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Despite the COVID-19 pandemic, Latino small business owners have maintained their record of entrepreneurial success. The pandemic has negatively affected the finances and operations of small businesses, posing significant challenges for entrepreneurs ― particularly minorities. However, the entrepreneurial spirit in the Latino community remains strong. In fact, according to a small business report recently released by the White House, Latino entrepreneurs are launching new businesses at the fastest rate in over a decade and 23% faster than before the pandemic.
Characteristics That Enable Hispanics to Persevere as Entrepreneurs
Latino entrepreneurs pride themselves on specific characteristics that contribute to their entrepreneurial spirit and have enabled them to persevere even in uncertain times. They have a strong work ethic that embodies the virtues of hard work, ambition, and creativity. With grandparents or parents who were immigrants, they learned that America is a place where anything is possible. Building a business is a great way to provide stability for family and community.
Hard work is the cornerstone of Latino entrepreneurial success. Many grew up with family members who worked with their hands for a living or woke up before anyone else in the family, to open their shops or restaurants. They learned that one does not leave work unfinished.
Strong Work Ethic
According to a 2017 study, Latinos possess a unique work ethic that has produced a workforce willing to do whatever it takes to attain their goals. These business owners also embodied natural creative instincts and strong determination to create a path when none existed. This enables Latino small business owners to creatively problem solve. It also helps them to adapt to unforeseen market conditions, the latest industry developments, or a sudden revenue loss. Instead of following a business plan that does not account for unexpected challenges, business owners have used their ingenuity to adapt and navigate these tricky new developments. This has proven especially important during these uncertain times.
Lastly, in addition to being natural entrepreneurs, Latino entrepreneurs in this study were also comfortable taking high risks to achieve their goals. This is a crucial aspect of entrepreneurship. In fact, according to a study commissioned by Herbalife Nutrition and conducted by One Poll earlier this year, 88% of small business owners and employees surveyed believe that to be successful, people can’t be afraid to make mistakes
Challenges Faced by Latino Entrepreneurs
Latinos encompass many attributes that have enabled them to be strong entrepreneurs and demonstrate resilience in continuing to grow organically and open businesses in various industries. However, they still face significant challenges, such as less access to financing and credit. In a December 2021 study, the consulting firm McKinsey found that Latinos had the lowest rate of obtaining bank and financial institution loans to start their businesses compared to other racial and ethnic groups. The study also showed that they rely more on personal finances and receive a tiny fraction of the billions of dollars invested annually by venture capital firms, which inhibits the potential of starting a business and the possibility of bringing on employees and expanding businesses.
Before hiring employees, small businesses need a strong startup base capital and a stable and predictable revenue stream. Crossing that employer threshold is particularly challenging for Latino-owned businesses. A 2018 Stanford report found that for every 100 self-employed Latino business owners, there are only about 16 businesses with employees — almost half the rate of non-Latino businesses. Moreover, the challenge of getting financing is a significant factor.
Resources That Can Help Hispanic Entrepreneurs Succeed
Fortunately, Latino entrepreneurs do not have to confront these obstacles alone. There are several organizations, government agencies, and programs that can provide aspiring Latino small business owners with the support, education, and networking opportunities necessary to start new businesses or enhance their existing ones, such as how to acquire financing. Additionally, many of these valuable resources are easy to access online. These organizations include, but are not limited to the following:
- The League of United Latin American Citizens (LULAC) was established in 1929 and is the oldest and largest Hispanic-focused organization in the U.S. LULAC offers various resources and materials for entrepreneurs and created the Latina Entrepreneur Academy (LEA) to help Hispanic women build their businesses or enhance their existing ones. LULAC has worked closely on improving Hispanic women’s entrepreneurship partly because one out of every 10 women-owned businesses is Latina.
- The Latino Business Action Network (LBAN), a San Jose, Calif.-based nonprofit, works closely with Stanford University to fund and manage Hispanic-focused entrepreneurship programs. With a focus on growing businesses through “entrepreneurship research, education, and networks,” LBAN simultaneously teaches entrepreneurs how to scale and mentors them on topics like wealth building. The organization is responsible for more than 600 graduates through the Stanford Latino Entrepreneurship Initiative Education-Scaling Program, who now employ more than 30,000 people through their businesses.
- The U.S. Hispanic Chamber of Commerce (USHCC), founded in 1979, serves as the umbrella organization for more than 200 local Hispanic chambers of commerce and Hispanic business organizations around the U.S. The USHCC works to develop national programs to help Hispanic businesses. It promotes trade between Hispanic businesses in the U.S. and Latin America. Moreover, it provides technical assistance and training to Hispanic entrepreneurs. Additionally, the organization hosts events and programming to help businesses stay connected and informed.
Local Chamber of Commerce
- Your local chamber of commerce is also a great resource. It provides access to valuable resources, discounts, and relationships that help businesses save money and market their products. Joining a chamber of commerce can boost sales and significantly improve a local business’ visibility and credibility.
The road to entrepreneurship is not easy. It comes with high rates of failure, unknowns, and financial instability, especially in today’s challenging times. However, with the right attitude, effort, support, resources, and tools, overcoming these challenges is possible. The rewards can be worth it. Are you interested in starting your own entrepreneurial journey? Learn more at IAmHerbalifeNutrition.com
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