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More Latinos are becoming small business owners, and many more hope to join their ranks.
Entrepreneurship continues to rise among communities of color, so much so that Latino-owned businesses have grown 34% over the last 10 years. In line with this movement, young Latino students are increasingly seeking an entrepreneur-centric education.
In response to this surge of small-business ownership, colleges and universities are pivoting to providing entrepreneurial education programs aimed at students of color, according to a recent report from the Ewing Marion Kauffman Foundation.
“If we can create very large, Latino-owned companies, it will profoundly affect society as well as greatly help many smaller Latino businesses and businesspeople by serving as models for them, providing customers for their goods and services, and allowing their owners to join those really large businesses as executives,” Jerry Porras, a Stanford University emeritus professor of organizational behavior and change, told The Hechinger Report.
Entrepreneurship and Latino Students
Why are universities moving in this direction?
To start, it’s where the business economy is heading. Nationally, 380 out of every 100,000 adults started their own businesses in 2020.
The COVID-19 pandemic did impact minority-owned businesses, whose owners often face bias and racism when it comes to securing financing and have fewer resources to weather the ongoing storm of the pandemic, according to a 2020 report by the Stanford Latino Entrepreneurship Initiative.
Still, despite the economic crisis brought about by the pandemic, the monthly rate of new business has steadily increased.
The Ewing Marion Kauffman Foundation used four key factors to determine this information:
- Rate of new entrepreneurs: the broadest measure possible for business creation by the population. Percent of adults becoming entrepreneurs in a given month, year average in 2020 was: 0.38%
- Opportunity share of new entrepreneurs: the percentage of new entrepreneurs who created a business out of choice instead of necessity. Percent of entrepreneurs driven by opportunity in 2020 was: 69.8%.
- Startup early job creation: the number of jobs created in the first year of business per capita. Jobs created by startups per 1,000 people in 2020 was: 5 jobs
- Startup early survival rate: the rate of survival in the first year of business. Percent of firms surviving one year after founding in 2020 was: 78.1%
Help starting businesses is what Latino and other students of color are asking for.
“When we ask random students on campus what their career ambitions are, I would say 70 to 80 percent of them are telling us it is to be entrepreneurs,” Thaddeus McEwen, a professor of entrepreneurship at historically Black North Carolina Agricultural & Technical State University, told The Hechinger Report.
Better yet, colleges across the U.S. are focusing on underserved students.
A survey conducted by the National Association for Community College Entrepreneurship found that 1 out of 6 community colleges said, “their entrepreneurship program is focused on serving one or more historically underserved populations.”
Latino Business Ownership
In the past 10 years, specifically, there has been a significant increase in Latino entrepreneurship.
In fact, the number of Latino-owned businesses was double the national average – 14% compared to 6%, respectively, according to the Stanford Graduate School of Business’ “2020 State of Latino Entrepreneurship,” report.
“Additionally, the number of employer LOBs grew across 44 out of 50 U.S. states, and grew at a faster rate than the national industry average across 13 of the 15 industry sectors that include a substantial number (over 1,000) of employer LOBs,” Victoria Arena writes in Latinas in Business Inc.
The Stanford report goes on to note that the growth rate is highest in:
- Finance and insurance
- Transportation and warehousing
- Real estate
Experts say this movement toward entrepreneurship is creating jobs, and also bolstering economic and wealth development among people of color.
“The data counters the idea that Latinos are only growing in service-related industries,” said Orozco told NBC News. “We are seeing multifaceted growth across states and industries including construction, finance and insurance, transportation, and real estate.”
How We Can Improve Education for Latino Entrepreneurs
College administrators can adapt their programs to better serve students of color.
The Stanford project offers a seven-week program on how to scale a business and provides mentors, access to capital (though no guarantees of loans or investments) and connections to a network of Latino-owned businesses.
They do so through two approaches:
- Understand the state of Latino entrepreneurship by collecting and analyzing data, and shaping research in this field.
- Advance knowledge and discourse by disseminating the results of the research.
- Stimulate more informed policymaking, business partnerships, and knowledge and skill development through its research findings.
- Conduct comprehensive quantitative and qualitative research on U.S. Latino-owned businesses using annual national surveys, U.S. census data, and discussions with Latino entrepreneurs.
- Publish reports useful to a span of groups, ranging from policymakers to educators to business owners.
- Connect with faculty and practitioners who can use our data to conduct quality research and promote business owner education.
We also have to address the systemic issues that hinder Latino education at the start.
- This is because access to quality education remains an issue for Latinos. Whether it is living in child care deserts, language issues and immigrant status, unengaged parents, childhood trauma, discipline, segregated school districts, and a lack of state funding—many Latinos are left behind in education compared to their white peers.
Systemic racism and discrimination make it harder for Latino and Black people to get quality access to education, healthcare, housing, transportation, employment, healthy food, safe treatment by police, all of which are worsened by the COVID-19 pandemic.
You can download and use the Salud America! “Get Your City to Declare Racism a Public Health Crisis Action Pack” to fight racism in your community.
The Action Pack will help you gain feedback from local social justice groups and advocates of color so that you can start a conversation with city leaders for a resolution to declare racism a public health issue along with a commitment to take action to change policies and practices.
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