Hispanic women entrepreneurs generate $97 billion in revenue, but have the potential to grow significantly with access to more resources
Washington, DC – 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 Entrepreneurswas prepared for NWBC by Susana Martinez-Restrepo, PhD, CoreWoman and Geri Stengel, 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[i] – 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.[ii]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.[iii]
“This Hispanic Heritage Month, I would like to take a moment to highlight the immense impact that Hispanic Americans, and in particular, Hispanic women, have had on helping our nation’s economy to grow and prosper,” said Chairman Steve Chabot who leads the House Small Business Committee. “With nearly two million thriving Hispanic women-owned firms accounting for billions of dollars in revenue each year it is clear that these companies are making a difference in their communities and in our nation. I applaud the dedication of our Hispanic American business owners not only this week or this month, but every day.”
“Women have made significant strides in our economy, but there’s much more work to do to level the playing field,” said Senator Jeanne Shaheen of the Senate Committee on Small Business and Entrepreneurship. “This is especially true for women of color. I commend the National Women’s Business Council for commissioning this report to examine the ways we can encourage and support Hispanic women-owned businesses. We must continue the fight to ensure all women in business have equal access to credit, capital, counseling and contracts.”
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[iv] 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.[v] An estimated 50.5 percent of Hispanics were men and 49.4 percent were women.[vi] 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.[vii]
“Our research brings together a wide array of data that has never been collected in one place and provides concrete examples of policy and practices that can be customized to target the varied needs of these business owners. In our report we have also illuminated the diversity of Hispanic women entrepreneurs, not only with respect to ethnicity, but also with respect to the origins of their businesses, in order to better understand how to leverage their tremendous economic potential,” said Carla Harris, chair, National Women’s Business Council.
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[viii]) 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 [ix]. Investment firms with minority and women decision makers are more likely to invest in companies with women at the helm[x].
The full report can be found on the NWBC website here.
[i] “The 2016 State of Women-Owned Businesses Report,” American Express OPEN and Womenable, 2016, accessed February 11, 2017, http://www.womenable.com/content/userfiles/2016_State_of_Women-Owned_Businesses_Executive_Report.pdf.
[ii] These estimates are based on projections. The last official number from the Survey of Business Owners and Self-Employed Persons (SBO) estimates 1.5 million Hispanic women entrepreneurs. The projections and the methodology used to derive them are available in “The 2016 State of Women-Owned Businesses Report,” American Express OPEN and Womenable, 2016, accessed February 11, 2017, http://www.womenable.com/content/userfiles/2016_State_of_Women-Owned_Businesses_Executive_Report.pdf.
[iii] Revenues: This was calculated as follows: Average revenues of non-Hispanic women-owned firms x Number of Hispanic women-owned Firms = Revenues that Hispanic women firms would have if they reached average revenues of non-Hispanic women-owned firms. Revenues that Hispanic women-owned firms would have – Revenues that Hispanic women-owned firms already have = Additional revenues.
Jobs: This was calculated as follows: Average employment of non-Hispanic women-owned firms x Number of Hispanic women-owned firms = Number of employees that Hispanic women-owned firms would employ if they reached average employment of non-Hispanic women-owned firms. Number of employees that Hispanic women-owned firms would employ – Number of employees that Hispanic women-owned firms already employ = Additional employment.
[iv] Because of the large number of studies and databases used or cited in this study, there is no consistency between the use of the ethnic categories “White” and “non-Hispanic White.” The report relies on the category definitions used by each individual study.
[v] “ACS Demographic and Housing Estimates, 2011-2015 American Community Survey 5-year Estimates,” US. Census Bureau, accessed June 5, 2017, https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_15_5YR_DP05&prodType=table.
[vi] “Nativity and Citizenship Status by Sex and Hispanic Origin Type: 2012,” U.S. Census Bureau Current Population Survey, Annual Social and Economic Supplement, 2012, accessed June 5, 2017, https://www2.census.gov/programs-surveys/demo/tables/hispanic-origin/201….
[vii] “Projected U.S. Population by Race and Hispanic Origin, 2015-2016, with and without Immigrants Entering 2015-2065,” Pew Research Center, September 24, 2015, accessed May 30, 2017.
[viii] Robert W. Fairlie, Arnobio Morelix, E.J. Reedy and Joshua Russell, “The Kauffman Index – Start up Activity, National Trends,” Ewing Marion Kauffman Foundation, 2015.
[ix] Candida G. Brush, Patricia G. Greene, Lakshmi Balachandra and Amy E. Davis, “Diana Report Women Entrepreneurs 2014: Bridging the Gender Gap in Venture Capital,” September 2014, Arthur M. Blank Center for Entrepreneurship Babson College, accessed August 7, 2017 http://www.babson.edu/Academics/centers/blank-center/global-research/dia….