notably, more 

Black businesses (14%) are at the 'survival stage' compared to non-Black businesses (5.6%).  

Regarding regular employment, Black-owned businesses employ 2-5 people (including the 

entrepreneur), while for non-Black entrepreneurs, it is 6-10 people (40.5%). 

 

c) Motivation to be in business 

Both non-Black and black entrepreneurs primarily aim 'to be entrepreneurs' (over 80% for 

both groups).  However, for 'financial rewards,' 83.8% of non-Black but less than 63% of Black 

respondents prioritize this objective.  Interestingly, there is a higher emphasis on 'career progression' 

among Black entrepreneurs (27.5%) than non-Black entrepreneurs (8.1%).  In contrast, a more 

significant percentage of non-Black entrepreneurs are influenced by 'family or friends' (55%) than 

Black entrepreneurs (23.5%). 

 

d) Barriers to success  

Chi-square tests examined the associations between two pairs of categorical variables. One 

test is between race (recoded, non-Black versus Black) and gender (males versus females).  The 

second test is between race (recoded, non-Black versus Black) and number of people employed 

(recoded, ≤ 5 people versus ≥ 6 people). 

According to Table 1, the chi-square test is significant (p-value <0.05):  more females among 

entrepreneurs versus males among non-Blacks.  This is opposite to national data, where men own 

most businesses.  According to Pew Research (2023), 55% of Black-owned businesses have male 

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Events and Tourism Review Vol. 7 No. 1 (2024), 34-44, DOI: 10.18060/27980                                                                                                  

               Copyright © 2024 Sotiris Hji-Avgoustis and Suosheng Wang 

This work is licensed under a Creative Commons Attribution 4.0 International License. 

 

 

owners, and 37% are owned by women.  Another 8% have equal male-female ownership.   

 

Table 1:  Race versus Gender 

 

 1=non-

Black 

2=Black Pearson 

Chi-sq. 

df Asymptotic 

Sig. (2-sided) 

What gender do you 

identify as 

Male 25 23 4.367 1 .037 

Female 12 28 

 

In Table 2, the chi-square test is significant (p-value <0.05):  most Black businesses hire 

fewer employees, whereas most non-Black businesses hire more employees.  This supports findings 

reported by Pew Research (2023), where 66% of Black-owned businesses had fewer than ten 

employees in 2020, 14% had 10 to 49 employees, and under 3% had 50 or more employees. 

 

Table 2:  Employment by Race 

 

 

 

1=non-

Black 

2=Black Pearson 

Chi-sq. 

df Asymptotic 

Sig. (2-sided) 

# of people employed ≤ 5 people 16 36 7.313 1 .007 

≥ 6 people 21 14 

 

T-tests were conducted to detect the perceptual differences between non-Black and Black 

business people in terms of the factors motivating them to start a business, major barriers to the 

success of the business, the factors contributing to the success of your business, and how successful 

their business has been with community development. 

The following results are found to be significant at the significance level of 0.5: 

1. Non-Black entrepreneurs feel more competition than Black entrepreneurs; both mean 

values are mild, while Black entrepreneurs are almost neutral (3.51 versus 3.02).  This contradicts 

national data that shows White businesses are unlikely to view minority-owned businesses as 

competition (Hutchings et al., 2011). 

2. Black entrepreneurs feel ‘racial discrimination’ more than non-Black entrepreneurs; the 

mean value is above 4 (4.18 versus 3.69).  According to the US Census Bureau’s Annual Business 

Survey (2021), 94% of the respondents noted that they are highly motivated to succeed in 

disproving persistent racial stereotypes. 

3. Black entrepreneurs tend to agree more with the statement ‘minority business owners 

encounter greater difficulties than others in creating a new business’ than non-Black entrepreneurs 

(mean values 4.64 versus 3.97).  This challenge persists, according to the most recent US Census 

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Events and Tourism Review Vol. 7 No. 1 (2024), 34-44, DOI: 10.18060/27980                                                                                                  

               Copyright © 2024 Sotiris Hji-Avgoustis and Suosheng Wang 

This work is licensed under a Creative Commons Attribution 4.0 International License. 

 

 

Bureau’s Annual Business Survey (2021). 

4. Black entrepreneurs agree more than non-Black entrepreneurs with the statement 

‘minority business owners find less support in society to create a new business than the majority 

group” (mean values 4.60 versus 4.03).  This also supports the findings of the recent US Census 

Bureau’s Annual Business Survey (2021). 

5. Regarding the general question, ‘Overall, how successful has your business been with 

community development?’, non-Black entrepreneurs feel more successful than Black entrepreneurs 

(mean values 4.23 versus 3.76).  Boston (2006) argues that Black-owned businesses are often 

dismissed as significant contributors to community revitalization because they are only a tiny part of 

the business ecosystem. 

The following results are found to be significant at the significance level of 0.10: 

1. Black entrepreneurs consider ‘to improve the neighborhood's quality of life’ more 

essential to motivate them than non-Black (mean value 4.29 versus 4.0). 

2. Black entrepreneurs consider ‘to have my own business so that my children will inherit it’ 

more critical than non-Black entrepreneurs (mean value is 3.58 versus 3.17). 

3. Non-Black entrepreneurs consider ‘lack of qualified employees’ a more substantial barrier 

than Black entrepreneurs, though both mean values are mild (mean value 3.71 versus 3.27). 

4. Non-Black entrepreneurs consider the ‘ability to develop new products and services’ more 

critical than Black entrepreneurs in contributing to business success (mean values 4.09 versus 3.82). 

5. Black entrepreneurs consider the ‘ability to manage the business successfully’ more 

critical than non-Black entrepreneurs in contributing to business success (4.27 versus 4.03).  Note 

that both mean values are above 4.0. 

 

Conclusions 

 

Not unlike in most other minority neighborhoods, small businesses in Indianapolis Black 

majority neighborhoods are the lifeline to growing local economies, revitalizing their surroundings, 

and contributing to the creation of jobs that subsequently result in the creation of wealth for the 

residents.  An ICIC (2016) study concludes that small businesses in distressed minority 

neighborhoods rival, and often exceed, larger businesses in job creation potential.   

Unfortunately, businesses in these areas face several obstacles that prevent them from 

realizing their full potential.  Past discrimination practices continue to negatively impact the 

economy and prospects of poorer, Black-majority neighborhoods (Cashin, 2004).  Their weak 

economies dissuade residents from other parts of the city from moving in and encourage those who 

can afford to move out of these neighborhoods to do so.  A study by Bates and Robb (2008) 

compared the performance of businesses serving minority neighborhoods versus businesses serving 

non-minority Whites.  They concluded that businesses in minority neighborhoods were 

disadvantaged due to reduced business visibility. 

Strengthening the business ecosystem in Black-majority neighborhoods is essential, and 

public policy must support it.  Improving the quality of life in these neighborhoods by ensuring 

essential services and amenities match those available to residents in other parts of the city should 

be a given.  Finally, expanding employment opportunities for these residents by supporting and 

growing the existing business ecosystem is also vital. 

 

 

 

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Events and Tourism Review Vol. 7 No. 1 (2024), 34-44, DOI: 10.18060/27980                                                                                                  

               Copyright © 2024 Sotiris Hji-Avgoustis and Suosheng Wang 

This work is licensed under a Creative Commons Attribution 4.0 International License. 

 

 

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Events and Tourism Review Vol. 7 No. 1 (2024), 34-44, DOI: 10.18060/27980                                                                                                  

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