Coral Gables is a city that offers a great deal of diversity, led by the abundant presence of Hispanic/Latino residents. Therefore, there has been an upsurge of Hispanic-owned businesses, which has helped to grow the local economy. With that said, Hispanic entrepreneurship is not a local event, but a national phenomenon.
According to a new report published by the Stanford Latino Entrepreneurship Initiative on the state of Latino Entrepreneurship, the number of Latino-owned businesses grew 50 times the rate of non-Latino own businesses since 2012. Consequently, this has given the U.S. economy a significant boost. The SLEI report highlighted the role that Latino business formation continues to play in this nation, and it also addressed the need to further develop programs for accelerating Latino entrepreneurs.
The 40-page report offered a number of interesting findings, including the fact that in 2012, the average revenue for Latino-owned was $156,000, compared to $573,000 for non-Latino businesses. If these businesses were somehow able to increase their level of sales to match that of the average non-Latino firm, conceivably, Latino-owned businesses would be able to generate $1.9 trillion, which $1.4 trillion more than the actual economic impact of $517 billion, according to the study’s authors.
SLEI interviewed more than 1,800 or the 1.4 million Latino businesses with their proprietary database to investigate the reason behind the gap. Many cited the fact that Latino businesses tend to be smaller, they tend to serve a niche market and they tend to gravitate toward specific industries. Nonetheless, approximately 80 percent of Latino businesses sold to Latino and non-Latino customers.
Latino business owners were likely to state that they wanted larger business, but more than half experienced slow growth. Often, Latino business owners are motivated by a desired to pass their business ownership to a family member and 50 percent of Latino entrepreneurs state that additional capital is necessary for future business growth. Additionally, Latino entrepreneurs were more likely than non-Latinos to depend on friends and credit cards for capital.
Unfortunately, many Latino business owners are not familiar with government lending programs, such as the federal Small Business Innovation Research program and the U.S. Small Business Association. Non-Latino businesses are overwhelming benefiting from the venture capital industry while Latino business owners are not.
Stanford University has developed plans to launch a six-week Fellows Program for Latino entrepreneurs as part of an initiative to equip Latinos with necessary resources. Stanford will offer two cohorts a year, the first to be led by Stanford Professor Huggy Rao, an expert in scaling businesses. The co-founder of Miami-based Senzari will also offer mentorship and instruction.
Researchers are planning to expand research and provide data on South Florida and other metro regions.
Fueling Latino-owned businesses isn’t only important for the U.S. Latino community, it’s important for growing the local and national economy. There are a number of successful Hispanic-owned businesses in South Florida, including MasTec, Fanjul Corp., The Related Group, Perry Ellis International and numerous others.