Hispanic-Owned Businesses Likely to Transform Economic, Political Landscape: Study
Hispanic-owned businesses will likely transform the economic and political landscape of the U.S., proven by the fact Hispanic-owned businesses have grown at a rate 15 times the national average sustained for at least the last 10-15 years.
Geoscape, a leading provider of business intelligence technology, data and analytics, released a study Monday, Sept. 21, which projected that there will be over 4.07 million Hispanic-owned businesses this year. That figure is 23 percent higher than the figure predicted in the last official Census, translating to an additional 750,000 firms. Geoscape partnered with the U.S. Hispanic Chamber of Commerce to uncover information about Hispanic business growth, learning that the Hispanic business growth rate is 15 times the national average.
Effectively, this growth has led to an increase in both businesses and total sales receipts. The report pinpoints areas of Hispanic businesses ownership, entrepreneurship and wealth, as well as its impact. Alongside a projected increase in Hispanic owned business, combined annual revenue is also expected to exceed $661 billion this year. That's $144 billion more than Hispanic businesses accumulated in 2012.
The growth of Hispanic firms can be seen across the nation and witnessed in the West North Central Census region (Minnesota, Iowa, Missouri, Nebraska, North Dakota and South Dakota), which is a fast-growing region for Hispanic businesses. Increases can be attributed to a number of factors, including the migration of Hispanics to that region for its social conditions, jobs, customer base, low cost of living relative to other regions, and its industrial composition.
Although the West North Central Census region may see rapid growth, the Pacific Census region (California, Oregon, Washington and Alaska) is home to the highest number of Hispanic-owned businesses.
Across the region, it's projected there are more than 1.05 million Hispanic owned throughout the region, which is an increase of 22 percent since 2012. Over the past three years, Hispanic businesses have grown more than 20 percent. Also, it's an astounding 57 percent increase since 2007. The report proclaims, "The dynamic growth of Hispanic-owned businesses will likely transform the economic and political landscape in the United States in the years ahead."
"This year's findings solidify what we've been saying for a long time -- that Hispanic businesses are the future of our nation's entrepreneurial activity," said Javier Palomarez, president & CEO of the U.S. Hispanic Chamber of Commerce, according to a press release.
"The remarkable gains our Hispanic business community has made in the past year are both inspiring and encouraging - our members are proud to be the future builders of the American economy."
According to Cesar M. Melgoza, CEO and founder of Geoscape, the data shows that this is the single largest jump in business growth the research firm has witnessed. The development of business proves that Hispanic businesses "are not just part of the future, they're also a huge component of our present economy. Our leaders need to understand their importance in driving the American economy, and they will only grow in importance in the future."
The surge of Hispanic-owned businesses is partially fueled by small business owners who primarily work in the service and trade industries. For the last decade, Hispanic-owned firms have outpaced all U.S. firms. Baby boomers are retiring at a faster rate than multicultural populations, which decreases the share of firms owned by non-Latino whites, who tend to be older.
While all races and ethnic groups experienced an increase in new entrepreneurship between 2003 and 2014, Latinos share of new entrepreneurs was more substantial. Growth continued despite the recession, and Hispanic continued to experience a higher rate of self-employment, compared to other populations. Because of the limited job opportunities during the recession, this seemed to spur Hispanics to launch their own businesses. Hispanic business owners are 1.5 times more likely to earn $150,000 per year income than Hispanics overall, and they're 46 percent more likely to earn between $25,000 and $49,000. Approximately 30 percent of Hispanic Households that identify themselves as small business owners earn more than $100,000 per year, compared to 23 percent of overall U.S. households.
Additional findings revealed in the report include: Close to 60 percent of Hispanic business owners are bilingual and bicultural, and they tend to be comfortable in both English and Spanish and they identify with both cultures; approximately 40 percent of Hispanic business owners are Americanizado (or "Americanized"); and 20 percent consider themselves Hispano, identifying more with their parents' cultural background.
Despite the presence and success of Hispanic businesses, entrepreneurs struggle to get their businesses off of the ground as they deal with cash management and financial planning.
Subscribe to Latin Post!
Sign up for our free newsletter for the Latest coverage!