State of Latino Entrepreneurship 2019 — Part 1

State of Latino Entrepreneurship 2019 — Part 1

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You. On behalf. Of the board and team, of the Latino business Action Network el ban we, welcome you to the fourth annual state of Latino Entrepreneurship. Forum, yes. This. Event has now become a tradition, at Stanford. Graduate School of Business, through the Stanford Latino entrepreneurship, initiative, a collaboration. Between, El ban and the Stanford GSB, we. Are most grateful for, your attendance and support of our American, economic. Imperative, and we, thank the Stanford GSB ecosystem. And team, members for their outstanding contributions. To make, this day possible in. Addition. We, thank our El ban principle, partners Wells, Fargo. 21st. Century Fox Chavez. Family Foundation, John, Arriaga, pitch. Johnson, and all, of our sponsors and strategic, partners for, their enduring investment, in us. Thank. You. It, is now my high honor to introduce professor Jerry, I Portis professor. Emeritus of organizational. Behavior and advisor, of the Stanford Latino, entrepreneurship. Initiative, professor, Porter's. Thank. You mark I'd. Also like, to add my welcome to all, of you for being here I know that some of you had a tough. Time getting here because of the parking and and all. The construction that we at Stanford are doing here to make this an even greater University, so appreciate. You overcoming, all of those, barriers. To get here I'm really, happy to see so many of you here today as. Mark mentioned, the. Stanford Latino entrepreneurship, initiative, or slay as we call it is the, collaboration between Stanford, Business School and the Latino business Action Network which. We call El Bam and. It's, a nonprofit organization located. Here in the Silicon Valley the. Essence of the collaboration. Revolves. Around Stanford. Providing, the academic, resources, to. Carry out projects, that are proposed and funded by El Ben, this. Collaboration, is made it possible for Schley to produce research, offer, educational, programs and facilitate. The development of an ecosystem, supportive. Of the growth of u.s. latino-owned, businesses, we're. Very pleased to share the findings from our most recent research a national, survey of latino-owned, businesses in. The US but. Before we get into the research I'd. Like to tell you a bit more about slay. Which. Not only produces, the research described, here today but. Also engages, in other research and education. Related activities. When. One examines the demographic. Data, on Latinos, in this country it. Quickly becomes clear that, not only do Latinos, currently, represent, a significant. Portion of our economy. But. That they will be even more significant. In the future. Their. Current impact both as consumers, and business, owners is substantial. Today. Latinos, represents, 17% of the u.s. population, and over. Five million businesses, are owned by Latinos. Tomorrow. It will be even more significant. As a number, of Latinos grows to approximately one third of the US with. The commensurate, growth in the number of Latino owned firms. Very. Clearly not only are Latinos a significant, part of the mainstream of the US economy today. But, tomorrow their impact will be substantially, greater. Given. These demographics. We. Believe that effectively, promoting, the continued, economic growth and success of, Latinos, is a national, imperative and. I really want to stress the word imperative. Slave's. Research program is driven by this belief as well. As by the understanding that in this arena governmental. Policymakers, and business leaders, need hard, data in. Order to do their job well. Providing. Some of these needed data is the basis for our research agenda. So. In addition to the annual national. Surveys of Latino entrepreneurs its lay has conducted over the last four years. We've. Also, collaborated. With the Federal Reserve Bank of New York and inner eyes to create a white paper titled, Betina, own businesses, shining.

A Light on national, trends which, was published in this. Past November. Slay, also generated, another white paper earlier last year in collaboration with honorable more Alex titled. The u.s. Latino entrepreneurship. Gap a comparative. Measure of Latino entrepreneurship, activity, and. Finally. We. Coalesce, the group of academic, researchers, to, produce a book of readings on latina entrepreneurship, to be published early next year. All. Of these efforts have sought. To add more research-based facts, to our understanding, of the important, role latino-owned. Businesses play. In our economy. Anyone. Interested in reading these studies can, access them you through GSP website, or, the l-band website which is l-band us. Slay. Is also involved in a series of efforts focused on making a difference in the success and growth of latino-owned. Businesses, most. Important, of these is an, innovative hybrid six-week, executive. Development program, focused. On helping Latino, chief executives. Successfully. Scale their companies, by. Hybrid I mean, it's both in residents here at Stanford and online. Restricted. To companies with over 1 million in annual revenues, or if at the startup phase having. Raised 500,000. From professional, investors, this. Program targets, companies, they want to grow big. By. Big we mean over a hundred million five hundred million, and 1 billion in. Annual revenues. Today. Slay has offered this program six times to, cohorts of approximately, 75 businesses, each our. Current scaling program alumni, total over 430, the. Next program will be offered this coming May so. If anyone in the audience is, interested. In enrolling please. Log on to the l-band website at Alban dot us for access to an application we'd. Love to see you finally. Slay. Is developing a national network of individuals and, organizations, that make up a portion of the ecosystem. Latino. Entrepreneurs operate. In, derived. From both our research and educational, activities the.

Current Ecosystem, consists. Of over 100, business executives, who, have mentored participants, in our educational, program. 50. Capital providers, who, have listened to pitches, by our educational, program members focused on securing financing and, finally. Not. Finally but third organizations. Across the country that focus on helping Latino, businesses to succeed such, as the Hispanic Chamber of Commerce local. Business development agencies. And Athena, professional. Associations, and finally. The, 430. Alumni, of the. Program who. Are committed, to doing. Business with each other and getting, a business for each other, mantra. We promote. In the program and, we believe that the more Latinos do business with each other the more everybody will, benefit, so. Together these three major efforts, make, up the agenda for slay they're, interconnected and, synergistic. And it's. Our goal to substantially. Improve, the health of our US economy, by, strengthening the, economic well-being, of us, Latinos. So. Now I would like to introduce professor purses. Drell. Stanford. University, Provost, since. Her inauguration two, years ago she's, been a staunch supporter of our efforts and a, real champion, for diverse at the University we're, very honored to have her here with us today so please help me welcome her to our program professor drew. Thanks. To Jerry and and, it's, a pleasure for me to add an. Additional welcome. To, all of you here, to Stanford for this year's forum, at. The University, and the Graduate School of Business have really been proud to join with the Latino business Action Network to support the Stanford, Latino, entrepreneurship. Initiative, since its inception in, 2013. And in. A few minutes you'll be hearing presentations. On the finding, from sleighs fourth annual survey, of latino-owned. Businesses in, the US this. Is a really important, study as it examines. Activities, and the performance, of latino-owned, businesses and, measures, their impact, on the US economy, the. Report also brings. To light some of the challenges, and opportunities, Latino. Entrepreneurs, face in sustaining. And growing their, businesses, and I'm. Not going to steal any thunder from, our upcoming presenters, no spoilers, here but it is clear, from, the previous, studies, as Jerry has already mentioned that latino-owned. Businesses are. A significant. Force in the US economy and Latino. Entrepreneurs are. Playing. An increasingly. Important, role in the, overall economic. Success, of our country and that. Makes sense when. You consider that the Latino population is.

One Of this country's largest. Fastest-growing. Minority, groups, and. By. My data and are the experts, are in the audience, by. 2050. Latinos. Will be 1/3, roughly, of the population. Of the u.s. and will, have a huge, impact on all aspects. Of our, nation business, education health, government. And this, just presents enormous opportunities. For Latino business leaders but as. You're gonna hear, they. Latino. Businesses today face challenges, ranging. From common, small business, growing pains and financial, barriers to larger. Systemic issues such. As the need to strengthen the, business ecosystem. Research. Education. Mentorship, these are all really critical, components, of a. Vital, business, ecosystem and, we're pleased. To contribute, to this effort. Through, the Latino entrepreneurship. Initiative. Now. This, initiative. Is just one of many efforts at Stanford. Now to inspect. Stanford, supports, to ensure, a culture. Of diversity inclusion. Equity, and, access and, I want to talk about this for a few minutes. Advancing. These values, across, the university, in every. School in every. Program, in every, area of operation, is actually. A key, component of, Stanford's. Vision, for the future. Why. Is, this effort so important. At. Stanford. Our mission. Depends, on embracing, diversity, of, thought. Backgrounds. Approach. We. Know that in research, and education breakthroughs. In understanding, come. From considering, a broad range of ideas and, engaging, in rigorous testing, of them and, it. Is an imperative. For. All our, students, to, interact with a broad spectrum of interests. Identities. And perspectives, because. The. Future is diverse. All. Our, students, must be, able to embrace, that diversity in, order. To thrive. Now. I'm going to give you a personal, example of, what, can happen to an institution. When, diversity, of thought and approach. Is not, present, so. I'm, going to ask for a show of hands if you don't mind how many of you know what. SLAC National Accelerator, lab, is. Okay. So a fair number of you for those of you who don't it's a Department. Of Energy funded, National, Lab sort, of 350, million dollars, that. Is managed, by Stanford, and if you drive down to 80 between. The, page. Mill and the Sand Hill exits you're driving right over it. That, lab had a storied. History it, was the center, the universe for, the field of particle physics in night the 1970s. But. In the early 2000s. The frontiers, of the field had moved to Europe and the lab needed, to reinvent itself find, a new scientific mission, see, a future that was different from the past I'm. Sure you can think of a few businesses, that I have had this problem.

At. That time everyone. On the management team could. Only see the past and their, idea of success was. To. Go back to the 1970s, if we could just go back to the 1970s. Everything. Will be okay again now. That is not going to happen I came. In as the director of the lab in the middle of that crisis, and had. To replace the top two layers of management of, the lab to get it to face forward I brought. In a diversity of thought, diversity. Of backgrounds. And along, with it diversity, in gender ethnicity, approach. And training, and the. Lab today is doing great. But. It was essential. To. Bring in that diversity, of thought. Now. Equity. And access are, equally, important. Cornerstones. Of the university's, vision for the future I did. A stint, as the Dean of engineering, here and, at. That. Juncture. We. Asked, our mid-career, faculty to, tell us what the future should look like for, Stanford, School of Engineering and, they, came back and said the single most important. Cultural. Challenge. Facing Stanford, School of Engineering, was. Diversity. They, said it was the one area where, the Stanford, School of Engineering was. Content, to be nearly average. Ooh. That. Hurt. But. It was also true so. To, remedy that, we. Needed to ensure, that the school was welcoming, and inclusive, to. Students, of all backgrounds and, we, particularly. Focused, on increasing. Participation, of women and underrepresented minorities. In engineering, now. I have to tell you it was just an, to. Work with groups like, the Society, of Latino engineers Sol to. Help further our goals I learned. So, much from those students and, I. Observed. Something, and this. Is where I think you can help one, of the many places but. I observed, that our Latino, students, and women, students and black students, and Native students simply. Didn't have access to, the same robust, professional, networks. That, other student, populations, had and, so. It made success, just a little bit harder for them I. Spoke. Earlier about the need to strengthen, the Latino business ecosystem. Here's. An area where many of you here today could contribute to that and to help us and I'd, love to encourage you to, provide opportunities. Mentorships. And professional. Networks for. Our Latino students. Help. Them make the valuable, connections, that will be critical to, their future success and, ultimately. I believe will. Help the, Latino business landscape and will be critical to our success as a nation we. Do see this as a significant, challenge for our students, given. The importance, of networks, in the. Tech and business world in particular although, in the academic, worlds as well as. Stanford. Looks, to the future we, know diversity. Inclusion. Equity, and access are. Essential. To our success. To Stanford's, success. And one. Of the initiatives, in our long-range vision is called ideal which, stands for inclusion, diversity, equity and access, in a learning environment, it's. Not about counting numbers, and checking, boxes it's, about cultural. And institutional, change. It's. About ensuring that, all, members, of our campus community feel. They belong and are supported, regardless. Of their backgrounds, or affiliations. It's. About ensuring, diversity. Of thought experience. And approach is, represented. In all sectors of our education, and research, enterprise, it's. About equality, of access.

Within. Our community, to, the opportune. And the benefits, of Stanford, and it's. About transparency. On how well, we, are meeting our own expectations. For ourselves to. Ensure diversity in our community. Ultimately. It's. About ensuring, that Stanford. Continues. To be an outstanding, institution, that. Attracts, the, best students, and the best faculty now, and in, the decades to come I believe. The, future, will, be owned by the institutions. That get this right and I, want Stanford, to be one of those institutions. So. Let me just wrap. Up we, have many. Great efforts that reflect. The goals of ideals at Stanford, and that really includes, the important, work, of the Stanford Latino, entrepreneurship. Initiative, I applaud. The efforts, of all of those who are involved with this important, research and I, really look forward to I hope hearing a bit about this year's findings. Getting. Our arms around the data is essential. To understanding. The successes, the, challenges, and the opportunities for. The Latino businesses, and of, course there is the bigger storyline, here we, know that supporting, Latino Entre Nous ship entrepreneurship. Is critical, to the overall economic, growth. And success, of this, country thank. You very much. Thank. You Provost and thank you for your reinforcement. On the significance, of diversity. And inclusiveness, now. Ladies and gentlemen it is time it is time for the latest of the, state of Latino, entrepreneurship. Which. Will be presented in two parts the first by Paul or professor. Of economics, and advisor, of the Stanford Latino entrepreneurship, initiative, the, second research portion will be presented, by Marlene Auto School slay lead, research, analyst so now it is my honor to introduce this stage Professor Paul or. Thanks. Mark, thanks. To everybody for coming. Thanks, to all of you out there who are just. For showing an interest in what we're up to as well as the many of you who are supporting, us financially and otherwise we, really appreciate that thanks. Very much purses, for that introduction, and giving us the broader perspective of the university, overall and most. Of all thanks to Jerry for making Jerry Porras who's made all this possible over, the years and who I've, had the good pleasure of working with since. I stepped in as one. Of the faculty directors, along with Jerry of slay, so. I'm. Also one of the faculty directors, of the, GSB. Center for entrepreneurial, studies and I've spent a lot of time out. On the. Road interviewing, owners of small and growing businesses many of which are a lot like the employer firms, are gonna hear about on the research side and and slay, ed firms which we've seen and, I've.

Had Two of the best parts of being involved with slay over the last few years have been one, working with Marlene and Ileana, who've. Really devoted their so, much energy to pushing, the research, agenda forward, and then. The other part that's really great as the Slade program, when L ban and slavering, in the 60. Or so entrepreneurs, every few. Months working. With that group has been in. Craig. And, I'm. So happy that we have. Managed, in this year's report most. Of the pictures are of our actual alumni. Oh somebody. Changed my slide you, the guy, who. Was up here a minute ago is on the cover of the report this year is he here by any chance I was always curious if he was going to be here anyway, we have a lot of alumni. Here, and anyway. It's great to see their pictures in the report Marlene, is much closer the details than I am so I'm gonna leave that to her I just wanted to introduce some, of the themes and some of the big pictures of the. Research side of things so. I. Believe. This is figure one of this year's report and, it. Tells you the story of Latino, business in the last few decades on, the left and so. What do we see we. See that there's been tremendous growth, in the total number of latino-owned, businesses much. Faster. Than the, growth of of. Non-latino. Owned businesses, and that's for two reasons one is we have more and more Latinos, in the population, and we have more and more Latino. Entrepreneurs among those who are in the population, and it's just sort of capturing, partially. The fact that Latino. Population. Is growing as a whole as well, as as a share, of entrepreneurs. However. As you can see on the right these. Latino-owned, businesses remain, relatively. Small compared, to other businesses, so a slays work over the last few years has made very clear there's. Not really there's, a small but not very significant. Latino, entrepreneurship. Gap but, there is a large. Gap. On the scaling, side so. What is it that's that's keeping, these firms, from growing, now slay ed which Jerry was talking about is, one. Initiative based at addressing that and you know it's a small step in that direction and we think a very successful. One but as Marlene. Will make clear. There's, just so much to be done to help these businesses scale some. Of the more recent data and now I'm focusing, on firms that have employees, as well, as more recent years in this figure, which, also comes from this year report.

Tells, A similar story you. Can see from this table that we, have fast growth in Latino, firm population. Just, as there's been incredibly, fast growth in the, Latino population. But. Even in this very successful. Even, in this more success, for group that is firms, that have employees. We. Still see this big scaling, gap on the right side much, smaller the latino-owned firms are much smaller than the rest and, I, want. To now highlight, a different sub. Group where the scaling, issue is even sort, of more central, so, within the Latino owned business community, you find, a subgroup that's even that's growing, even faster. But. Having. Even more trouble, scaling, and that is female-owned Latino. Businesses, or female owned businesses, in general now by day I'm a labor economist. And, that. Means that my other. People, like me and and. Myself. We've, done a lot of research documenting. Tremendous. Labor, market, progress, for women here, in the United States in the last few. Decades and we see trends going forward that are likely to continue to favor progress, for women so I always say not. Just in the context, of Latino. Issues. But more broadly in the labor market I'm very bullish on women. In the American labor market, now, having said that sleigh. Has shown similar, trends. For Latinas, in terms, of their strides they're making an entrepreneurship, female. Run Hispanic, businesses. Have become a bigger share of this, broader Latino, entrepreneurship. Community however, as, this graph begins, to get at the, scaling, limits or even more binding, for women so. What, most of the Latino, latina, owned. Businesses. Are very, small outfits, and we've, had some really great success, stories within Schley IDI of bringing. In female. Entrepreneurs. Who've scaled. Their business to the next level and and you, know hopefully we can think of we can see ways to expand that network and to and to make that continue, to happen so, the product that I. Think, there's real opportunity, for progress there but. It. Would be nice to kick it into the next gear this. Is actually, from, the Gap report the entrepreneurial, gap report that Jerry made reference, to and that our no bo mer Alex. Drove. The process on behalf, of slave recently, and this, just gets it this idea about this. Difference, between it's. Not so much the Entrepreneurship, gap as the scaling, gap that I think. Is so important, so, what. This shows is that the gap between Latinos. And non-latinos. Is not at the business foundation. Level. Latina. Latino. Entrepreneurship. Is pretty. Much not quite but pretty close to the same rate of overall business development. As a share of population, the. Overall self-employment and business formation rates are about the same for Latinos and other groups but. It's taking, that next those next steps which. In this graph were showing in two ways one is hiring. People becoming an employer, owned firm, and then, another way we're showing it as becoming a scaled firm a firm with a million dollars of revenue or something like that that's. Where Latinos and others are diverging, and that's part. Of what's lei-ed, and part of what slays, research, agenda, is it's trying to figure out what is causing, that funnel, to hold up so many latino-owned, businesses. From. To keep them from getting over the hurdle to, becoming scaled. Businesses, that, difference in scaling, and making businesses more professional. And poised for growth, is what, we're really trying to study here so. I'll. Just leave it at that because I want to give Marlene plenty of time to go through much, more detail, of what she's been she and Ileana. Have been working on these. Are exciting, times for Latino, entrepreneurs and, I just want to reinforce I mean it's almost cliche but I want to reinforce the. Term Persis, used it really. Is a time of both opportunity. And challenges, for this population, right, the Latino. Entrepreneurship. World has made great strides and, there's great opportunities. Out there but these challenges, in terms of financing and scaling, and other things remain, in in there in out. There and so. Hopefully. Our research just gives some insight into thinking about how to get past that so, to give you more detail. On the state of the Latino entrepreneurship. Let, me introduce Marlena, Orozco, one, of the key drivers of the research side of Schley thank you very much. Good. Afternoon and thank you professor Palmer for providing those big picture trends, it's, a real pleasure to be here with you today to share key findings, of our 2018.

Slay Survey, of u.s. Latino business owners we. Began collecting data in the summer of 2018. Through, proprietary business panels, and with, the support of several organizations throughout, the country including the, Latino community, fund in Georgia the, Hispanic, Chamber of Commerce in Houston Camino. Financial, goal - 66, and several, others, we. Are indebted to this growing network. That supports the study of Latino business owners this. Year we're really excited, to, form an ongoing research. Panel with, Latino business owners of all sizes and industries across, the country which, will provide important, insights around, long-term, growth and rates. Of business failure, before. Sleighs efforts, much, of what we knew about Latino, business owners centered. Around some, big picture trends, for. Instance a few, years ago while the total number of businesses. In the US was on the decline the. Number, of Latino owned businesses grew by 46%. Today. Slay estimates, that there are around five million, Latino, owned businesses, in the u.s., we. Also know that Latinos, are starting businesses at a higher rate relative, to all other demographic, groups however. Most. Latino-owned. Businesses start. Small and stay, small with, only three percent of all Latino owned companies, generating. At least a million dollars in annual gross revenue, which, we define as skilled firms throughout the report. Since. 2015. We. Have been serving around 5,000. U.s. Latino business businesses. To dig deeper, into the challenges, facing this segment of the business owner population, but, also we highlight the opportunities, ahead in the. State of Latino entrepreneurship, report which we just released today we. Share insights, into a growth framework, that highlights characteristics. And strategies, prevalent. Among Latino owned firms that, have successfully, scaled grown. Their number of employees, and generated. Profits. The, corollaries, of success outlined, in the growth framework, may be interesting, for other latina firms seeking to grow and also, for those who wish to support. This growth we. Also examine, Latino entrepreneurs attitudes. And experiences, with. A accessing. Capital in addition. We supplement, these data with government, surveys on business owners and data, from entrepreneurs that, go through the Schley education, scaling program a few of whom you'll hear from later today. So. In what follows i'll start by presenting key, findings, based, on the analysis, of the 2018, national. Survey we'll, start by reviewing four key findings, first. We, collect a lot of data on both the business owner and business. Characteristics. This. Year we highlight several business strategies, and characteristics, that positively, correlate, to scaling Latino, businesses. This. Includes being, a certified minority. Or women owned enterprise which. We define as a business certification, being. Networked, which means you participate, in formal business organizations. Like chambers of commerce or trade associations, and exporting. Goods and services, among. Other strategies, we. Developed a growth framework, with these characteristics, which I'll detail in just a bit, secondly. We, have historically, collected detailed, data and the types of funding, that the you know business owners access, this. Year we follow Latino business owners through a funding pipeline, starting. With the reasons for not applying and among, those who did apply the. Amount they requested, what, they received, and their, self-identified. Reasons for loan denials. We. Find that among Latino business owners who apply for funding only. One in four gets fully funded compared, to half of white, business owners who apply.

Related. To their funding experience, we, also find, that Latinos, bear greater personal, financial risk related. To lower credit scores and the types of credit they are using personal, as opposed to business. Lastly. We, know that Dino's are not a homogenous, group and our, large sample, allows us to consider a variety of data cuts looking. At female owned firms compared, to men, immigrants. Versus u.s. native-born Latinos, as a few examples. This year we. Also consider, the, childhood class background, of Latino, entrepreneurs and find, that most skilled, business owners were raised and lower and lower middle, income households. I'll. Detail all of these key findings, in what, follows and we'll start by looking at the characteristics that positively, correlate to scale which, we position in the report as a growth framework. Now. The figure I'm about to show you contains, a lot of really useful information so, I'll share it with you piece by piece first. We, consider three measures of growth scale. Number. Of employees and profit. Skilled, firms again are those that are generating, over a million dollars in annual revenue, and we compared to we compare those two firms. That are not yet they're the unskilled, firms, employer. Firms are those with paid employees, compared, to non employer firms which have no employees and profitable. Businesses are those that generated a profit in the 12 months prior to taking the survey compared, to those who broke even or had losses which, we categorize, as unprofitable. We. Also consider business owners characteristics. Gender, and Nativity, as these, had the greatest within-group differences. Then. We, consider what business, strategies, broadly, are most positively. Correlated, with, these measures and business. Owner characteristics. The. Business strategies that we consider are the following, whether, the business is formally registered which.

Will Be indicated in purple on the graph whether the business owner is networked, or connected, to these formal business organizations, in orange whether. The. The business operates in purchased, real-estate compared, to renting or working from home which will be noted in blue whether. The business exports, products, or services, internationally. Marked in green, whether. The business sells are developed software which we define as being a tech company which, will be noted in darker blue and. Lastly whether, the business operates, as a franchisor, has franchisees. Which will be noted in yellow and we, bring, order these strategies starting, with the highest percentages, of each, business strategy, found among, Latino, businesses. Among skilled Latino businesses so. When we take these strategies and see their averages, across the different growth measures, and these, groups. This is what we find very. Clearly we, see that all these measures are most strongly correlated, to scaled, businesses, as all, of these positive business strategies, are being pooled in the scaled direction, which is the lower left-hand quadrant, you. Can determine the percentages, for each of these business strategies, with, the location, of each point on the Rings starting, with zero percent in the middle each, subsequent, ring represents. A 10 percentage point increase for. Example close, to 90 percent which is the final outer ring of all, skilled businesses, are registered. Compared, to only 67%. Of unskilled, businesses, I should. Also note here, that immigrant, owned businesses, are, more likely to be registered, compared. To businesses owned by us native-born. Latinos, this. Is likely because it adds an added layer. Of protection and, can come with some potential benefits you. Can also see that for networked, firms which, are noted in orange there's a huge gap between scaled. And unskilled, firms a 45. Percentage, point difference being. Networked, or connected, to formal business organizations. Is important. For scale and success, as these, can provide access to information and business opportunities. Which, really speaks directly to what, Provost Darrell, was talking about in terms of professional, organizations. There's. Much to learn from the figure so we'll hope you spend some time digesting, the information in the report a, particular. Note I want to call out to business strategies, for growth business. Certification and, exporting. Here. You can see that business certification. The. Distribution, across scaled firms compared, to all Latino firms. 58%. Of all skilled, firms have, some type of business certification whether. They're a minority-owned. Women-owned. 8a, government, certified, veteran-owned. Or some combination, of these being. A certified business strategy, is billion. A certified business is a prominent, strategy, in the growth framework, as it provides access to contracts, at the government and corporate level which are simply not available if you're not certified. Exporting. Is another growth strategy, as businesses. That export not, only grow faster, but, are also nearly 8.5%. Less likely to go out of business the, non exporting, businesses according, to the Department of Commerce among. Those in our survey, 14%. Of all, Latino owned companies export, products, and services, while, scaled, Latino. Companies export, at about 30 percent. Latino. Export businesses are more likely to be profitable, immigrant. Owned scaled.

And Tech, companies and you can see here from this figure that the top two export, markets include, Mexico, with 18 percent of Latino, owned exports, going, to Mexico and 13 percent of them going to Canada in total. Our survey respondents export, to over 25 countries including a mix of Latin American, and European countries, so. We now have a better sense of the strategies, that are positively, correlated to growth but. This framework would be incomplete if we didn't also discuss, the barriers to growth we. Find that the factors that negatively, impact profitability, and growth include, access, to capital the, cost of that capital labor, taxes. Government. Regulations, slow business late, paying clients, market, unpredictability, and changes, in technology, we. Focus heavily on access, to capital to, better understand, the financing, experiences, of Latino entrepreneurs our, next. Key finding. First. We. Note that the majority of Latino business owners or, 60%, of them did, not apply for financing, in the 12 months prior to taking the survey, this. Percentage, however is comparable. To other small businesses, including, those of white white. White, business owners. So. Latinos, and white business owners are applying for. Loans at pretty. Comparable rates. However. In a, recent report we collaborated, on with the Federal Reserve Bank of New York and inter eyes we found that among the Latino business owners that do apply for funding one, quarter, gets fully funded, compared, to half of white business owners who apply in other. Words Latino, business owners are denied more, often than white business owners. Furthermore. The majority of Latino business owners apply for less than, $100,000. Even. Among the most successful, Latino. Owned business, is for. Example you can see in this figure. 22%. Of skilled firms applied, for $100,000. Or less which, are the gray and orange buckets combined and, 36%.

Of Companies apply tech companies applied for that amount. So. Even though Latino business owners are mostly, applying, for relatively, small amounts, they're. Still not getting all of their funding approved as shown in this figure here take. Scaled firms for instance which is the second bar on the screen while. Half of Latino, scaled forms receive the funding they apply for again. Relatively, small amounts over, one-quarter, receives some or none of the funding they requested. Now. It's hard to say for sure with these data all of the reasons why their funding was not fully approved we. Do ask the entrepreneurs, why, they think they weren't approved and the. Reasons vary across the type of business for. Scaled firms they, say it's because they didn't have sufficient collateral and for, unskilled, firms they say it's because they have low credit and some. Numbers simply don't know why they were not approved while. This may all be true and valid reasons overall we. See that Latino business owners are taking on personal, responsibility without. Much accountability, ascribed, to lenders in fact. Very, few say, their denials, were due to unfair, lending practices. We're. Just beginning to uncover potential biases, but, need additional data from the lenders perspective, certainly. From, interviews with Latino entrepreneurs we hear some of these stories and you'll get to hear about some of their funding experiences, in the next part of the program. We. Now move on to our next key, finding which relates to how Latinos go, about securing, capital just. As a personal credit score provides, information, to lenders when, an individual, seeks a mortgage or other personal, loan business, scores, indicate, the credit risk of a business however. Other, research has found that 72%, of, all small business owners do not know their, business credit score and 60%. Don't, know how to find it so this is a pervasive problem this. Leads to low rates of use even, though owners who understand, their business credit score are 41. Percent more likely to be approved for a loan. Our. Study, found that one-third of Latino owned skilled, firms and, 16%. Of employer firms use their business scores to access capital noted, in light blue in this figure this. Means that, many firms with proven track records continue, to rely on the owner's. Personal credit scores when seeking funding for the business, for. Latino business owners with good personal credit in our survey they're more likely to have higher business revenues, and also, use a wider variety of funding however. In interviews, with Latino business owners we, do see that even, with good personal, credit some, are still asked to put down extensive. Personal collateral. Rather, than business assets, which, exposes, them to greater personal, risk this, is certainly another area, a funding area for future study. Moving. On to our last key finding we, highlight an under studied personal, characteristic, of successful Latino. Business owners, social. Mobility and entrepreneurship, has become an important, topic of study and business. Success may be linked to personal, success in, our. Survey we, find that a plurality of Latino, business owners who, have scaled their company they, report having been raised and lowered to lower middle income households, this. Suggests that, childhood, class. Background, need, not be an insurmountable barrier, to building a successful business, in fact. 44%. Of skilled, firms report.

Coming From low income and lower middle income backgrounds. Which, are subjective, measures as interpreted, by the entrepreneur, but, telling them the less. Furthermore. We, see that nearly an equal amount of scaled, and unskilled, Latino businesses, report. Coming, from upper middle and upper, income households. So wealth in this case does, not predict predict, successful, entrepreneurship. So. To conclude here's, a look at a few summary statistics, related, to our key findings, this, year, the, Schley survey of u.s. Latino business owners provides. A framework on the factors related, to growth we. Also dug deep into the funding experiences. Of Latino, business owners to, uncover the multi-layered, barriers, along, the funding pipeline, from. Reasons, for not applying there. Is some day version that we didn't cover but, you can find a read more about in the report to. The amounts of funding received when funding was sought in, future. Longitudinal, surveys with our growing research panel, we, will be able to capture experiences. Over, time with. Individual, businesses, this. Research direction, will provide valuable insights, in the years to come so we encourage all our theno business owners to be part of our panel and spread the word we. Also encourage you all to read our 2018. State of Latino entrepreneurship. Report to learn more about these findings and many, more that we were unable to cover today and as, Paul was mentioning earlier, this is a slay at alum tony aguilar who's on the cover of this year's report thank. You. You.

2019-02-16 00:52

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