These assumptions translate the $200 billion revenue increase to $290 billion in additional business equity. We assumed that US private companies’ enterprise value is 2.54 times annual revenue and applied a debt-to-equity ratio of 0.43. 1 Our estimate of the wealth-building opportunity is based on an additional $200 billion per year in revenue for Black-owned businesses that attain revenue parity. This gap includes a $290 billion-and growing-opportunity to grow overall wealth by achieving revenue parity between Black- and white-owned businesses in addition to providing aid to small and medium-size businesses (SMBs)-those with up to 500 employees-with nonwhite owners. The COVID-19 crisis, however, has further stressed Black-owned businesses and may cause the racial wealth gap to widen. Healthy Black-owned businesses could be a critical component for closing the United States’ Black–white wealth gap, which we project will cost the economy $1 trillion to $1.5 trillion (in 2018 dollars) per year by 2028. Entrepreneurship and business ownership-particularly of community-based businesses-are crucial ways to develop community wealth, for both business owners and the people they employ.
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