Hispanic small business owners across the country are significantly more optimistic about revenue goals and hiring plans in 2017 than their non-Hispanic counterparts, according to a new study by Bank of America to be released Wednesday.
Tuesday, Bank of America released highlights of its national Hispanic Small Business Owner Spotlight at a luncheon event at Bulla, a Spanish restaurant in Coral Gables, attended by 56 small business owners and community leaders.
The study of 1,000 small business owners found that 71 percent of Hispanic entrepreneurs — the fastest-growing segment of the small business sector — expect their revenues to increase in 2017. That’s 20 percentage points higher than that of non-Hispanic respondents (51 percent). Also, more than half of Hispanic entrepreneurs surveyed plan to hire more employees over the next 12 months, compared to one-quarter of non-Hispanic small business owners. And over the next five years, 76 percent predict business growth, compared with 55 percent of non-Hispanic small business owners, the study found.
The luncheon program included a panel moderated by Jose Mas, CEO of MasTec, that featured Liliam Lopez, president of the South Florida Hispanic Chamber of Commerce; Elizabeth Romero, an executive with the bank’s small business division; and Miami small business owner Miguel Collado of General Post-Tensioning and Engineering Services.
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“Small business is Miami. Small business is what has put Miami on the map, in my opinion,” said Mas, who shared how his father started the family business from nothing. In its very early years, a small business loan was a turning point for MasTec, now a public company with 22,000 employees that generates about $4.5 billion in annual revenues. “When I think about Miami, that’s what we are about. It’s the immigrant community that came here early on ... and changed it from a sleepy town to an international city that it is today.”
For both the early Cuban immigrants and today’s multicultural residents, it’s the immigrant mentality that explains why Hispanic-owned businesses grow at 1.5 times the rate of their non-Hispanic counterparts, the panelists said. “There is a drive that an immigrant brings based on necessity and a desire to win,” Mas said.
Chief challenges for Miami’s Hispanic businesses include navigating government regulations and finding enough qualified workers, Lopez said.
Nationally, according to the study, 23 percent of Hispanic business owners cite maintaining a work-life balance as their top challenge, followed by finding qualified candidates (19 percent), access to loan funding (17 percent), understanding regulations and policies (17 percent) and managing the day-to-day of their business (11 percent). As a group, they are also highly concerned about healthcare costs, the strength of the U.S. dollar and tax rates.
Another national finding: Sixty-eight percent of Hispanic small business owners have applied for a loan during the lifetime of their business, compared with 48 percent of their non-Hispanic counterparts.
Of those who have applied for a loan, 86 percent of Hispanic entrepreneurs were approved, similar to the approval rate reported by non-Hispanic small business owners (85 percent) — a finding that runs counter to popular misconception. In the survey, 51 percent of Hispanic small businesses said they believed there is a lending gap.
“Sometimes perception is not the reality,” Romero said. “In 2017, Hispanics will be applying for loans four times more than non-Hispanics.”
Another key finding: Family ties run deep. Sixty-six percent of Hispanic entrepreneurs have received financial gifts or loans from family and/or friends to help fund their businesses — 29 percentage points higher than their non-Hispanic counterparts.
When it comes to other forms of family support, 55 percent say their family plays an influential role in their business decisions, versus 39 percent of non-Hispanic entrepreneurs, and 63 percent say their family helps to run their business, versus 54 percent of non-Hispanic counterparts. In addition, Hispanic small business owners are more than twice as likely to say they will pass their business on to a family member (42 percent vs. 18 percent of non-Hispanic small business owners).
The study, conducted by GfK Public Affairs, was based on interviews between Aug. 7 and Oct. 4, 2016, of 1,000 small business owners with annual revenue between $100,000 and $5 million, plus interviews with 348 Hispanic small business owners.