According to a Stanford Graduate School of Business Study conducted in 2019 Hispanic-owned businesses employ more than 3 million people and contribute nearly $500 billion in annual sales to the U.S. economy.
If you’re considering joining the ranks of thousands of Hispanic business owners, there are a few factors you should consider.
Starting a business is a decision that should be made only after careful consideration and discussion amongst family members. I encourage my clients to create a list of the “pros” and “cons” of self-employment. Every individual must contemplate their own risk/reward scenario. Does the independence and satisfaction that comes with owning your business outweigh the financial risks? Are you prepared to devote the effort and time commitment often required to ensure a new small business succeeds? If you’re unsure about either of these questions you might want to reconsider. Being an entrepreneur has a lot of ups and downs and the only way to get through those periods is to have a passion for the work and the support of those around you.
Establish Good Credit
Having a solid credit history is critical to obtaining the necessary resources to launch a new business. Sounds fiscal habits like paying your bills on time and living within your means will, over time, enhance your ability to secure access to capital from financial institutions. A high credit score will provide you with the opportunity to secure loans at competitive interest rates and attractive repayment terms. For those that can afford it, purchasing a home while maintaining regular timely payments, will improve your creditworthiness while also generating the collateral routinely required for business loan approval.
Find your Niche
Whether you open a business in a unique industry or a saturated market i.e., restaurant, body shop, landscaping, etc., it is important to differentiate yourself from the competition. Many new entrepreneurs mistakenly think that price alone is the biggest factor in customer acquisition. While the price is important, being the lowest price in town can jeopardize the sustainability of a business as rising employee wages, supply costs, and other inflationary factors put pressure on profits. I recently met with a family from Ecuador who was thinking of going into the house cleaning business. After studying the local market they found a void in the “eco-friendly” cleaning services field. The competition in this premium category was not nearly as fierce, allowing them to set above-average prices while realizing higher margins.
Tap An Expert
Before spending the time and effort in crafting a detailed business plan, aspiring entrepreneurs often benefit from a review of their ideas by business experts. Organizations such as Score, Women Venture, and Latino Economic Development Centers, among others, offer free mentoring on business start-ups. I recommend that my clients bring a business idea overview document, sometimes referred to as the “sumario ejecutivo”, or executive summary, a section of a business plan, to a subject matter expert for review. These mentors are generally highly experienced individuals who can detect both flaws, as well as additional opportunities in an aspiring entrepreneur’s business model. For more tips on business and start-ups read Carlos Golan’s blog on Shopify.