Latino entrepreneurs have room to grow in Houston

Zulema Escobedo didn’t want to be an entrepreneur, she recently explained. At 24, she was happily working in banking with aspirations of becoming a branch manager next. But the desire for more freedom spurred her to consider alternative avenues that could give her the flexibility to occasionally attend her young daughter’s school during the day or focus on community work – a passion for the Escobedo family.

The first step: Escobedo has completed an apprenticeship as an insurance salesman. Over the next 23 years, she expanded her entrepreneurial presence into retail, real estate and healthcare, and continued her community work, including serving as President of Port Arthur’s Mexican Heritage Society.

“It was scary because I was making very good money at the bank,” Escobedo said, reflecting on that trip. “It was very scary starting at the bottom. It was a lot of work. But it was worth it.”

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According to the Kauffman Indicators of Entrepreneurship, a project by the nonprofit Ewing Marion Kauffman Foundation that tracks entrepreneurial trends in the United States, Latinos have the highest rate of new entrepreneurs among ethnic groups, which is 50 percent higher than the rate among all Americans.

The Houston area, on the other hand, has a particularly high concentration of Latino-owned companies, Stanford University researchers found.

The study found 11,354 such Latino-owned businesses in the metro area compared to 68,651 white-owned businesses. own operations. In comparison, the Dallas area had 11 Latino-owned businesses for every 100 white-owned businesses.

With this in mind, Stanford’s study found that Latino-owned businesses in Houston and across the country are less likely than white-owned businesses to be profitable and more likely to have outstanding debt. The researchers looked at companies that had at least one employee in addition to the owner and had annual sales of $10,000.

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“In general, when we think about the challenges Latino-owned companies face, we see a problem with access to capital,” said Dr. Barbara Gomez-Aguinaga, associate director of the Stanford Latino Entrepreneurship Initiative, which conducted the study. “Our 2020 research showed that Latinos were less likely to receive credit, despite sharing similar credit characteristics to their white partners.”

Access to cash has been a critical issue for many Latin American business owners during the pandemic, she said, and as a result, Latin American business owners are more likely than white business owners to turn to personal savings, credit cards, and home equity loans. Overall, two-thirds of Latino-owned businesses in the Houston metro area reported negative impacts from the pandemic — including supply chain disruptions and increased costs and reduced revenue — compared to 60 percent of white-owned businesses.

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The Stanford Latino Entrepreneurship Initiative — a partnership between Stanford University and the Latino Business Action Network — sees such research as a key component of change. Data on Latino ownership has been sparse, obscuring the challenges such business owners face as well as their opportunities, Gomez-Aguinaga said.

Business owners eventually create jobs, and Latino-owned companies create jobs at a healthy pace. The number of jobs created by Latino-owned businesses in the United States rose from 1.9 million in 2007 to 2.9 million in 2019, a 53.6 percent increase compared to 9.8 percent percent in white-owned businesses over the same period.

“Opportunity is for everyone,” Gomez-Aguinaga said. “As we continue to support Latinos and close the gaps that exist between Latinos and white business owners, we have an opportunity, not just for Latino business owners, but for the entire metro area as a whole.”

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