As the United States becomes more and more diverse, businesses run by people of color are becoming a much more vital part of the U.S. economy. Their importance will continue to grow as America becomes more diverse and minority entrepreneurship rises. Currently, at least 40 percent of all businesses in seven different states are minority-owned.
Recently released data from the 2012 Survey of Business Owners by regulatory economist Michael McManus shines a little more light on the plight minority businesses as it analyzed the data collected from minority business owners through the Census 2012 Survey of Business Owners.
Some of the news in the report was very positive. For instance, during the recession, minority-owned businesses were able to:
· Increase their share of overall business ownership from 22 percent to almost 30 percent,
· Bring in $335 billion in sales and an additional 1.3 million employees, and
· Add 2.2 million businesses, outpacing their population growth.
“While non-minority-owned businesses employed 1.9 million fewer employees in 2012 than in 2007, minority-owned businesses employed 1.3 million more,” said Chief Counsel for Advocacy Darryl L. DePriest in a statement released with the report. “Today’s issue brief underscores the importance of the minority entrepreneur and highlights areas for potential growth for minority-owned businesses.”
Latino Chamber of Commerce of Dane County President Mayra Medrano was not astonished by the report’s findings.
“It really doesn’t surprise me because a recession is an environment that’s really difficult to even find a job or figure out where the next career move should be, so entrepreneurship tends to be much more favored,” Medrano told Madison365. “So when it comes to our communities of color, especially our Latino population, there always has been the top choice to be your own boss. It really doesn’t surprise me that communities of color were more resilient during the recession.”
The Latino Chamber of Commerce of Dane County provides opportunities for Latino businesses and professionals to acquire resources and knowledge that enable them to succeed. In recent decades, the number of Latino entrepreneurs in Dane County and nationwide has grown exponentially. From 1990 to 2012, for instance, the number of Latino entrepreneurs in America more than tripled, going from 577,000 to more than 2.0 million.
The 2012 Survey of Business Owners study found that minority-owned firms are much younger than non-minority businesses, both in the age of the firm and the age of the owner. Older firms earn far more in sales and are more likely to be employers.
“The immigrant population is a young population. We can see it here in our school districts,” Medrano said. “As young people, they tend to me more connected to technology. Their scope of reference is much bigger than the older population.”
While entrepreneurship rates among non-Hispanic, U.S.-born individuals dropped during the decade that included the recent recession, the number of Hispanic entrepreneurs grew by 71.5 percent. All told, 29 percent of businesses nationwide are majority-owned by minorities, and this share is quickly increasing. This is all despite the barrier and disadvantages entrepreneurs of color often face.
“Latinos often face cultural barriers. How we do business here can be very different for what they were once used to. There are different licenses and permits that start-ups will need to have in order to proceed forward in opening up a business and that can be a challenge,” Medrano said. “There are language barriers and lack of networks and lack of access to resources that Latinos have. We have many challenges.
“What we need the most is access to capital. For anybody, that can be a big challenge but it’s an even bigger challenge for communities of color,” she said. “It’s usually the process that’s the barrier. We know that there are so many pools of money or access to people who are interested in investing in businesses, but it’s the process. It’s having to be able to formally identify yourself … so there’s an immigration reform issue.”
Having mentors and successful examples can go a long way in helping businesses flourish. That’s what the Latino Chamber tries to lend a hand with.
“We have people who come in [to the Latino Chamber] and they have great ideas in their heads, but nothing on paper. And they’ve spent the last 10-15 years of their lives saving up for this moment,” Medrano said. “That’s what we try to do here at the Latino Chamber: connect them with the resources and connect them with the accountant to set up payroll and connect them to various kinds of business resources that can help them succeed.
“Successful Latino businesses have generally been pretty open about wanting to help others and to provide mentoring and best practices to help start-ups,” she said. “Just the fact that we can come in and have them be a mentor at the Chamber is very instrumental in helping other businesses succeed. Many Latinos are a little shy at first, but at the Latino Chamber, we help Latinoprenuers open up. We know that you’ve been a successful business here in Madison for 10-15 years, [so] tell us about who you are and what you’d like to see. And you be surprised at the some of the type of stories that they share with people they’ve helped in the business community that we had no idea that they were helping.”
Recession or not, there’s nothing like creating your own job. But it’s not as straightforward as it seems.
“It’s not easy being an entrepreneur. Being your own boss is great but it comes with challenges,” Medrano said. “One of the things that we always ask people when they come in for assistance is: Are you ready for this? Are you ready for the days where you will be working 24/7? We want to ensure that people are in the state of mind and prepared for what entrepreneurship is all about. Success doesn’t happen overnight. It takes a ton of hard work.”