The Best Metros for Minority-Owned Businesses in the U.S.

Kelly DoranUpdated August 23, 2021

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

Minority-owned businesses are an integral part of the business landscape in our country, contributing a wealth of ideas and innovations to the American economy. Over the past couple of decades, minority-owned businesses have seen a steady increase and pre-COVID US Census Bureau data shows that one million employer firms in the United States are owned by minorities. Even in 2020, during the current pandemic, new businesses generally have been sprouting up in record-breaking numbers. Fostering diversity in business ownership everywhere is an important part of building strong communities. But if you’re a minority business owner looking for promising places to explore or expand--or if you just want to know how America is doing at creating supportive environments for minority-owned businesses--it can be helpful to know which locations are excelling in this regard. Using a 5-star rating system, Lantern examined eight different business, societal, and cultural factors in major American metro areas with populations of less than one million. (You can find a detailed explanation of our methodology below.) Our mission? To evaluate U.S. metro areas for how well minority-based businesses have been doing there. Now let’s get to the good stuff! Here are the 10 best metro areas for minority-owned businesses. (And keep an eye out, too, for our Small Business Spotlights, where we talk to real business owners of color about their experiences in three of the winning metros: Honolulu, HI, Dayton-Kettering, OH, and Knoxville, TN.)

1. Honolulu, HI

Aerial view of Honolulu’s coast with skyscrapers and a volcano

If you’re already fantasizing about a post-COVID world, Hawaii is a dream vacation destination. And Honolulu tops our list as the best metro for minority-owned businesses.A racially diverse city, Honolulu and the surrounding areas usually welcome--and benefit from--an influx of tourists throughout the year. The Hawaii Tourism Authority reported that $17.75 billion was spent by visitors to the Hawaiian Islands in 2019, with $8.19 billion on the island where Honolulu is located, alone. While 2020 has been a special case, the islands are eager to provide rest and relaxation for more vacationers whenever the coast is clear. With some of the highest scores we saw for prosperity, inclusion, and diversity among minorities, Honolulu could just be your next business destination. Honolulu scoring:

Percentage of minority-owned businesses – 5 stars
Sales from minority-owned businesses – 3 stars
Immigrant population – 5 stars
Revenue growth for people of color – 2 stars
Inclusion of minorities – 5 stars
Equity of minorities – 5 stars
Diversity of population – 5 stars
Prosperity among minority population – 5 stars

Small Business Spotlight: Jared Brown | Fat Cheeks

The data and numbers all point to Honolulu as the best place for minority business owners. But what do people of color have to say about owning a small business in Hawaii’s biggest metro area?We caught up with Jared Brown, owner of Fat Cheeks, a restaurant that brings a taste of the East Coast to the Aloha State. Here’s his perspective on what it means to be a minority business owner in Honolulu.Lantern: How did you come up with the business idea?Jared: It was pretty straightforward, honestly. We needed to have a business that was adaptable, scalable, that had a low threshold to get in and delivered a product that allowed us to play on where we were comfortable. Especially because we moved from the east coast without knowing anyone here. How did you start the business? I opened our first business here with my wife Levina. The decision to move to Hawaii and start a business in a brand-new market was made on a bit of a whim.From the time we gave serious thought to moving thousands of miles away to the time one of us had landed and started setting up our life here was maybe two weeks.I had been working for years at restaurants back in New York City, where I am from. Levina was doing work for a technology firm in Massachusetts, where she is from, and we were both ready to make a move. At the time, she had been calling me pretty regularly every day to vent about the state of the company. It just so happened that on this particular day she had a trigger she wanted to pull.She led with, “Let’s finally move to Hawaii.”I replied with an “Okay, but we would need to do some research and check the business environment. This isn’t like all those times we went on vacation.”So, we hang up the phone, and literally two minutes later she calls me back and says, “I found a shop location in a marketplace to be built.”Surprised, my reply was a simple “Okay, cool. Send me the info and I will look at it when I get off work.”A harmless, borderline neutral response--knowing that there was more than a good chance that I wouldn’t need to really look at it for a few days. I was wrong. Like, really wrong. Because a few short minutes later, her next call was, “I bought two tickets.”Long story short, we flew out on what amounted to a 10-hour layover, saw the space, talked to the owner, walked around Kakaako (which had changed drastically), signed, paid, and flew back home. We gave our notices and started working on the move. Has the increased focus on racial inequality in the U.S. affected your business? We saw a real uptick when the BLM marches began, and there was a push to support Black-owned business. Our sales spiked for a few weeks and have since leveled off. It was heartening to see such a swell of support.

Black Lives Matter protesters marching in Honolulu, with a sign that reads “HAWAII FOR BLACK LIVES”

Black Lives Matter protesters march in HonoluluWhat do you think could help more minorities become business owners? I have always believed that access to resources (programs, people, government, etc.) and the knowledge needed to navigate, understand, adapt, and utilize those resources are the two most important foundations to building long-term generational prosperity.Secondary to that is the confidence to use those resources and knowledge. Access means more than telling someone to Google it.Communities that are traditionally left out of creating real generational wealth have no real working knowledge about acquiring it or building it. Especially given the tradition in this country to keep those doors closed to “undesirables” — an economic “redlining” that reinforced a racial wealth gap.To build that access, we have to educate on what is available. Many people have opened those doors for people of color. Not enough of us walk through them or even know we could.How can people support your business?Come by and try it out. If you like it, come back. If you don’t, please tell us through email or Instagram message so we can improve. We don’t look at review sites at all. Are there any other minority businesses you’d recommend? Here, in Hawaii, I think the best resource for getting in touch with those types of businesses are the folks over at the Popolo Project (follow them on Instagram) and BLM Hawaii. Both of those groups have done the legwork to bring into view many of the Black businesses here in the Aloha State.How can we better support minority-owned businesses? I could write a book on what could and should be done.In terms of what I think would be effective going forward? In brief? Buy local first. Especially in urban centers. It is the small local businesses that are the lifeblood of community. It is important to keep the local money circulating within those communities as many times as possible before leaving. If you like the product or services, recommend it.

2. Cape Coral-Fort Myers, FL

Boat going through a dockside community in Cape Coral, Florida

Coming in at number two, Cape Coral-Fort Myers, FL, is a waterfront community in the southwestern part of the state, along the Gulf of Mexico. Boasting 400 miles of both salt and freshwater canals, this metro area is popular for its boating and outdoor recreational activities. Scoring especially high for sales by minority-owned businesses and inclusion of minorities, the Cape Coral metro area is also home to vibrant immigrant communities, placing it near the top of best metros for minority business owners. Cape Coral-Fort Myers scoring:

Percentage of minority-owned businesses – 5 stars
Sales from minority-owned businesses – 5 stars
Immigrant population – 5 stars
Revenue growth for people of color – 2 stars
Inclusion of minorities – 5 stars
Equity of minorities – 4 stars
Diversity of population – 4 stars
Prosperity among minority population – 2 stars

Recommended: Banks on Wheels: Helping Underserved Communities

3. Spokane-Spokane Valley, WA

Spokane river rushing past Washington Water Power building and a green park

Steeped in its Native American heritage, the Spokane Valley is situated along the eastern border of Washington state. A welcome exception to the rainy metros along the west coast, Spokane is known for its outdoor recreation opportunities and offers a wealth of activities from fishing and boating to skiing and hiking. Scoring high for its percentage of minority-owned businesses and revenue growth for minority populations, Spokane is home to a rich Latinx community. Industries thriving in the inland northwest include construction, mining, manufacturing, transportation, communication, and medical. Spokane-Spokane Valley scoring:

Percentage of minority-owned businesses – 5 stars
Sales from minority-owned businesses – 3 stars
Immigrant population – 2 stars
Revenue growth for people of color – 5 stars
Inclusion of minorities – 4 stars
Equity of minorities – 4 stars
Diversity of population – 3 stars
Prosperity among minority population – 3 stars

Recommended: Native American Credit Unions & Tribal Banks

4. Palm Bay-Melbourne-Titusville, FL

Aerial view of the Space Coast featuring downtown Cocoa Beach, FL

Situated on the Atlantic coast of Florida, Palm Bay and the surrounding metro area are a destination for outdoor enthusiasts who want to take advantage of the beach, nature preserves, golf, and more. It’s also just an hour drive to the popular attractions in Orlando.With higher scores for the number of minority-owned businesses and inclusion, the metro area may offer interesting opportunities relating to its major industries, which include healthcare, retail, and manufacturing.Palm Bay specifically has become increasingly diverse, with Black and Hispanic populations making up over one-third of the city’s total population.Palm Bay-Melbourne-Titusville scoring:

Percentage of minority-owned businesses – 5 stars
Sales from minority-owned businesses – 3 stars
Immigrant population – 3 stars
Revenue growth for people of color – 2 stars
Inclusion of minorities – 5 stars
Equity of minorities – 5 stars
Diversity of population – 4 stars
Prosperity among minority population – 3 stars

5. Fresno, CA

With deep roots in agriculture, California’s Central Valley is home to a vibrant and diverse population. Known as the agricultural capital of the world, the Fresno region produces over 350 crops worth about $6.8 billion, including nuts, fruit (especially grapes), and vegetables. Fresno scores high for its percentage of minority-owned businesses, inclusion, and amount of business sales by minorities. With a thriving Latinx community, Fresno has Latinx-owned businesses in the healthcare, retail, and agriculture sectors. Fresno scoring:

Percentage of minority-owned businesses – 5 stars
Sales from minority-owned businesses – 5 stars
Immigrant population – 5 stars
Revenue growth for people of color – 2 stars
Inclusion of minorities – 5 stars
Equity of minorities – 1 star
Diversity of population – 5 stars
Prosperity among minority population – 1 star

6. Des Moines-West Des Moines, IA

Large arch over bridge leading into downtown Des Moines, Iowa at night

The state capital of Iowa, Des Moines is also a center of business activity, especially for businesses in finance, insurance, healthcare, and retail. With a relatively low cost of living compared to other metro areas and a high score for percentage of minority-owned businesses, Des Moines offers a wealth of opportunities for minority business owners, new and established, as well as those who want to patronize them.Des Moines-West Des Moines scoring:

Percentage of minority-owned businesses – 5 stars
Sales from minority-owned businesses – 3 stars
Immigrant population – 3 stars
Revenue growth for people of color – 3 stars
Inclusion of minorities – 4 stars
Equity of minorities – 4 stars
Diversity of population – 3 stars
Prosperity among minority population – 5 stars

7. Madison, WI

Skyline of Madison, Wisconsin across a lake at sunset

Located just west of Milwaukee, on an isthmus between Lakes Mendota and Monona, and home to the University of Wisconsin at Madison, this is a bustling college town that features a host of outdoor recreational activities and fun for people of all ages. With high scores in minority business ownership and prosperity, it could be an exciting place to explore.Madison’s acclaimed diversity may also contribute to its small businesses’ success by increasing the odds of low unemployment rates and relatively low economic volatility.Healthcare and social assistance are the most popular industries in Madison, followed by education and manufacturing. Minority business owners who want to capitalize on the young population and small-town feel, may want to consider Madison. Madison scoring:

Percentage of minority-owned businesses – 5 stars
Sales from minority-owned businesses – 1 star
Immigrant population – 3 stars
Revenue growth for people of color – 3 stars
Inclusion of minorities – 1 star
Equity of minorities – 3 stars
Diversity of population – 3 stars
Prosperity among minority population – 5 stars

8. Dayton-Kettering, OH

Dayton, Ohio downtown area on the Great Miami and Mad Rivers

Conveniently close to Indianapolis, Columbus, and Cincinnati, the Dayton-Kettering metro area has long been known as a center of industry, innovation, and manufacturing. More recently, however, it has seen a transition towards service-related businesses. Dayton’s downtown area has been experiencing a revival, and it’s a busy place for business owners to share unique foods, services, and goods as young people and families are calling the Dayton-Kettering area home. This location also scored high for percentage of minority-owned businesses and equity of minorities.Dayton-Kettering scoring:

Percentage of minority-owned businesses – 5 stars
Sales from minority-owned businesses – 3 stars
Immigrant population – 1 star
Revenue growth for people of color – 5 stars
Inclusion of minorities – 3 stars
Equity of minorities – 4 stars
Diversity of population – 3 stars
Prosperity among minority population – 2 stars

Small Business Spotlight: Dr. Karen Townsend | KTownsend Counseling

In 2020, metro areas across the country (including Dayton-Kettering, OH) were rocked by Black Lives Matter protests as racial inequality in America was newly spotlighted. The call for change--and improvement--extended beyond those marches in the streets and made its way into the workplace. Enter Dr. Karen Townsend. As a professional coach and the president of KTownsend Counseling, Dr. Townsend helps local businesses maximize their productivity and profitability, with a special focus on diversity. Read on to learn about her journey from educator in the classroom to educator in corporate America. Lantern: Tell us about your business. How did you come up with the idea?  Dr. Townsend: Prior to launching my business, I worked in higher education for 13 years. I was responsible for creating programs to recruit and retain minority students. I also wanted to ensure that after matriculating, these students would persist to graduation. I am proud to say that the students in my programs were highly successful—in college and in life. So much so that they became the subjects of my doctoral dissertation. These students demonstrated that when provided with access, mentoring, and encouragement, they could be just as successful as any other student. While I no longer work on a college campus, I still view myself as an “educator.” The only difference is that now, my “classroom” is in corporate America. I am committed to helping leaders create inclusive environments and build strong teams. How did you start the business? I started my business as a “solopreneur,” serving clients in higher education, government, non-profit, and corporate settings. Because I absolutely LOVE the work I do, I am still very hands-on in the delivery of services. Prior to COVID-19, I provided training, executive coaching and consulting on-site and in-person. With restrictions on travel and gatherings, all my programs are now being delivered using virtual platforms. Has the increased focus on racial inequality in the U.S. affected your business?  Increased would be an understatement! When COVID-19 shut down the country, all the projects on my calendar were “postponed.” However, after the social unrest that occurred as a result of the killings of unarmed African Americans, my business increased exponentially. While I am pleased that now diversity, equity, and inclusion seem to be priorities for many organizations, leaders must recognize that the conversations that we are having now are long overdue. To help leaders facilitate these conversations, we developed a new program: Can We Talk—A Candid Conversation for Sharing, Support, and Action. What do you think could help more minorities become business owners?  It goes back to what I said about the work I did with students early in my career: Access. Mentoring, Encouragement. With access to information and opportunities, with mentors who are committed to supporting their growth and development as business owners, and with encouragement throughout the entrepreneurial journey, not only will more minorities become business owners, but they will also be SUCCESSFUL business owners. What minority-specific resources have you used to help your business? In Dayton, Ohio where I live, the Dayton Area Chamber of Commerce has been an excellent resource for me. In addition to traditional chamber services, our chamber has a Minority Business Partnership Program (MBP). A woman on a panel speaks at an event for Dayton’s Minority Business Partnership (MBP) Program

A woman on a panel speaks at an event for Dayton’s Minority Business Partnership (MBP) Program

Speakers at an event for Dayton’s Minority Business Partnership (MBP) Program. Image courtesy of the MBP Facebook PageThe leaders of the chamber and MBP have invested time in getting to know me and my business. They have provided me with professional development and leadership opportunities. They have given me and my business exposure, which in turn allowed potential clients to become familiar with my business and the services we provide. Finally, they have referred me to potential clients. As a small business owner, having the stamp of approval from the Chamber of Commerce is a game-changer! How can people support your business?KTownsend Consulting is committed to partnering with leaders who believe in “people development.” All too often, in an effort to be profitable, leaders focus on the product, or the process, or the procedure. At KTC, we believe that without the people, nothing will be accomplished. With that in mind, we invite all leaders who are committed to “people development” to reach out to us at [email protected]. And check out my regular “Three-Minute Diversity Lessons” by connecting with me on LinkedIn.

9. Knoxville, TN

A vibrant and bustling metro area with all the amenities of an even larger city, Knoxville is also just minutes away from the peace and calm of the Great Smoky Mountains. Eminently affordable, it’s a desirable place for young families to call home.The main industries here include office and administration, retail, and trade jobs. There’s plenty of opportunity for business owners in those and related sectors, and Knoxville scored particularly high for percentage of minority-owned businesses. Knoxville scoring:

Percentage of minority-owned businesses – 5 stars
Sales from minority-owned businesses – 4 stars
Immigrant population – 1 star
Revenue growth for people of color – 2 stars
Inclusion of minorities – 3 stars
Equity of minorities – 3 stars
Diversity of population – 2 stars
Prosperity among minority population – 3 stars

Small Business Spotlight: Sybil Bailey | Afro Mermaid Skincare

Sybil Bailey, owner of Afro Mermaid Skincare, smiling in front of her studio

Knoxville is known as the Gateway to the Great Smoky Mountains For entrepreneurs of color, it might also be the gateway to owning and operating a business. One such business owner is Sybil Bailey of Afro Mermaid Skincare. Her company offers customized products and services for locals looking to improve their skincare regimens. Here’s her take on life as a minority business owner in Knoxville, Tennessee: Lantern: Tell us about your business. How did you come up with the idea? Sybil: Afro Mermaid Skincare was a dream I’d had for about 30 years. I have always loved skincare and was constantly pampering friends and family.  How did you start the business?   I left the corporate world in 2018 (with a parting gift!--$$) and cartwheeled into beauty school. It was a challenging AND rewarding experience for me. I turned fifty right before graduation. Is your business online? In-store? Alone or with a partner?  Afro Mermaid Skincare is a solo skincare studio. Has the increased focus on racial inequality in the U.S. affected your business?  It has! People of all races are seeking out minority businesses. It’s one of the factors in my business’s pandemic survival. What do you think could help more minorities become business owners?  Capital, mentoring, co-working office space, opportunity, and equality. What minority-specific resources have you used to help your business?  The Shora Foundation and Urban League. How can people support your business?   By spreading the word, buying gift cards, and coming in for services. Are there any other minority businesses you’d recommend? Martene the Nail Stylist (contact at [email protected]).How can we better support minority-owned businesses?  Publicity, capital, and marketing support.

10. Akron, OH

With a strong foundation in manufacturing, Akron, OH, has long been known as the smaller, slightly funkier cousin of Cleveland. Located less than an hour from that major metropolis, Akron offers its residents a more bucolic lifestyle, with easy access to farmland and scenic countryside. But in its own right, Akron’s also a thriving city with plenty of music, restaurants, and entertainment—and it also has one of the higher equity scores of our top 10 metro areas.The state of Ohio has set the goal of achieving 15% minority owned businesses. To reach that aim, it offers resources to support the growth and sustainability of those businesses through the Akron Minority Business Development Center (MBAC). These resources include helping minority business owners apply for small business loans and access necessary capital, business management, marketing, and accounting assistance. Akron scoring:

Percentage of minority-owned businesses – 4 stars
Sales from minority-owned businesses – 3 stars
Immigrant population – 1 star
Revenue growth for people of color – 3 stars
Inclusion of minorities – 3 stars
Equity of minorities – 4 stars
Diversity of population – 3 stars
Prosperity among minority population – 3 stars

Resources for Minority-Owned Businesses

Many cities across the U.S. are working to increase their number of minority-owned businesses by providing resources that offer support to minority entrepreneurs to help them secure capital and get business counseling and marketing services. Additionally, organizations like the U.S. Small Business Administration offer loan programs specifically for minority business owners, veterans, and women. These programs offer additional assistance to firms that are at least 51% owned and controlled by minority individuals. There are also many organizations that offer minority business grants to help with starting and maintaining a business.

Get Your Business Started Today!

No matter who you are or where you live, starting a business is a big endeavor. Finding the support and financing you need is crucial to your success, and Lantern is here to help. Finding the best city for your small business may take some searching. You can use this guide as a starting point as you research promising locationsOnce you’ve picked a place, it’s time to consider small business financing options. Money to start your business can come in the form of small business grants, loans, investments, savings, or any combination of these four. Lantern makes it quick and simple to see your small business loan options. By filling out one application, you get access to reputable lenders that service small businesses of all kinds. Get started today on your business adventure!

Methodology

To determine the best places for minority-owned businesses, Lantern looked at 50 metro areas across the US with populations of one million or less. We chose to focus on mid-size metros because we wanted to explore the opportunities outside of the larger metros that most people are already familiar with. Lantern developed a scoring system based on eight (8) criteria as listed below, then gave each metro a star rating based on its scores in relation to the other metros.The following breaks down the methodology and data used for the eight criteria: Number of Minority-Owned Businesses Using data from the U.S. Census Bureau’s Annual Business Survey, we looked at the percentage of minority-owned businesses in each metro and compared it to the percentage of minorities in the overall population. If the ratio was 1 or above, the metro scored well, while those lower ratios were considered less favorable for minority-owned businesses. Business Sales by Minority-Owned FirmsUsing data from the U.S. Census Bureau’s Annual Business Survey, we looked at the percentage of sales (in dollars) by minority-owned businesses in each metro and compared it to the percentage of minorities in the overall population. If the ratio was 1 or above, the metro scored well, while those with lower ratios had lower star ratings.Immigrant Share of PopulationSince about 80% of immigrants are non-white (minority), it’s important to measure how much of the population and business landscape minorities make up in the selected metro areas. To measure immigrant population, we looked at data from the New American Economy. Metros with higher percentages of immigrants in their overall population scored higher. Racial Equity Index RankUsing data from the National Equity Atlas, we looked at the racial equity index, which shows how equitable a region is, based on multiple indicators including whether “communities are seeing progress on racial equity and overall prosperity.”The higher the racial equity index ranking, the higher the star rating.Revenue Growth for Firms Owned by People of ColorUsing data from the National Equity Atlas, we assessed the change in revenue for businesses owned by people of color. The data compared revenue amounts from 2007 to 2012. The greater the increase in revenue, the better the metro scored.Prosperity ScoreUsing data from the National Equity Atlas, we looked at the prosperity score, which shows how populations are faring compared to how they’re doing in other metro areas, using the following indicators:

Median wage
Unemployment
Poverty
Educational attainment
Disconnected (not working or in school) youth
School poverty
Air pollution exposure
Commute time
Housing burden

The higher the prosperity score, the higher the star rating.Inclusion ScoreUsing data from the National Equity Atlas, we looked at the level of inclusion in the 50 metro areas. The score given by the National Equity Atlas assessed how a specific metro area compared to other areas by looking at the racial gaps across several different indicators.The higher the inclusion score, the higher the star rating.Diversity IndexUsing data from the National Equity Atlas, we looked at the diversity index scores in the 50 metro areas. The diversity score is a measure of the racial/ethnic diversity of residents based on six major racial/ethnic groups:

White
Black
Latinx
Asian or Pacific Islander
Native American
Mixed/other populations

The highest-scoring metros had the most even mix of all the races listed above.

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About the Author

Kelly Doran

Kelly Doran is a professional writer and editor who is passionate about helping brands tell their story. Her extensive experience includes writing and editing long-form, quality content for enterprise organizations in Fintech, medical, and regulated industries.

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