STANFORD, California. September 2, 2023 (Business Wire/SLEI) — The Stanford Latino Entrepreneurship Initiative (SLEI) at Stanford Graduate School of Business (GSB), in collaboration with the Latino Business Action Network (LBAN), released the annual State of Latino Entrepreneurship (SOLE) research report, highlighting the latest trends in Latino entrepreneurship in the U.S. According to the report, U.S. Latinos continue to strengthen the American economy by creating employer businesses at a faster rate than white-owned businesses and have outpaced the revenue and job creation rates of white-owned businesses and American businesses at large.
“The 8th annual SOLE report highlights the remarkable achievements of Latino entrepreneurs whose success is reflected in the rapid growth of new businesses, creation of jobs, and their ability to adapt business practices in the aftermath of the pandemic,” said Barbara Gomez-Aguinaga, PhD, associate director, SLEI. “Spotlighting the disparities between Latino and white business owners in accessing capital and government and corporate contracts provides the starting point to address these issues that prevent Latino business owners from reaching their full potential.” The annual report is based on a national survey of more than 10,000 business owners – approximately 5,000 Latino-owned employer businesses and 5,000 non-Latino, white-owned employer businesses, which served as a benchmark comparison group.
“Our research offers critical insights into the impressive gains made by Latino entrepreneurs while also revealing the impact of systemic barriers facing many Latino business owners,” said Paul Oyer, senior associate dean for academic affairs at Stanford GSB and SLEI Faculty Director. “The findings are a valuable tool to inform data-driven policy and programs to support Latino entrepreneurs who continue to have an extraordinary impact on the U.S. economy.” The U.S. is currently home to more than 62.5 million Latinos, representing 19% of the U.S. population. With an economic output of $2.8 trillion, there are approximately 5 million Latino-owned businesses across the U.S., generating more than $800 billion in annual revenue.
THE NEW YORK CITY METRO AREA
The Stanford Latino Entrepreneurship Initiative have compiled some of the most pressing insights about Latino-owned employer businesses in the New York City metropolitan area. With more than 28,000 Latino-owned businesses (LOBs) in the region, the New York City metro area is home to almost 10% of all LOBs in the United States. Similarly, White-owned businesses (WOBs) in the New York City metro area represent 11% of all WOBs in the country.
Although LOBs generate lower revenue than their WOB counterparts, LOBs have outpaced the revenue growth rates of WOBs in the New York City metropolitan area. LOBs generate less revenue from government and corporate contracts than WOBs in the New York City metropolitan area.
LOBs outpaced the revenue growth rates of WOBs in the New York City metro area. In the past three years, the median compound annual growth rate (CAGR) for LOBs was 5%, compared to 2% for WOBs. The median revenue of LOBs in the area was $150,000, compared to $325,000 among WOBs in 2022.
LOBs report having less available cash to cover business operations than WOBs in the New York City metropolitan area. More than half of LOBs in the New York City metro area have assets to cover less than one month of their business operations, compared to 28% among WOBs.
Business Recovery From COVID-19
While almost half of WOBs in the New York City metropolitan area report being fully recovered from the pandemic, more than 6 in every 10 LOBs have partially recovered (58%) or have not recovered at all (11%) from the pandemic. Additionally, 9% of WOBs in the area reported not having been impacted by the COVID-19 pandemic, compared to only 4% among LOBs.
Supply Chain Issues
LOBs in the New York City metropolitan area have experienced more supply chain issues than their WOB counterparts. While 42% of WOBs in the area did not experience problems, 40% of LOBs faced significant or extreme supply chain disruptions.
Government And Corporate Contracts
LOBs based in the New York City metropolitan area are less likely to secure contracts from state and federal governments than WOBs. Furthermore, LOBs in the area obtain substantially smaller contracts from corporations, as well as local, state, and federal governments, that took longer to secure.
Among all employer businesses that secured government contracts in 2022, LOBs experienced the longest negotiating periods, with 51% of them taking more than twelve months, compared to only 5% among WOBs. A similar trend occurs among corporate contracts.
ABOUT STANFORD LATINO ENTREPRENEURSHIP INITIATIVE RESEARCH PROGRAM
SLEI operates a research program that explores and expands knowledge of the Latino entrepreneurial segment of the U.S. economy through research, knowledge dissemination, and facilitated collaboration. The program, jointly supported by LBAN and Stanford GSB’s Center for Entrepreneurial Studies, conducts an annual national survey to assess the current state of U.S. Latino entrepreneurship and is curating a significant panel of Latino entrepreneurs to enable longitudinal research to understand trends over time.