If you weren’t paying attention this Hispanic Heritage Month, it’s time for a heads up. The latest research from the Stanford Latino Entrepreneurship Initiative shows that Hispanic owners are the “fastest growing segment of the small business ecosystem.” What are we all doing to ensure these owners’ continued success?
As a Latina-owned company, under the leadership of my co-founder, Carolyn Rodz, Hello Alice decided to once again dig into the data and do a temperature check on the Hispanic business community. By comparing thousands of responses from Hispanic owners against results from the overall population, this report helps us understand the unique triumphs and challenges facing this group at the heart of our economy. Here are four takeaways.
Hispanic small businesses are growing
First, the good news: Hispanic businesses are growing! According to our data, 61% of Hispanic-owned businesses are in the scale stage in 2021, up by 17% compared to last year. Hiring has followed apace with 89% of Hispanic businesses planning to add employees this year, which is almost double the figure we measured in 2020.
Entrepreneurs like Sandra Diaz illustrate this upward trajectory. After a pandemic layoff, she uprooted her life from Miami to Baltimore and started Fearless Yaya, an Etsy shop where she sells art, stationery, greeting cards, and other gift items that reflect and empower people of color. It turns out she tapped into a sorely neglected market segment, becoming an Etsy Star Seller and so far racking up more than 600 sales. Our partners at BGE recently recognized her growth with a $20,000 BGE Energizing Small Business Grant, which Diaz plans to spend on hiring a web designer and scaling her operations.
It’s a similar story for Alejandro Lopez over at Toma, a company selling a bottled cocktail base that reportedly makes “the greatest Bloody Mary ever” (I hereby volunteer for any and all market research to verify that claim). Currently a one-man show, Lopez has immediate plans to scale his e-commerce presence and hire additional help. “My dream is to build a team and a working environment that fosters creativity and innovation, diversity of thinking, and career opportunities for young professionals in my community,” Lopez said. Cheers to that!
Marketing and brand awareness are big focuses
A key part of our survey process is understanding the emerging challenges faced by small business owners. Among Hispanic entrepreneurs, 12% said their biggest challenge in Q3 2021 is marketing –an 80% quarter-over-quarter increase that stands apart from other demographics.
You can see this focus among brands like the Chicago-based NuMercies. Founded by former model Ashley Gonzalez, the all-natural vegan skincare company is aggressively ramping up its marketing efforts for the holiday season. “I definitely want to do a commercial before Black Friday,” she said, adding that she’ll probably reach customers through digital advertising tools from Hulu and Google this season.
Still, Hispanic owners are less optimistic than their peers
The growth we measured hasn’t always translated into optimism. In fact, 22% of Hispanic owners told us they predicted business in 2021 would be the same or worse as 2020. That’s compared to 17% of owners from other demographics.
In many ways, we can interpret this as a continued fallout of the pandemic. According to the Stanford Latino Entrepreneurship Initiative, 86% of Hispanic businesses report a “large negative impact” due to the pandemic. That impact varies by industry, too, as issues like supply chain woes continue to wreak havoc on many sectors. Hello Alice measured the lowest business optimism in industries such as construction and transportation logistics -; two areas that happen to have a higher-than-average concentration of Hispanic-owned businesses.
In response, I echo the leaders at the United States Hispanic Chamber of Commerce in their call for Congress to pass the still-pending infrastructure bill. This type of policy will help jumpstart key industries, including construction, and boost the overall outlook for Hispanic-owned businesses.
Capital access should remain our number one priority
No matter how you slice the data, small business owners of every demographic tell us that access to capital is their number one challenge. Hispanic owners, like all New Majority entrepreneurs, have a harder time accessing bank loans, business credit, and venture capital compared to their white counterparts.
I’m continually amazed at what Hispanic entrepreneurs can accomplish despite this adversity. There’s Deb Rock, who overcame bottle shortages, wildfires, and droughts to put out this year’s vintage of Sonoma Hot Sauce. And there are folks like Celeste Ponce of Ponce Architecture, an award-winning firm that explicitly prioritizes people over profits by focusing on underserved communities throughout Houston.
Hearing these stories proves to me that Hispanic business owners have never lacked the innovation or work ethic required to succeed –in many cases, they just need money! As business leaders continue to plan for 2022, let’s all put our heads together and figure out ways to get small businesses the cash they deserve.