Hispanics are transforming the U.S. economy—as consumers and small business owners.
Consider the demographics: By 2050, Hispanics are projected to account for about one-third of the U.S. population.
“Hispanics are the fastest-growing minority, surpassing 50 million and accounting for more than half of the 27-million population increase in the past decade,” says Diana C. Bolivar, president of the Hispanic Chamber of Commerce of Metro Orlando, which was the U.S. Hispanic Chamber of Commerce “Chamber of the Year” in 2012.
Hispanics are fast emerging as a lucrative niche for marketers: U.S. Hispanics boast a purchasing power of more than $1.2 trillion—larger than that of all but 13 countries in the world, according to a May report released by the Selig Center for Economic Growth at the University of Georgia.
Hispanics don’t just represent a hot consumer market. They’re also becoming an integral part of the small business community, bringing with them a resilient entrepreneurial spirit that’s propelling their operations forward. Between 2002 and 2007 (the most recent U.S. Census data available), the number of Hispanic-owned businesses in the United States jumped 44 percent, compared to a 15 percent increase among non-Hispanics. Hispanic-owned enterprises represent the fastest-growing segment among U.S. small business launches, projected to reach about 3.2 million in 2013, according to the U.S. Hispanic Chamber of Commerce.
We spoke with Hispanic small business owners about their unique strengths—ones that all owners can learn from.
Tap Into a Hot Market
Despite the massive purchasing power of Hispanics, many small businesses haven’t yet figured out how to tap into the niche. “Even with these numbers, many non-Hispanic companies are ignoring the Hispanic market and are not reaching this segment of the population,” Bolivar says.
Contrast that with many Hispanic business owners who have staked their claim in the market by forming strong connections with their customers and vendors, both Hispanic and non-Hispanic.
“Rather than transactions, Hispanic owners wish to establish long-lasting relationships,” says Augusto Sanabria, president and CEO of the Hispanic Business Initiative Fund of Florida, which provides business development assistance to Hispanic entrepreneurs. “They take time to get to know customers and providers at a personal level, often socializing beyond business networking. Hispanic business owners typically invest a lot of time cultivating relationships before changing vendors or forming new agreements.”
Bolivar says non-Hispanic business owners can successfully target Latinos by adopting the same strategy. “Establish a connection, and find something in common with your Hispanic customer on a personal level,” Bolivar says. “Once you make a personal connection, then you can talk business.”
Building knowledge about Hispanic consumers can also help forge those ties, says Jose Villa, an NFIB member and owner of Sensis, an advertising agency with offices in Los Angeles and Washington, D.C.
“Learn a little about the U.S. Hispanic market—the size of the population, where they live, what countries they come from,” he advises. “Watch Univision or Telemundo for 20 minutes once a month. Pay particular attention to the commercials. It will give you a sense of the market. Think about whether your business has a Hispanic customer base. If it does, try to figure out why, and leverage that to grow your Hispanic customer base. If not, try to understand why, and look at competitors who are doing a better job.”
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Quick Take: Stand Up for Your Community
Active community involvement is one reason Hispanic business owners excel at building close connections with customers and business and community leaders.
Fifty-four percent of Hispanics say they own a business to give back to the community, compared with 21 percent of all U.S. business owners, according to a 2011 MassMutual Financial Group study on Hispanic business owners.
NFIB member Linda Valdez, owner of LValdez & Associates, a marketing and management consulting firm in San Antonio, prioritizes “giving back” and volunteers through several organizations, including The Alternative Board, a CEO peer board and coaching organization for small business owners. She is also a member of the NFIB Leadership Council in Texas.
“I was very active on the state level and benefited tremendously by serving in leadership roles,” she says. “It has been instrumental in building relationships from various sources, especially legislative members who are working for the betterment of small business. It also gave my firm a place at the table to work on the success of small business in America.”
To get involved with NFIB in your state, visit www.NFIB.com/advocacy.
Put Family First
Familia plays a big role in Hispanic culture, so naturally it plays a big role in Hispanic-run businesses, says NFIB member Manuel Cosme Jr., chair of NFIB’s Leadership Council in California and co-founder of Professional Small Business Services Inc. in Vacaville, Calif.
For many Hispanics, family is at the core of their decision to launch a business. Nearly 90 percent say they own a business to provide financially for their families, compared with 77 percent of all U.S. business owners, according to a 2011 MassMutual Financial Group study. And 55 percent of Hispanics say they own a business to have something tangible to pass on to their children, compared with 35 percent of all U.S. business owners.
“When we open up a business, we not only tend to hire family members, but our employees become extended family members,” says Cosme, whose company provides income tax, payroll, bookkeeping and business consulting services. “When I turned 60, our whole staff came to my surprise birthday party. We’ve attended our staff ’s weddings, birthdays, graduation ceremonies and celebrations. We’ve attended other family functions of several of our clients, and their employees were present there, too.”
Family businesses of any background can nurture this type of camaraderie, which may add a competitive edge when it comes to business longevity. Owners of such companies tend to think generationally, often trusting and training young family members to eventually take over. In a 2012 study of family businesses by Ernst & Young, more than half of the respondents singled out “a long-term management perspective” as the single most important factor to the success of their business.
Even if children don’t take over a business, the exposure to it may inspire family members to become future entrepreneurs. As a child, Villa watched his father flourish through self-employment in the real estate and insurance industries.
“I spent my afternoons and summers with him at his office,” he says. “He worked hard, but I saw him reap the rewards of his labors. I also saw the satisfaction he gained from his work and growing his business.”
His father’s success motivated Villa to launch his first business while in grade school.
“My first small business was building homemade ‘finger boards’ [miniature skateboards] when I was in sixth grade,” Villa says. “They were all the rage in the late 1980s, and I started making them myself and selling them at school.”
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Maggie Maceiras credits a do-whatever-it-takes mentality for the success of her Miami-based candle company, Soy Delicious. Maceiras and business partner Georgette Hoyo worked as teachers before taking a leap of faith to launch their own business in 2006.
“From the very beginning, we’ve worn many hats,” Maceiras says. “We’ve done everything on our own through blood, sweat and tears. We know what it’s like to stay up until 3 a.m. catching up on emails.”
Maceiras and Hoyo bootstrapped their entire venture with cash, taking no outside investment or bank loans. It wasn’t until 2012 that they hired any support staff.
“Our mantra has been, ‘Go big or go home,’” Maceiras says. “So around 2009, I told Georgette that we couldn’t continue to [sell our products at] little shows and school bazaars because it took weekends and evenings away from our families. In 2010 we spent about $60,000 [marketing our products at] the Latin Grammys, trade shows and more.”
The go-big strategy paid off: They now have a large account in Mexico City and sell Soy Delicious products to hotels and boutiques across the United States. Maceiras attributes her “just-go-for-it” attitude to her upbringing.
“Hispanics are brought up to never give up,” Maceiras says. “Entrepreneurship requires that same fearlessness. My business partner and I were teachers with no business background. We didn’t know anything about making candles. Sometimes we’re even surprised how we’ve gotten this far, but we had great role models in our parents. I always tell Georgette, ‘Look what these two little Cuban girls from Miami have accomplished.’”