Everyone should take note that in correlation with National Hispanic Heritage Month, the National Women’s Business Council (NWBC) released a new report detailing the barriers to success faced by many Hispanic women entrepreneurs, and offering a roadmap of solutions to help unlock their full economic potential. Hispanic Women Entrepreneurship: Understanding Diversity Among Hispanic Women Entrepreneurs was prepared for NWBC by Susana Martinez-Restrepo, PhD, of CoreWoman and Geri Stengel of Ventureneer.
The report revealed that while Hispanic women entrepreneurs have grown at a faster rate than any other group – 137 percent between 2007 and 2016 – their full economic potential is unrealized. The research highlighted that the 1.9 million Hispanic women-owned firms in the United States make a significant contribution to the economy, employing 550,400 workers and generating $97 billion in revenues. However, if Hispanic women-owned businesses generated employment and revenues proportionate to other women entrepreneurs, these figures would be increased by 80,000 and $155 billion, respectively.
Hispanic people are the most diverse major ethnic group in the U.S., and the fastest growing. By 2012, the U.S. population was 309.1 million people. Non-Hispanic Whites represented 63.7 percent (196.9 million), Hispanics 16.3 percent (50.5 million), and non-Hispanic Blacks 12.2 percent (37.7 million) of that total. An estimated 50.5 percent of Hispanics were men and 49.4 percent were women. The number of Hispanics living in the U.S. is on track to increase from 14.7 million in 1980 to 88.1 million in 2045.
The NWBC report identified the reasons that Hispanic women entrepreneurs may face challenges, and identified opportunities for them to succeed. First, the high unemployment rate among Hispanic women (6.3 percent compared to 4.3 percent among non-Hispanic white women) may be the reason Hispanic women’s businesses are growing in number, but not by revenue or number of employees. Secondly, Hispanic women face more barriers in starting and growing businesses using their own money, and are also less likely to be able to collateralize business loans, all of which limits their growth capacity. Training improves performance and can help close the gap in skills, mindset and access to capital. This may be particularly relevant for foreign-born Hispanic women who are more likely to lack the advanced education, financial literacy, language skills and information necessary to fully navigate the entrepreneurial system.
The NWBC report concluded that targeting the untapped potential of Hispanic women entrepreneurs can accelerate U.S. economic growth, and the key to unleashing their potential is tailoring programs to their diverse needs. The NWBC offers four recommendations to help do this:
Increase funding provided by the federal government to Small Business Administration Women’s Business Centers. These centers provide business and financial training to low-income Hispanic women entrepreneurs, especially women who do not speak English.
Increase dedicated resources to marketing and raising awareness of entrepreneurial training programs and funding. Many Hispanic women are not aware that these programs exist and that specific institutions provide affordable financing.
Expand and make permanent the New Market Tax Credit. Lack of access to financing for people with low credit scores and/or lack financial literacy can impede the growth potential of Hispanic women-owned businesses. To close this financing gap, the federal government can increase corporate, foundation and individual funding by enlarging and making permanent the New Market Tax Credit program that encourages investment in Community Development Financial Institutions (CDFI).
Use federal pension funds to catalyze change by investing a portion of such funds with emerging manager programs. One reason venture capitalists so rarely fund women-owned businesses (only five percent of venture dollars are invested in companies with women chief executive officers) is that so few women are investment decision makers. Investment firms with minority and women decision makers are more likely to invest in companies with women at the helm.