4 small business ideas from Hispanic Heritage Month
If you weren’t careful this Hispanic Heritage Month, now is the time to take precautions. The latest research from the Stanford Latino Entrepreneurship Initiative shows that Hispanic homeowners are the “fastest growing segment of the small business ecosystem.” What are we all doing to ensure the continued success of these owners?
As a Latin American company, under the leadership of my co-founder, Carolyn Rodz, Hello Alice decided to dig into the data again and do a temperature check on the Hispanic business community. By comparing thousands of responses from Hispanic homeowners to results from the general population, this report helps us understand the triumphs and unique challenges facing this group at the heart of our economy. Here are four takeaways.
Hispanic small businesses are growing
First off, the good news: Hispanic businesses are growing! According to our data, 61% of Hispanic-owned businesses are in the scale-up phase in 2021, up 17% from last year. Hires have kept pace with 89% of Hispanic businesses planning to add employees this year, which is almost double the number 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 store where she sells art, stationery, greeting cards and other items – gifts that reflect and empower people of color. It turns out that she has tapped into a very neglected market segment, becoming an Etsy Star Seller and racking up over 600 sales so far. Our BGE partners recently recognized its growth with a $ 20,000 BGE Energizing Small Business grant, which Diaz plans to spend on hiring a web designer and scaling up its operations.
It’s a similar story for Alejandro Lopez at Toma, a company selling a bottled cocktail base that would make “the greatest Bloody Mary of all time” (I volunteer for any market research to verify this claim). Currently a one-man show, Lopez has immediate plans to expand his presence in ecommerce and hire additional help. “My dream is to create a team and a work environment that fosters creativity and innovation, diversity of thought and career opportunities for young professionals in my community,” said Lopez. Let’s drink to that!
Marketing and brand awareness are key areas
Understanding the emerging challenges facing small business owners is a key part of our investigative process. Among Hispanic entrepreneurs, 12% said their biggest challenge in Q3 2021 was marketing – an 80% quarter-over-quarter increase that stands out from other demographics.
You can see this concentration among brands like Chicago-based NuMercies. Founded by former model Ashley Gonzalez, the all-natural vegan skin care company is aggressively stepping up its marketing efforts for the holiday season. “I really want to advertise before Black Friday,” she said, adding that she would likely reach customers through digital advertising tools from Hulu and Google this season.
Still, Hispanic homeowners are less optimistic than their peers
The growth we measured did not always translate into optimism. In fact, 22% of Hispanic homeowners told us they predicted business in 2021 would be the same or worse than in 2020. That’s compared to 17% of homeowners in other demographic groups.
In many ways, we can interpret this as a continuing fallout from the pandemic. According to the Stanford Latino Entrepreneurship Initiative, 86% of Hispanic businesses report a “significant negative impact” as a result of the pandemic. This impact also varies by industry, as issues such as supply chain issues continue to wreak havoc across many industries. Hello Alice measured the lowest commercial optimism in sectors such as construction logistics and transport -; two regions that happen to have a higher than average concentration of Hispanic-owned businesses.
In response, I echo the leaders of 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 revive key industries, including construction, and improve the overall outlook for Hispanic-owned businesses.
Access to capital must remain our number one priority
Regardless of how you slice the data, small business owners across all demographics tell us that accessing capital is their number one challenge. Hispanic homeowners, like all entrepreneurs in the new majority, have a harder time accessing bank loans, business credit, and venture capital than their white counterparts.
I am continually amazed at what Hispanic entrepreneurs can accomplish despite this adversity. There’s Deb Rock, who overcame bottle shortages, wildfires, and droughts to release this year’s Sonoma Hot Sauce vintage. And there are people like Celeste Ponce of Ponce Architecture, an award-winning company that explicitly prioritizes people over profits by focusing on underserved communities in Houston.
Hearing these stories proves to me that Hispanic business owners have never lacked the innovation or work ethic needed to be successful – in many cases, they just need the money! As business leaders continue to plan for 2022, let’s put all of our minds together and find ways to get small businesses the money they deserve.