LGBT-owned businesses can be a valuable topic for business reporters. While employee diversity has made headlines for years, stories on businesses that self-identify as being lesbian-, gay-, bisexual- or transgender-owned are a more recent development.
Diversity programs
There are multiple diversity programs for certified LGBT-owned businesses across the U.S. You can find these programs, which attempt to include LGBT businesses within corporate supply chains, in more than a third of Fortune 500 companies, in many top federal agencies (including the Department of Transportation and the Department of Housing & Urban Development) and in major urban municipalities
The National Gay and Lesbian Chamber of Commerce’s Supplier Diversity Initiative (NGLCC SDI) plays an important role in connecting LGBT-owned businesses with corporations interested in working with minority suppliers. NGLCC runs a LGBT supplier database and holds NGLCC SDI matchmaking events across the country throughout the year.
The Human Rights Campaign releases its report on businesses that contribute to the LGBTQ community in the Corporate Equality Index. In 2017, the report stated that 66 percent of CEI-related businesses made at least three different efforts to help the LGBTQ community, such as philanthropic contributions, diverse supplier initiatives and public policy. The same report also compiled a list of LGBT-friendly companies, including Apple, Microsoft and Starbucks, that scored perfectly on their criteria of LGBT equality.
LGBT-owned small business
Of the nearly 28 million small businesses in the US, only 909 were certified LGBT Business Enterprises (LGBTBEs) as of October 2016, according to a National Gay and Lesbian Chamber of Commerce report. LBGTBEs must be at least 51 percent owned, managed or operated by an LGBT person that exercises independence from a non-LGBT owned business.
LGBTBEs make up less than one percent of small businesses. Part of the reason is that many owners may be reluctant to disclose their sexual orientation, particularly lesbian, transgender and bisexual groups. Of the 909 LBGTBEs, a majority—nearly 67 percent—are owned by gay man. Only 30 percent are lesbian-owned and barely 2 and 2.3 percent were transgender and bisexual-owned respectively, according to the NGLCC report.
This number may grow dramatically in the future, however. Fortune reported that nearly half of LGBTBEs are concentrated in five states: California, New York, Texas, Florida and Georgia. That leaves many opportunities for growth in other parts of the country. Furthermore, future entrepreneurs aged 18 to 35 are more open about sexual orientation, which could lead to increasing disclosures of LGBTBEs. A 2015 study by the Public Religion Research Institute (PRRI) found 7 percent of millennial identify themselves as lesbian, gay, bisexual or transgender. The Daily Beast reported that was 3 percent higher than a 2011 study of adults of all ages.
Business longevity
Though almost half of all start-ups don’t make it to four years according to the Statistic Brain Research Institute, the 909 certified LGBTBEs have been around for an average of 12 years. At least 15 percent of these businesses were founded over two decades ago, according to a report by the National Gay & Lesbian Chamber of Commerce. The Harvard Business Review examined several reasons why LGBTBEs find more success, which include their ability to attract top talent and the innovation of its employees.
Above-average revenue
Though LGBT-owned firms often are considered to be minority-owned businesses, their revenues are considerable. According to a 2016 report by NGLCC, certified LGBTBEs contributed over $1.15 billion to the U.S. economy. The report estimated that figure to be about $2 trillion when taking into consideration all 1.4 million LGBT businesses in America, including non-certified LGBT businesses. And citing a 2015 National Small Business Association report, Fortune writes that certified LGBT-owned businesses realize an average of $2.5 million in revenue a year, almost triple the average revenue of other small businesses.
Reporter’s Takeaway
• Look through the roster of LGBT-friendly companies provided by the National Gay and Lesbian Chamber of Commerce and interview a local manager to find out how their diversity program impacts their business.
• Contact the NGL Chamber of Commerce to ask if there is an increase of LGBT-owned businesses in your region.
• Find an LGBT-owned businesses and ask about the successes and challenges they face, comparing them with other small businesses in your area.
