The 2012 U.S. Census revealed that Hispanic-owned small businesses are growing at nearly twice the rate of the national average with annual revenues at $350B (though many industry insiders believe this is a conservative estimate with the true figure being well-north of $600B). The U.S. Minority Business Development Agency reports that between 2002 and 2007, Hispanic owned businesses grew faster than the national average of 44 percent in 28 states. Clearly, the impact of the Hispanic population and the entrepreneurial spirit we bring with us is influencing the emergence of Hispanic-owned small businesses. – and with this rapid growth the need for Hispanic specific resources and support to help enable revenue generation and profitability is at an all-time high.
In a recent Fox Latino interview, Hector Barreto, the former Administrator of the U.S. Small Business Administration under George W. Bush, said that there are many intangible factors inhibiting Hispanic small business growth. According to Mr. Barreto, Latino business owners are filled with uncertainty and lack confidence in the U.S. government.
I respect Mr. Barreto’s candor in identifying the challenges that both Hispanic (and non-Hispanic) small business owners are faced with in our current economic environment. However, for Hispanics in particular, the obstacles run much deeper and this is where the Presidential candidates and politicians across America are all missing the mark. Hispanics, perhaps more than any other community, are rich in diversity and self-identify with their culture. As such, they require tools, resources, government and educational programs that are culturally-relevant so that they can grow their business in ways they can identify with most naturally. This factor alone explains why Hispanic consumers (let alone Hispanic small business owners) represent the largest unbanked community in America.
Can you imagine the incremental impact of Hispanic-owned business revenue generation to the U.S. economy?
Many Hispanic-owned business owners are faced with the inability to consistently create and sustain relationships with Fortune 500 corporations. Revenue generating and job creation opportunities are not being seized fast enough. Hispanic business leaders are not at the forefront of supplier diversity programs at a time when corporations are looking to expand their business partnership outreach with the community.
To overcome this challenge, Hispanic-owned businesses must lead and operate with a strategic versus a tactical approach. There are many opportunities here, but for the purposes of this article, I can recommend two fundamental areas: leadership and operational excellence. Learning how to apply both of these factors within a small business is the difference between success and failure and both can be attained through one variable: executive education. Business owners must invest to educate themselves on how to be better leaders and, at the same time, better business operators. As a small business owner, you can’t do one without the other; this has been an unwritten rule amongst those who lead supplier diversity programs (which are quickly becoming the standard).
According to Luis Cuneo, Hispanic Segment and Channel Market Development Executive at IBM, “One of the most common questions I am asked by Chamber Executives is: ‘How can we help small businesses grow?’ ”
His reply: “Teach small business owners to run their company as an executive and the company will start to thrive. For the past seven years, I have been engaging with hundreds of small businesses across the U.S., and I have noticed the following leadership barriers that inhibit these companies from growing:
- The leadership style is Transactional.
- Unable to delegate and empower their team.
- Haven’t identified their successor.
- Haven’t created an exit strategy for both the owner and the company.”
In August 2012, a survey of Texas Hispanic-owned Businesses with Paid Employees was sponsored by The University of Texas at Austin, McCombs School of Business, and the Kauffman Foundation. Results from the survey suggest that Hispanic-owned businesses with paid employees need strategies that help them in two primary areas:
• increase business training in management and communication skills
• improve access to public- and private-sector customers
According to the survey, the following two critical findings revealed why Hispanic-owned businesses are performing behind mainstream businesses:
• Hispanics’ lower levels of assets and education, lower percentage of parents with business experience, and smaller networks than Caucasian business owners.
• Ineffective oral and written communication with customers, employees, and suppliers as well as limited access to procurement opportunities.
Think of the opportunities for job creation, economic growth and innovation if the majority of Hispanic-owned businesses increased their business training in management and communication skills – while improving their access to public- and private-sector customers?
Finally, Hispanic-owned small businesses must forge greater levels of relations with the banking and financial management community. One of the Small Business Administration’s top priorities is to provide access and opportunity to small business owners in traditionally underserved communities.
However, small business owners must minimize the risk profile for a potential SBA lender by showing them that their business is being managed and led with leadership and operational protocols that can be trusted. In today’s risk adverse climate, small businesses must operate with the same strategic due diligence and leadership principals as a mid-size / larger corporation.
Hispanic-owned small businesses can no longer be led through a tactical lens where the owners operate like an old-fashioned “mom and pop” shop. Leaders must become executives, and learn to trust their employees to assume the responsibilities that the owners used to be accountable for when the business was new. If small businesses are to steadily grow and mature, owners must begin leading and focus on developing the talent around them. When this happens productivity multiples, a workplace culture begins to take shape and a “real business” begins to blossom with operational guidelines, organizational structure and leadership that is being strategic versus tactical in its thinking, planning and execution.
In the end, Hispanic-owned businesses must focus on building infrastructure and systems to support growth and business scalability. This requires strategic thinking enabled by leadership and operational excellence that continuously matures to foster best practices and relationships so that you can see and seize the opportunities that matter most.
Hispanics in America influence the future of the US economy yet this conversation remains quiet as corporations grow more uncomfortable with this time-sensitive issue. The numbers speak for themselves. The lack of commitment in giving rise to the Hispanic community is so obvious that it is becoming irresponsible as the risk profile increases. Corporations know that Hispanics represent the fastest growing population (+$50MM) and workforce community in America. They are also aware that Hispanic-owned small businesses are growing at over twice the rate of the national average (est. +$350B revenue annually). On top of that, Latino purchasing power ($1.5T by 2015) is no mystery as there is growing tension in the boardroom with indecision about how to unlock this market segment. Regardless of the escalating “Latino factor” – corporations are not being proactive enough to engage with this valuable demographic that will represent 30% of America by 2050. As such, the US economy is weakening due to the lack of investment in the Hispanic Community that will soon dictate new business models and the ground rules for Wall Street analysts.
The following is intended to bring awareness to some of the tension points corporations can’t shake and that carry tremendous economic and societal implications if not solved immediately. The goal is to highlight a few trends that identify the opportunities that are being missed if US Hispanics continue to be viewed as a recurring expense rather than a strategic investment.
I. Hispanics Must Make Banking & Financial Planning a Priority
More than half of Hispanics expect to improve their financial situation over the next year, while little over a third of all Americans can say the same. Yet, when it comes to financial planning, or even every day banking and insurance needs, Hispanics are still in the minority.
For banks and other financial institutions, they must begin to recognize that conventional banking as we know it may not be part of the traditional Hispanic upbringing. This has led to a general mistrust of banks and, when coupled with a natural skepticism, would account for the $53 billion attributed to "unbanked" Latino households according to a study by a research arm of the University of Virginia's Darden School of Business (download report: PERDIDO EN LA TRADUCCIÓN: The Opportunity in Financial Services for Latinos). Read More About This Topic Here
II. Hispanics Lead the Recovery by Occupying Walmart, not Wall Street
Hispanic growth is fueling an increase in buying power in this country that is yet to be seen in other economies. According to Nielsen’s recent study, The Hispanic Market Imperative – it revealed that if US Hispanics were a standalone country, their market buying power would be one of the top twenty economies in the world.
Given this knowledge, it's surprising that so few retailers have put much effort into learning about the Hispanic consumer and how to serve their needs. One very prominent exception is Walmart, which has been attracting increasing numbers of Hispanics to their stores by integrating them into all facets of its business, including merchandising, marketing, operations, and community outreach programs. One campaign called "The Best Heritage is a Good Education" addressed the need for higher learning while acknowledging the importance of culture - displaying a genuine understanding of what's important to the Hispanic community. Read More About This Topic Here
III. Media and Entertainment Through the Hispanic Lens Brings a Paradigm Shift
In the world of media and entertainment, we are finally starting to see a positive shift in the portrayal of Hispanics. Cultural stereotypes are giving way to cultural authenticity. The attention usually given to Spanish-speaking Hispanics is turning to the English-speaking majority born in the United States. New Generation Latinos (NGLs) are making waves and changing the conversation. Not only are NGLs influencing traditional media, they are making Hispanics the biggest and fastest growing users of online and interactive technology, mobile devices, and social media.
Hispanics represent a huge opportunity for the news media, entertainment programmers, advertisers, online content creators - you name it. But captivating this trendsetting and game changing audience will take a different approach, one the industry is just waking up to. Unlike previous generations, largely here through immigration, NGLs are not looking to quietly assimilate. They expect mainstream media and entertainment to embrace and reflect their authentic voice and culture. Read More About This Topic Here
Note: On May 7th, ABC News announced its plans to join forces with Univision News to create a multiplatform news, lifestyle and information programming aimed at U.S. Hispanics.
IV. Hispanics Buy Brands that Empower Their Cultural Relevancy
There is a growing necessity for brand marketers to provide culturally relevant content and messaging that specifically targets US Hispanics. In fact, Hispanics are the largest immigrant group to exhibit significant sustainability of their culture and are not disappearing into the American melting pot. Now that we have confirmed that cultural sustainability matters to US Hispanics, companies must become more educated about the Latino community not just as consumers – but more importantly, as people and the identity we represent as a diverse community. They must recognize that Hispanics buy brands that empower their cultural relevancy.
Hispanics in America are growing tired of being the target of new marketing campaigns by brands that are not creating cultural connectivity. In fact, Latinos are more likely to turn away from brands that are only interested in selling to them, rather than empowering their cultural relevancy. Hispanics are more inclined to build trustworthy relationships with people and companies that take the time to understand who we are and what we represent morally, ethically and culturally. Read More About This Topic Here
The United States economy is at risk if corporations ignore the impact of Hispanics in America. If not addressed immediately, severe economic and societal recovery woes will prevail. The rest of America must mature from being uncomfortable about a topic that has direct implications to their financial well-being and the future of their children. The US economy demands that we all become more educated about Hispanics as they will soon represent the core of our country. We must stop being in denial.
According to a recent Nielsen's report, The State of the Hispanic Consumer: The Hispanic Market Imperative,Latinobuying power will have grown 50%between 2010 and 2015, reaching an incredible $1.5 trillion. To put this in perspective, the report notes that if U.S. Hispanics were a standalone country, their market buying power would be one of the top twenty economies in the world.
No wonder that more than half of Hispanics expect to improve their financial situation over the next year, while little over a third of all Americans can say the same. Yet though Hispanics represent 52 million consumers in this country and the majority of population growth,when it comes to financial planning, or even every day banking and insurance needs, we as a group are still in the minority. It doesn’t help that the median age of Latinos is 28 years old – an age when most people are still looking at 30 as the distant future.
In their pursuit of the American Dream, Hispanics are failing to protect it.Yes, we may feel confident that we will improve our financial situation over the next year.But what about the following year?And the year after that?Are we doing all we can to preserve our surging buying power?Are we protecting ourselves and our families, investing for the future and planning for retirement?
Chris Mendoza is the Assistant VP of Multicultural Marketing at Mass Mutual, where they havebeen conducting an ongoing set of national research studies on Hispanic families and business owners.
According to their research, even with an improving financial situation, 33% of Hispanics named finances as their #1 stress.As Mr. Mendoza told me:“The main concerns are not dissimilar to everyone else, especially after the financial collapse.They came here for the American Dream and a better life, but it’s disappearing.So what can they do to protect themselves?”
Though their concerns may be the same, the Hispanic experience with banks and insurance is not.There are unique tension points with this market, and education is the key – on both sides – to establishing relationships that matter.To put it in simplest terms, Hispanics need to improve their financial literacy, while financial institutions must become culturally literate.
For banks and other financial firms, that means understanding that conventional banking as we know it may not be part of the traditional Hispanic upbringing.This has led to a general mistrust of banks and, when coupled with a natural skepticism, would account for the $53 billion attributed to “unbanked” Latino households (according to a research arm of the University of Virginia’s Darden School of Business).
Among the solutions: don’t assume all customers have experience managing their money with a bank and provide financial education accordingly, fully explaining the risks and rewards; build trust and credibility by offering culturally-relevant and language-appropriate products and services – and back it up with bilingual/bicultural staff; ensure that your mobile banking services acknowledge and support the growing numbers of Hispanics connecting to the web via mobile devices; and establishbranch office locations to better serve Hispanic communities.
Along with the latter, it’s also important to show genuine concern for the community – for example, by active involvement in Hispanic issues and sponsorship of local events. And don’t overlook other opportunities, such as reaching out to Hispanic business owners, or Hispanic High Net Worth Individuals (HHNWI), only one-third of whom have a financial plan or plan for retirement.
There are similar tension points related to insurance, making Hispanics the group most underserved by the industry.Because insurance is not mandatory or necessarily needed in most Latin American countries, its important role in U.S. society is not widely understood or accepted.It may even be perceived as a waste of money; the “live for today” mentality of the culture translates into “you can live without insurance” and contradicts the value in planning for life’s unpredictable events.With their unique backgrounds and motivations, Hispanics cannot be lumped with the mainstream on this issue and must be addressed on their own terms.
The solutions here are not unlike those for other financial institutions: understanding Hispanic insurance buying patterns, or lack thereof,and tailoring messages and marketing efforts around Hispanic cultural beliefs and care for the community; providing culturally-specific education that clearly explains insurance terminology, how it works and why it’s important to the U.S. Hispanic community; developing websites and online tools, as well as products and services,specifically designed for Hispanic small business owners and individuals; and addressing the plight of the uninsured with a comprehensive approach to helping Hispanics acquire and maintain insurance coverage through a caring partner relationship.
Whatever the industry, all of this can be achieved with the appropriate training and certification that focuses on effectively leveraging Latinos in the workplace and communicating and marketing brands in an authentic way that resonates with Hispanic consumers.
As Chris Mendoza of Mass Mutual explained it: “Skepticism can be allayed by a professional who understands the Hispanic market and challenges of the Latino community.They want strong relationships that are like extensions of family,someone who understands what’s keeping them up at night and will take care of thoseneeds. Education, a savvy agent, and a strong brand can help close the financial gap and protect their American Dream.”
The research at Mass Mutual revealed a key lesson: One size does not fit all.What works in one part of the country may not work in another. Do you have an individualized approach to reach the Hispanic community on a market-to-market basis? Do you have a cultural marketing strategy that includes local marketing, education and recruiting field work?Do you have relevant financial products and services for Hispanic consumers with distribution in place to reach these markets?
Learn more at www.CenterforHispanicLeadership.com or follow us on Twitter @HispanicTalent
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My father, Frank Llopis, who was a victim of Castro’s Cuba, always told me that he never had any regrets in life. (He turned 96 years old last Friday!) He said he’d been given opportunities that allowed him to live a more complete life – a life full of joy and contentment. But he also said that if he hadn’t taken action when faced with adversity, he would have been an incomplete person.
Think of how many opportunities we miss because we didn’t tap into our passion when faced with adversity. What about the opportunities that others missed?
As a leader, do you ever step back and ask yourself about the consequences of your passion, or lack thereof? Are you only thinking of yourself, or are you thinking
about your team, your organization and the people who depend on you?
Passion is becoming a luxury because you must take some risks to live passionately.
How many times have you been in a meeting and had someone tell you, “That’s a great idea, you should do something with that?” And then what happens? Most of the time, nothing. A great leader’s passion is infectious, and if given the opportunity it can inspire action. Passion is only a luxury when not managed responsibly. Be mindful of how you put your passion into action.
Without strategy, change is merely substitution, not evolution.
As leaders, we all recognize that we need strategies for change. Unfortunately, most leaders just don’t trust themselves enough to define their strategy, since this makes them accountable for their own vision. I have noticed that most leaders want to be accountable more for what others want them to be than for what they seek to be themselves.
Your passion must define your strategy for change. In fact, your passion must always fuel your intentions. Think about what excites you most. Are you living this every day in your work as a leader? Don’t hold anything back, and like my father, you won’t end up with regrets.
Think about the people you associate yourself with. Are they supporting and fueling your passion? Do you fuel theirs? Is it a one-sided relationship? This is why most leaders feel stuck in the workplace. They give too much of themselves to people who don’t reciprocate. Passion means you care and you open your heart to take action and make a difference for those around you. If your leadership passion doesn’t impact others, your influence will be short-lived.
Once, early on in my career, a boss told me that I was too passionate. He said, “Tone it down a bit, Glenn.” When I shared this with my father, he told me not to ever stop being my natural self. My father told me that my boss had misinterpreted my passion as being emotional, rather than strategic behavior. My father told me that the day I stopped being passionate would be the moment I would stop caring about the business, and I would start missing out on opportunities. Without passion, he said, I wouldn’t be aware of my full potential, and I would never find mastery in anything. My father reminded me that my passion would fuel others to be just as passionate about their own work. My father’s wisdom never let me down - and six months later, my boss was unemployed.
What’s the passion that you can unleash to get you going in your business – that unlocks your leadership? When you go to work today, I encourage you to take a moment to share your leadership passion with your team. You’ll awaken new opportunities for yourself, your organization, and its people. Allow your leadership passion to create sustainable impact and influence in your work!
|"Adversity is very big when it is all you can see. But it is very small when in the presence of all else that surrounds you."|
|-- Glenn Llopis|
|Hispanic Business Development|
|Personal Employee Branding|