Much of the story of Latinos in America is that of entrepreneurship, and the Latino business community is adding chapters to that story faster than ever.
According to the Stanford Latino Entrepreneurship Initiative’s 2021 report, Latino entrepreneurs continue to outpace the rest of the startup population.
Latinos are 1.7 times more likely to start their own business than other groups. About 5 million Latino-owned businesses currently exist in the U.S., and 9% of those are employer businesses, growing by 26% between 2012 and 2019. And by 2050, Stanford estimates Latino-owned businesses will make up 29% of U.S. businesses — that’s up from 17% today.
So, why take the risk of starting your own business? Lou Sandoval, president and managing advisor of Halo Advisory Group, said after years of working for others, he knew he could count on himself.
“I’ve always been an ‘intepreneur’ within large corporations, so I took that same flavor and said, ‘I’m used to working hard, I know I have that work ethic, so I’m going to apply that to my own enterprise,’” Sandoval said.
Jacqueline Ruiz started her business JJR Marketing 17 years ago. In that time, Ruiz said she’s learned the power of delegation.
“I was only 23 years old when I started JJR Marketing and I wish I had known how to delegate,” said Ruiz. “Understanding how to get results through other people is the key to success and I wish I had known that way, way before.”
She said that even though Latinos have made huge strides in American business, there are still sectors where she would love to see more Latino representation.
“I think technology is still an underrepresented area for Latinos, as well as the financial sector. I love to see more investors and leaders and CIOS leading the technology sector. I think there’s a lot of innovation to be created in that space and I think we as Latinos bring a lot of the magic to the table,” she said.
For Latinos looking to take the plunge, director of Illinois Latino Small Business Partnership at the Illinois Hispanic Chamber of Commerce Pedro Guerra recommends starting with professional affinity groups and local chambers of commerce, where entrepreneurs can get low- or no-cost advice on how to button up their business plans.
“Right now in the Hispanic community, there are several landscapers but there are not several landscaping Minority Business Enterprises,” Guerra said. “Getting access to contracts is something a chamber can help you do … not getting charged $5,000 to get certified for a service you can receive at no cost.”
According to Rogelio Lopez of the Hispanic Business Network, throughout the pandemic, incidents of fraud have been harming all businesses, but especially small businesses.
“When people were not going to the office, that’s when fraud started picking up … over the last three years I would say that anytime a business gets hit by fraud the average cost is $25,000,” Lopez said. “So think about that. A big business can weather that storm. What will that do to a small business?”
Guerra said those small business owners can lean on financial institutions and professional networks for help with that, too.
“Reaching out to your chamber and understanding the knowledge they bring in, understanding what a suspicious email is, understanding … the basic importance of protecting your business identity … working with a financial institution and the chamber can help eliminate the fraud risk,” Guerra said.
Despite all this, the report also found that while 77% of white business owners receive all or most of the funding they apply for from national banks, just 51% of Latino business owners do. Sandoval believes entrepreneurially-minded Latinos generally can benefit from education on different options for financing their businesses.
“I think traditionally we’re raised to be debt-averse, but I think one of the things we could do a better job of is learning how to play the equity financing route as needed … how to procure those venture capitalists or private equity firms that can be good partners to you as you scale your business,” Sandoval said.
Ultimately, Sandoval says the risk of starting up your own business is worth it if you’re prepared for the work.
“Buckle up, being in business for yourself is a roller coaster ride,” he said. “Best of all, you’re going to be working for yourself, so you’ll see the fruits of your labor immediately.”