Small Business Insights: Hispanic entrepreneurs reveal top priorities in new survey

Bigger financial hurdles

It’s often harder for Hispanic-owned businesses to get funding to start or grow their business.

Almost two-thirds (61%) said it’s a challenge to get loans or financing right now,1 compared to less than 1 in 2 (47%) of non-Hispanic businesses.2 Of these, almost 1 in 5 (19%) describe it as “extremely challenging.” Just 13% of other business owners said the same.

This echoes other recent research published by QuickBooks earlier this year, which found that Hispanic-owned businesses were more likely to have loan applications rejected during the COVID pandemic.

As we’ll see later in this report, the pandemic remains one of the biggest challenges facing many small businesses today—though signs of recovery are emerging.

“We were really struggling last year. We’ve had to work twice as long to do what we normally did in a regular day… We didn’t apply for any government support but the pandemic did push us to think outside of the box. Within a week or two we moved everything online: our videos, story times, even tutoring. We learned how to change quickly and I am very happy that we were able to do that. A lot of companies weren’t able to do that.” – QuickBooks customer Kelli Orona, owner of The Bookworm of Vallejo

Less likely to use banking services

While around 1 in 2 (51%) Hispanic-owned businesses have a business bank account, and around 1 in 4 (28%) have a business credit card, among other business owners this rises to 59% and 41% respectively.

Owning a business is the way to get ahead

An unrivalled 96% of Hispanic business owners said they started their business to earn more money than they could by working for someone else. This was the most popular response.3

In fact, the drive to own a business is so strong that more than a third (35%) said they decided to become a business owner before they even knew what kind of business it would be.

“I’ve always known I wanted to be a business owner. All through high school, I kept telling counselors and my teachers that I wanted to go into business. You know what they did? They put me in typing and secretarial skills. I said, ‘No, I want to own my own business.’ I was pegged already because of my ethnicity. I had a lot of obstacles in my way to get to where I wanted to go. The biggest was being taken seriously as a woman who wanted to run a business.” – Kelli Orona, owner of The Bookworm of Vallejo

Most use their own money to start their business

Perhaps in response to the funding challenges described above (see “Funding and financial services”), more than 9 out of 10 (95%) Hispanic business owners said it was important for them to save up their own money before starting a business.4 And almost two-thirds (62%) said contributions from friends or family made a difference5 — compared to just 50% of other business owners.6

It starts and ends with family

What does success mean to Hispanic business owners? The most popular answer, chosen by 95% who said this is important to them, is being able to make a good living for themselves and their family.7

“I define success as being an asset to the community. For me, it’s being able to show parents that they can teach their children so they can get over the struggle and go to college, when maybe they never thought they could get there. Their success is our success.” – Kelli Orona, owner of The Bookworm of Vallejo

As we’ve seen, family and friends often make critical financial contributions to fledgling firms. But for some business owners, it goes deeper than that. More than nine out of ten (95%) of Hispanic respondents to our survey said emotional support from their closest circle was an important factor when they started their business.8

Financial challenges, and the impact of COVID, are the biggest hurdles

The top five challenges identified by Hispanic-owned businesses today are:

1. Adjusting the business to COVID (77% agree)
2. Getting more customers (77% agree)
3. Surviving during COVID (76% agree)
4. Taking care of financial tasks (74% agree)
5. Growing sales/revenue (74% agree)

These challenges are broadly in line with those facing other business owners—though others place more emphasis on growing sales/revenue.

“The biggest challenge for us is getting the word out. The thing I hear the most is, “I didn’t know you were here!” My daughter Nicole has been very good at jumping into Instagram, Facebook, and Twitter to spread the word. It’s still word of mouth, but it’s a new frontier for us. We both had to get out of our shells this year.” – Kelli Orona, owner of The Bookworm of Vallejo

Cash flow is a challenge for many small businesses

The majority of Hispanic business owners said they are currently experiencing cash flow problems. Overall, more than two-thirds (69%) described cash flow as a problem. Of these around 1 in 5 (18%) say cash flow is “extremely challenging” right now.9

This correlates with the fact that — as we’ve seen, above — critical financial tasks such as invoicing, getting paid, paying bills, and managing taxes are a challenge for almost 3 out of 4 (74%) of Hispanic-owned businesses. More than 1 in 5 (21%) describe these tasks as “extremely challenging.”10

Despite the challenges, most are satisfied with how their business is performing

Almost two-thirds (64%) of Hispanic business owners are “very” or “extremely” satisfied with their income, potential for growth, and how well they are managing the business. When we add those who are “somewhat satisfied,” this rises to 94%.11

What is it that keeps them going? The top three sources of inspiration are:

1. Other small business owners
2. People who have overcome personal challenges
3. Local business leaders

“Our customers know we’re not just selling them books. We’re also giving them tips, help, and encouragement. When they come back and we hear that their children are passing, graduating, going to college, becoming doctors and teachers, these stories are truly beautiful, and an honor to be part of. It revives us and keeps us going.” – Nicole Goltiao, The Bookworm of Vallejo

Methodology

QuickBooks commissioned Edge Research to survey 1,811 small business owners and self-employed people in May and June 2021. Of these respondents, 456 were Hispanic or Latina/o/x. Anonymous responses were collected from QuickBooks customers and a random sample of small business owners who do not use QuickBooks.

Sample reveals demographic insights

Reflecting broader demographic trends, our survey found that Hispanic business owners and their businesses tend to be younger than others. For example:

• 37% of Hispanic business owners were aged 18-34 compared to 28% of non-Hispanic business owners.
• 49% of Hispanic business owners described their business as being in the “early” stage of its lifecycle, compared to 33% of non-Hispanic business owners.

Footnotes

1. When Hispanic respondents were asked, “How challenging are each of the following for your business today?” 19% described “Securing loans or financing” as “extremely challenging,” 20% described it as “very challenging,” and 22% described it as “somewhat challenging.”
2. When non-Hispanic respondents were asked, “How challenging are each of the following for your business today?” 13% described “Securing loans or financing” as “extremely challenging,” 19% described it as “very challenging,” and 15% described it as “somewhat challenging.”
3. When Hispanic respondents were asked, “How important was each of the following to your decision to get started with the business?” 54% said “That I could earn more money working for myself than working for someone else” was “extremely important,” 32% said it was “very important,” and 10% said it was “somewhat important.”
4. When Hispanic respondents were asked, “How important was each of the following to your decision to get started with the business?” 47% said “Having money saved up” was “extremely important,” 34% said “very important,” and 14% said “somewhat important.”
5. When Hispanic respondents were asked, “How important was each of the following to your decision to get started with the business?” 22% said “Getting money from family or friends to help get started” was “extremely important,” 22% said it was “very important,” and 18% said it was “somewhat important.”
6. When non-Hispanic respondents were asked, “How important was each of the following to your decision to get started with the business?” 18% said “Getting money from family or friends to help get started” was “extremely important,” 18% said it was “very important,” and 14% said it was “somewhat important.”
7. When Hispanic respondents were asked, “How important are each of the following to your personal definition of success?” 53% said being “Able to make a good living for me and immediate family” is “extremely important,” 35% said this is “very important,” and 7% said this is “somewhat important.”
8. When Hispanic respondents were asked, “How important was each of the following to your decision to get started with the business?” 41% said “Support and encouragement from family and friends” was “extremely important,” 36% said it was “very important,” and 18% said it was “somewhat important.”
9. When Hispanic respondents were asked, “How challenging are each of the following for your business today?” 18% said “cash flow” is “extremely challenging,” 23% said it is “very challenging,” and 28% said it is “somewhat challenging.”
10. When Hispanic respondents were asked, “How challenging are each of the following for your business today?” 21% said “Taking care of business financial tasks – invoicing, getting paid, paying bills, tracking income and expenses, taxes, etc.” is “extremely challenging,” 20% said it is “very challenging,” and 33% said it is “somewhat challenging.”
11. When Hispanic respondents were asked, “Overall, how satisfied are you with the state of the business today, taking into account the income you earn, your potential for growth, how well you are managing the business, and so on?” 35% said “extremely satisfied,” 29% said “very satisfied,” and 30% said “somewhat satisfied.”

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