Texas’ Hispanic businesses growing, but still lag in key areas
August 17, 2012
By Brian Gaar
Hispanic-owned businesses are a growing piece of the Texas economy, but they still lag behind mainstream businesses in revenue, employment and payroll size, according to a new University of Texas survey.
The report, titled “The Survey of Hispanic Businesses with Paid Employees in Texas,” was directed by the Bureau of Business Research of the IC2 Institute at The University of Texas at Austin. It surveyed more than 3,500 Hispanic-owned businesses last year in Texas. The survey is being released to the public today.
Hispanic-owned businesses grew by more than 40 percent in Texas from 2002-2007, from 319,340 to 447,589, according to the report, which cited a 2007 Census study, the latest numbers that were available.
Those businesses accounted for more than 20 percent of all state firms, second to non-Hispanic white-owned companies, which were 62 percent of all the business in Texas.
But, as with national trends, Hispanic-owned businesses lagged behind their mainstream counterparts in several areas, including average gross receipts (about $138,287 compared to $546,228 for mainstream employer firms), average payroll (about $240,518 compared to $473,134) and average employment (9.6 employees for Hispanic firms vs. 13.5 employees for mainstream firms).
“Hispanics are creating mainly small businesses,” said Elsie Echeverri-Carroll, director of the Bureau of Business Research’s economic development program and one of the survey’s principal investigators. “And the problem with this is, not only that they are small, but they stay small. So there is a scalability problem.”
There are factors that contribute to the lag behind mainstream business — disparities in wealth and education, she said — but the study also found other factors that might contribute to the scalability problem.
Many respondents indicated that they wanted additional training to help grow their business.
Asked about their three top training needs, Hispanic employers cited management and leadership (24 percent), followed by improved business/consumer relations/sales (16 percent) and more effective communication (14 percent).
That desire for management and communication skills training is potentially a new revelation, Echeverri-Carroll said.
“We found this fascinating,” she said.
Aaron Cox, vice president for chamber relations with the Texas Association of Business, was encouraged to see “the spirit of entrepreneurship is alive and that folks are starting businesses,” as the study showed.
But it also showed the need for business owners to connect with chambers of commerce and take advantage of educational opportunities, he said.
“The issue of scaling … I think provides a unique opportunity for organizations like ours, as well as chambers and other business organizations across the state, to really connect these business owners throughout their communities with other opportunities throughout the state,” Cox said. “And make sure that we have a truly unified business community throughout the state, where everyone is prospering and thriving at the same level.”
Since many Hispanic-owned businesses aren’t scaling up, the Texas economy is losing out, the survey said.
Pointing to Census data, the survey said “if Hispanic-owned firms would have reached parity with the rate of business creation among whites in the state, (Hispanic-owned businesses) would have numbered 769,000 rather than the 447,589 that actually existed. In addition, with parity, collectively (Hispanic-owned businesses) would have employed over 3.1 million workers and grossed over $930.6 billion in receipts in 2007.”
As demographics change, that will become even more important, researchers said.
“There’s no doubt that the state of Texas is changing demographically very, very quickly,” said J. Bruce Kellison, associate director of the Bureau of Business Research and a key investigator for the survey. “And Hispanic businesses and the ability to generate economic activity and employment among Hispanic-owned businesses is going to be crucially important for the future of the state’s economy, no doubt about it.”
Manny Flores, CEO and a co-founder of LatinWorks advertising agency in Austin, said Hispanic-owned businesses tend to be small, service-sector oriented and they often employ family members.
Flores said that it’s important to have a business plan and to understand the industry an owner is entering.
It’s also important to become involved, he said.
“If I had a restaurant, I would be very active in the Texas Restaurant Association, for example, to shape and mold industry laws,” he said. “Become involved in our legislative process.”
But beyond that “we’ve got to move away from just being ‘Hispanic,’ ” he said. “This is about being a true Texas business owner, with unlimited opportunity. The yard and landscaping business could grow into, instead of an (ABC Home Commercial Services), it could be a Hispanic-owned franchise operation, who knows?”
Source: Austin American-Statesman