Latina Entrepreneurs: An Economic Force in the U.S.

Washington, DC - Latina-owned firms are an integral part of the fabric of business in the United States. Many Hispanic women entrepreneurs were born in this country and own long-established businesses in a wide range of industries, according to a new survey conducted by the National Foundation for Women Business Owners (NFWBO) and sponsored by Wells Fargo & Company.

"Latina entrepreneurs are certainly not newcomers in the U.S.," noted Nina McLemore, NFWBO Chair and President of Regent Capital, in discussing the study, "The Spirit of Enterprise: Latina Entrepreneurs in the United States." "Those surveyed have owned their businesses for an average of 12 years. Two-thirds were born in this country and one-third are immigrants who have lived here for an average of 30 years."

Survey respondents are in a wide variety of industries. Many more own firms in construction (10%); accounting, engineering and other professional services (10%); and manufacturing (9%) than in businesses such as hotels, restaurants and bars (4%).

"By documenting that Latina entrepreneurs are a growing economic force with unique characteristics, we are improving their opportunities for access to capital, technology and training," said Colleen Anderson, Executive Vice President of Premier Business Banking at Wells Fargo. "At Wells Fargo, we're trying to learn more about Latina-owned businesses by meeting with their owners face-to-face and by sponsoring studies like this."

Latina entrepreneurs are a rapidly-growing business segment. According to an earlier NFWBO report, "Trends Among Minority Women-Owned Firms," the 382,400 Latina-owned firms in the U.S. in 1996 generated sales of $67.3 billion - a 534% increase since 1987, compared to a 120% increase for all businesses. Despite this growth, the recent NFWBO/Wells Fargo survey shows that the share of Latina entrepreneurs with bank credit and the amount of capital they have has not increased significantly in the past two years.

Family and Heritage are Important Factors
While Latina entrepreneurs interviewed report that they started their own businesses, they are more likely than women business owners of other ethnicities to describe their businesses as family run. Three-quarters (75%) of the participants in the NFWBO/Wells Fargo survey say that their immediate family - spouse, children or parents - is involved in their business.

Nearly two-thirds (63%) of the Latina entrepreneurs surveyed use English and Spanish in their business activities. Just over half (54%) of Latina entrepreneurs consider English their first language, 37% indicate that Spanish is their primary language, while at least 7% say they speak both languages equally.

Typically, Latina business owners say they vary their language based on the type of interaction. A majority use primarily English in their business dealings with advisors, fellow business owners, customers, and employees. However, Latina entrepreneurs are involved in the Hispanic market and maintain ties to their heritage; more than one-third use Spanish or both languages with employees and customers.

In addition, Latinas are proud of their cultural heritage and background. Two-thirds (64%) of those surveyed say that their cultural heritage is an asset for them as business owners; just 16% say it is mostly a challenge, and 7% say it is both.

The first and second generation Latina entrepreneurs who were interviewed in the NFWBO/Wells Fargo survey - who comprise 57% of those surveyed - come from diverse regions, including Mexico (46%), Cuba (17%), South America (14%), the Caribbean (9%), and Central America (8%).

Start-Up Capital and Financing Remain Virtually Unchanged
The Latina business owners interviewed for this survey started their firms with slightly more capital than all women business owners interviewed for a 1998 NFWBO survey, "Paths to Entrepreneurship." Just over half (54%) of Latina entrepreneurs surveyed started their firms with $10,000 or more, compared to 44% of all women business owners. One third (32%) of Latina entrepreneurs started their business with less than $10,000, compared to 44% of all women business owners.

Less than half (45%) of Latina women entrepreneurs in the study borrowed funds to start their businesses; most borrowed from commercial banks (35%) and family members besides spouses (23%); other sources were personal credit cards, friends, spouses, and refinanced homes.

The share of Latina entrepreneurs with bank credit is similar to two years ago and the amount of capital they have has not increased significantly. Just over half (54%) of Latina entrepreneurs have bank credit according to the latest NFWBO/Wells Fargo survey, compared to 50% in 1998.

The amount of bank capital carried by Latina business owners has not changed significantly over the past two years. In 1998, 24% of the Latinas surveyed had under $25,000 in capital available for use, and 24% had $100,000 or more. Today, 22% have under $25,000 and 29% have $100,000 or more.

"This study confirms that Wells Fargo was on the right track when we launched our Latino Loan Program three years ago," said Anderson. "We initially set a goal to lend $1 billion, but since then, we've seen a phenomenal increase in the number and the success of Latina and Latino businesses. Because of our increasing commitment to this group, last year we raised our goal to lend $3 billion over 10 years to Latina and Latino business owners."

The NFWBO/Wells Fargo survey, "The Spirit of Enterprise: Latina Entrepreneurs in the United States," revealed many similarities between Latina entrepreneurs and all women entrepreneurs, based on comparisons with past NFWBO research studies.

· Latina entrepreneurs share many of the same motivations for entrepreneurship as all women business owners: to control their own destiny, improve their economic situation, achieve greater flexibility, or because of a change in their job situation;

· Like all women business owners, two-thirds (66%) of Latina entrepreneurs come into business ownership by starting their businesses; far fewer of them purchase, inherit or acquire their business through gift or marriage;

· Latina entrepreneurs share the same rewards and frustrations of business ownership with women of all ethnic backgrounds. What Latinas like best about business ownership includes being their own boss and having more flexibility and freedom. The downsides of being a business owner, according to the Latinas interviewed, include long hours and the burden of responsibility that comes from being employers;

· Fourteen percent (14%) of Latina entrepreneurs-compared to a similar 13% of all women business owners in the U.S.-are engaged in international trade.

"NFWBO's survey of my fellow Latina business owners captures the spirit of enterprise in this important business constituency," observed Sandra Hernandez Adams, President of Strategic Micro Partners and President Elect of the National Association of Women Business Owners. "It is empowering to see that Latina entrepreneurs are similar in many respect to all women business owners. It is fulfilling to see how those surveyed consider their heritage and culture when conducting business."

• The Majority of Latina Business Owners Were Born in the U.S.
• The Majority of Latina Business Owners Consider English Their Primary Language
• Latina Entrepreneurs Proud of Their Cultural Heritage, Consider It an Asset
• Amount of Credit Carried By Latina Entrepreneurs Similar to 1998 Levels

Editor's Note: When referring to the study, it should be called "The Spirit of Enterprise: Latina Entrepreneurs in the United States," conducted by the National Foundation for Women Business Owners and sponsored by Wells Fargo.

The report, "The Spirit of Enterprise: Latina Entrepreneurs in the United States," is available for $90. Contact the National Foundation for Women Business Owners, 1411 K Street, NW, Suite 1350, Washington, DC 20005-3407, phone 202-638-3060, fax 202-638-3064, e-mail info@nfwbo.org, home page www.nfwbo.org. (Discounts are available for NFWBO corporate partners and NAWBO members.)

The National Foundation for Women Business Owners (NFWBO) is a nonprofit research and leadership development institute. NFWBO is recognized as the premier source of information and intelligence on women business owners and their enterprises by corporations, policy makers, financial institutions and the media. Up-to-date intelligence about women business owners and their enterprises worldwide is documented in NFWBO's original research and analysis.

Wells Fargo & Company, a member of NFWBO's Corporate Advisory Council and Corporate Circle, is a $234 billion diversified financial services company providing banking, insurance, investments, mortgage and consumer finance through about 5,300 banking stores, the world's leading internet banking site (www.wellsfargo.com) and other distribution channels across North America and elsewhere internationally. Wells Fargo leads the industry in improving access to capital for women business owners and offers a full range of financial services. Through its Women's Loan Program - the first of its kind - Wells Fargo has loaned billions of dollars to women-owned businesses nationwide. Last year, two years after starting a Latino Loan Program, Wells Fargo increased its lending goal to Latino business owners to $3 billion over 10 years. For more information about Wells Fargo's Latino Loan Program, call (800) 359-3557 ext. 350. Small business owners interested in internet banking, bill payment and other small business products and services, refer to Wells Fargo's online resource center at www.wellsfargo.com/biz.

Methodology: This nationwide study of Latina business owners was conducted over the telephone from late May though late June 2000. Four hundred and four (404) interviews were completed among women business owners of Hispanic heritage. Forty-one percent (41%) of the interviews came from the South, 39% from the West, and 10% each from the Northeast and Midwest. The interviews were conducted by TNS Market Development, a woman-managed firm that specializes in the Hispanic market.

The sample pool of Latina business owners was compiled from various sources. Ninety-eight percent (98%) of the sample was derived from a national database of women business owners. This database was constructed primarily from yellow pages and supplemented with industry specific databases. To enhance the national database, letters of inquiry were sent to state Hispanic Chambers of Commerce and postings were made on 14 Latina or women business owner-focused web sites. Most respondents came from the top ten states in terms of Hispanic population: California, Texas, New York, Florida, Illinois, New Jersey, Arizona, New Mexico, Colorado, and Massachusetts. While almost all respondents were from the continental U.S., 8 Latina entrepreneurs from Puerto Rico were also interviewed.

Due to the sources of this sample, the Latina business owners interviewed may not be indicative of the entire population of Latina entrepreneurs in the U.S. Since commercial business lists were used, firms that are well-established are likely to be somewhat over-represented, and new Latina-owned firms may be under-represented when compared to the entire population.

The sampling error for the sample of N = 404 is "5% at the 95% level of confidence. This means that, 95 times out of 100, survey results will be within 5% of population values.

The full report also provides comparative data from 6 previous reports. For methodology information concerning these reports, contact NFWBO.