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Latino-owned businesses hold the key the U.S.'s future prosperity. Photo: Getty Images.
Latino-owned businesses hold the key the U.S.'s future prosperity. Photo: Getty Images.

Latino entrepreneurship will rebuild and reshape the U.S. economy

The 2020 State of Latino Entrepreneurship report shows that Latino-owned Businesses are crucial to the economic recovery.

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Besides being the fastest-growing segment of the U.S small business ecosystem, Latino-Owned Businesses (LBOs) has proven to be resilient too. 

Despite having less chances to receive fundings from national banks, the number of Latino-owned employer businesses (those with at least one paid employee other than the owner) has grown by 14% between 2012 to 2017—over twice the U.S. average of 6%. 

Additionally, the number of employer LOBs grew across 44 out of 50 U.S. states, and grew at a faster rate than the national industry average across 13 of the 15 industry sectors. Some of those industries are Construction, Finance and Insurance, Transportation and Warehousing, and Real Estate.

These are some of the key findings of the sixth annual 2020 State of Latino Entrepreneurship report, which was officially released during the 2021 State of Latino Entrepreneurship Forum. 

The report is made by The Stanford Latino Entrepreneurship Initiative (SLEI) at Stanford Graduate School of Business (GSB), in collaboration with the Latino Business Action Network (LBAN).

“Supporting Latino businesses is critical to the overall economic growth and success of this country, and critical to our economic recovery from this pandemic”, said Persis Drell, Stanford University’s Provost, during the virtual launching.   

In fact, LOBs were moving in a positive direction before the pandemic. The roughly 400,000 LOBs generated nearly $500 billion in annual revenue and employed 3.4 million people. 

According to the report, although Latino-owned firms are less likely to generate a profit relative to White-Owned Businesses, three-quarters of LOBs also operated profitably or broke even over the past year, despite the challenges of the early months of the COVID-19 pandemic. 

“Amid the chaos and crisis, there is much we can learn on how to rebuild and reshape the American economy from the experiences of Latino businesses owners”, said  Marlene Orozco, SLEI’s Lead Research Analyst.

One crucial strategie to learn from Latino businesses owners is the importance of being connected to organizational or personal networks. 

Latinos are more connected to organizational networks than White business owners: 42% compared to 34%. This is related to higher revenue growth and positive funding outcomes. 

LOBs that leverage organizational networks are more than twice as likely to experience funding success than those that did not engage in any networking activities (63% versus 28%).

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