This is a guest post by Sarah Alvarez, senior program associate at the Aspen Institute Latinos and Society Program.
In the United States, Latino-Americans start businesses at three times the rate of the general population.
That means they play an important role in driving US economic vibrancy — through their outsized contribution to new business creation. However, Latino-owned businesses (LOBs) fail to scale in size and revenue at the same rate of other businesses, presenting an opportunity gap of $1.38 trillion for the US economy.
In order to address the untapped potential of LOBs and its cascading effect on the wider economy through unrealized economic growth, the Aspen Institute Latinos and Society Program released the report Unleashing Latino-owned Business Potential.
The findings, recommendations and solutions in the report come from the Aspen Institute Forum on Latino Business Growth, a convening of 27 cross-sector leaders and stakeholders. The report identifies key challenges and solutions to scaling Latino-owned business (LOBs), specifically those with the potential of reaching $1 million or more in revenue, a group of businesses that is often overlooked.
Focusing on fundamental business needs as well as overarching recommendations for improving the ecosystems within which LOBs operate, the report offers collective knowledge and solutions in order to help stakeholders, influencers and decision-makers take informed actions to help accelerate the pace at which LOBs grow, scale and, ultimately, succeed.
The report launched on November 30th with an event moderated by Monica Lozano, Chairman of the Aspen Institute Latinos and Society Program. Lozano and speakers Hector Barreto, Chairman of the Latino Coalition, Alejandra Y. Castillo, CEO of YWCA USA, Gary Cunningham, President and CEO of Meda (Metropolitan Economic Development Association), and Jean Horstman, CEO of Interise who discussed the cost and access barriers to obtaining the resources and opportunities necessary for scaling.
Each speaker shared valuable insights on a range of issues affecting the growth of LOBs including the costliness of business intelligence services; access to responsible and low-cost capital; and the availability of industry and business-stage-specific capacity building. The interplay between these issues was a striking source of opportunity for developing policies and practices that simultaneously tackle multiple dimensions of these issues and truly enhance the viability and growth trajectory of LOBs.
“If you think about these challenges in silos,” says Horstman, of Interise, “you get movement, but if you think about them like cantilevers, levered off of each other you get geometric movement.” For stakeholders to operationalize this approach, speakers echoed report findings that encourage a deeper more nuanced understanding, among elected officials and others about the needs and growth opportunities for LOBs in their jurisdiction.
Speakers encouraged looking at the supports available through city, state and federal government that can make the ecosystem within which LOBs operate more favorable. For example, increasing the loan limits of Community Development Financial Institutions (CDFIs), supporting intermediary organizations focused on capacity building and network development, and modifying existing subsidy programs so that they can be used more effectively in the small business sector.
In addition to the tactical steps stakeholders can take to support scaling of LOBs, the speakers emphasized the importance of LOBs to the US economy including the current and future benefits of a Latino-owned business sector that grows at rates comparable to other groups and in doing so is able to creates jobs and generate economic activity in cities across the country. Hector Barreto said, “the stakes are high. This is not only critical to the Latino community but also to the future of this country.”
To learn more about why scaling LOBs is so critical to the American economy and the most promising solutions for spurring growth, read the new report, Unleashing Latino-owned Business Potential.
About the Author: Sarah Alvarez is the Senior Program Associate at the Aspen Institute Latinos and Society Program.