Mar 30, 2019

Hispanic Entrepreneurs Remain Positive Despite Economic Challenges

Latino-owned businesses in the United States currently number about 4.4 million, contributing more than $700 billion to the economy every year, according to the US Hispanic Chamber of Commerce. These businesses comprise a significant portion of the economy, but current estimates suggest that they could be making a lot more.

In fact, these businesses could be generating upwards of $1.4 trillion more to the economy than they are now, according to research by the Stanford Graduate School of Business. These estimates point to growth inefficiencies among Latino-owned businesses.

One possible explanation is the relative youth of many Latino-owned businesses. Millennials who immigrated to the US as children own a whopping 86% of immigrant-owned firms with $1 million-plus in revenue. On the bright side, the abundance of new and young Hispanic businesses means lots of growth potential in the future.

The Hispanic business community definitely feels that potential. “Hispanic small business owners are confident about their 2019 business outlook, with strong majorities planning for increased revenue, growth, and expansion” according to Bank of America’s recent Small Business Owner Spotlight study.

68% of Hispanic business owners believe their local economies will improve this year compared to 54% of their non-Hispanic counterparts. Additionally, 59% of Hispanic business owners are positive about the future of the national economy compared to 55% for non-Hispanics. Across the board, positivity abounds in the Latino business community.

Interestingly, despite being more positive about the future overall, Latino entrepreneurs are more concerned about the effect of certain economic realities. Their top concerns are

  • Health care costs (70%)
  • Commodities prices (61%)
  • Trade tariffs and policy (60%)
  • Strength of US dollar (59%)
  • Consumer spending (59%)

Latino-owned businesses are particularly at a disadvantage to handle economic uncertainty brought on by these issues due to the difficulty they experience in securing funding.

“Latino-owned businesses applied for financing in 2017 at slightly higher rates than non-Latino white-owned businesses—47% compared to 40%—but were much more likely to experience funding shortfalls: 28% received full funding, compared to 49% of non-Latino white-owned businesses” according to the Stanford Business Latino Entrepreneurship Initiative.

Despite the structural deficiencies across the financing sector that impact Latino-owned businesses, many are projecting growth and stability in 2019. 74% expect revenue increases, 51% plan to hire new workers, 28% intend to apply for a loan, and 87% plan to expand their business operations.

In every single one of those categories, Latino entrepreneurs have more confidence than non-Latino entrepreneurs. One of the reasons growth expectations are so high is that these businesses have surpassed growth expectations in the past. 34% of Hispanic business owners say their business has grown above and beyond what they had envisioned.

The indomitable spirit of Latino entrepreneurs despite economic difficulties is a sure sign of progress. 2019 is shaping up to be another productive year for small businesses and the diverse cast of entrepreneurs who run them.

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About the author

Andrew Mosteller
Andrew Mosteller is a freelance writer and regular contributor to Lendio News. His upbringing in an entrepreneurial family nurtured a passion for small business at a young age. Andrew's father, an equity fund manager, taught him the ins and outs of investment financing. Now, Andrew spends his time writing copy for business owners, helping them expand and advertise their unique brands. He's also studying Strategic Communications at the University of Utah. When Andrew's fingers aren't glued to the keyboard, he spends his time reading, podcasting, composing music, and bombing down the ski slopes.

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