It’s Time We Support The Entrepreneur
It’s Friday morning, and I am dreading the news cycles that I will be fighting today. The senate impeachment trial may come to an end. The UK is formally leaving the EU. The coronavirus continues to spread, as well as the news about it.
But from where I sit, the story of the day is Stanford University’s fifth annual “State of Latino Entrepreneurship” (SOLE) a collaboration between the Stanford GSB Center for Entrepreneurial Studies and the Latino Business Action Network. Why: it’s a sober, fact-based Latino State of the Union that comes two business days before what most pundits believe is the largely theatrical U.S. State of the Union (for decades, both sides of the aisle have been guilty as charged). [To download the study, go here].
Correlating responses to a survey of 5,000 Latino business owners (LOBs) with U.S. census data, the study again exposes a large economic opportunity gap for that would benefit all U.S. citizens — an additional $410 billion for the economy and $1 million jobs.
I react to these numbers with mixed feelings.
There’s cause for celebration. Over the past ten years, the creation of Latino-owned businesses outpaced all businesses by a factor of 34:1. And the average revenue growth rate for these businesses was 14 percent, “outpacing the growth of the U.S. economy.” Where Latino-owned businesses are making strides: sectors that matter to the overall economy and job creation: manufacturing; construction; trade, transportation, and utilities; leisure and hospitality; education and health services; other services (e.g. personal care services, maintenance and repair services).
But there’s also cause for frustration. For five years straight, SOLE has dutifully and meticulously reported that despite the impressive numbers, Latino businesses have struggled to scale, which SOLE defines in part as growing above the $1million annual revenue mark. Latino business owners — perhaps as a result of cultural and language gaps, if not bias, I am guessing — struggle harder than others to get financing and earn liquidity, critical to growing an enterprise. This year’s study shed light on another challenge: Compared to Latino wage workers, Latino business owners generally enjoy higher “personal financial well-being” (home ownership, income). But many do not have health insurance. The study reports: “Only 63% of Latino business owners have health insurance, the lowest rate of coverage of any demographic group, business owners or wage workers. This leaves a significant portion of Latino entrepreneurs, and their families, at risk of a potentially debilitating financial outcome in the event of a healthcare crisis.”
The oxygen mask
Why does this matter? Think of the admonition to parents and caretakers before a plane takes off: in case of emergency, grab the oxygen mask first to that you can help others. Likewise, in case of emergency in the U.S. economy, give Latino business owners the opportunity to grab the oxygen mask so that they better help grow the GDP and overall job creation, for Latinos and non-Latinos alike.
Since its inception, LBAN has made big progress in attracting support from corporations such as Wells Fargo, Fox (even Rupert Murdock sees the opportunity gap), Bank of America, and an ever-growing roster of new sponsors, from Apple to Costco. And LBAN has created a successful program — the Stanford Latino Entrepreneurship Initiative — to educate business owners on scaling their companies with classes and mentorship by Stanford Business School faculty.
This is all good, and LBAN is making an impact. But I feel something is missing, beyond the scope of LBAN. I hope that today’s event — at the Stanford’s august CEMEX Auditorium, which coincidentally was named after the global Mexico-based building materials company — will trigger more support from the public sector. The time is right, and it’s not just about economic uncertainties that loom. It’s about economic opportunity during a presidential election year where conversations about the future viability of our republic are sure to dominate.
A request to civic leaders: read SOLE with heart and soul.