New Business Insights: 4 million Latino workers want to start new businesses

Up to four million Latino workers in the U.S. are considering starting new businesses, according to QuickBooks-commissioned research published today.* The move is a reaction to inflation’s impact on income and the internet making it easier than ever for people to go it alone.

If these dreams become reality, the industries that will see the fastest growth in Latino-owned businesses will be retail, food services, and construction. Many have big plans. Two-thirds (66%) intend to hire employees or contractors. Three in five (61%) aspire to build dynamic businesses that keep growing, year after year. Most (81%) admit they are naturally big thinkers.

Based on the experiences of existing business owners among the respondents, the next generation can expect average startup costs of around $13,000 per business (depending on the business and industry).

Inflation is the driving force

The rising cost of living is the number-one reason Latino entrepreneurs want to start businesses. Instead of passively losing income to rising prices, people are actively looking for ways to get ahead. More than two in five (44%) want to diversify their income by starting businesses alongside other jobs.

As the chart below shows, another important motivation is the desire to be their own boss. One in three (33%) say a lack of other opportunities nudged them toward business ownership. More than a quarter (28%) see it as the best way to make full use of their skills.

Digital technology accelerates new business growth

Overall, more than eight out of 10 respondents (86%) believe the internet and digital technology such as software and e-commerce systems are making it easier for people to start businesses. This is because it’s easier to reach customers, find the right business management tools, and get advice (see chart below).

Indeed, the majority of Latino business owners (57%) say they should have made more use of digital technology when they started their business. The next generation is listening. Almost eight out of 10 (77%) will use e-commerce from day one. Just 23% expect to make all their sales in person.

How will people fund their new businesses?

Like most small businesses, the next wave of Latino-owned startups will be largely self-funded. More than three in five (62%) say they will use their personal savings. Two in five (41%) hope to get business loans, but the data suggests this remains a challenge. Overall, less than half of Latino business owners (46%) have applied for funding—compared to almost two-thirds (65%) of other businesses. And among those who have applied, the majority (61%) had their applications rejected.

This matters. More than two in five Latino business owners (46%) say the lack of funding for their business has held them back.

New businesses rely on family and friends

One source of support small business owners can always rely on, it seems, is their family and friends. As the chart above shows, one in five (20%) will borrow money from friends or relatives to launch their business. A third (33%) plan to hire family members as employees or contractors. 

But family contributions often start much earlier in life. Almost all of the respondents (98%) say a family member inspired them to become a business owner—either due to the success of previous generations or the drive to provide for the next.

How will the next generation succeed?

As we’ve seen, many Latino business owners regret not making more use of digital technology when they started out. The majority (55%) admit they should have sought more advice. A similar proportion (53%) say they should have kept better financial records. More than two-thirds (67%) wish they’d started their business sooner. 

These are great lessons—and confidence boosters—for anyone considering starting a business today. But if there’s one key takeaway, it’s this: Business owners admit it’s tough to go it alone, but at the same time, it could be one of the best decisions you make. 

Methodology and data sources

QuickBooks commissioned a survey in May 2022 of 2,679 people throughout the U.S., age 18+, who are either currently business owners or want to become business owners. Of these, 1,679 are Latino and Hispanic respondents. The other 1,000 are white (76%), Black (14%), Asian (5%), or other/prefer not to say. Overall, 706 respondents are business owners (384 Latino/Hispanic), and 1,973 want to become business owners this year, next year, or later (1,295 Latino/Hispanic). Audience quotas and Census data weighting were used to ensure the responses are as representative as possible. Two in five (40%) of the Latino respondents completed the survey in Spanish, while the remainder completed it in English. Responses were collected in an online survey using Pollfish audience pools and partner networks with double opt-ins, random device engagement sampling, and post-stratification to ensure accurate targeting and results. Respondents received remuneration. Percentages have been rounded to the nearest decimal place. 

Data sources and calculations for “up to 4 million Latino workers in the U.S. are considering starting businesses this year.”

1. A QuickBooks-commissioned survey of 8,000 U.S. workers age 18+ in December 2021 found that 15% of Latino and Hispanic respondents in the sample said they want to start a business in 2022 (for comparison, the overall proportion of respondents who said the same was 11%). 
2. The U.S. Bureau of Labor Statistics’ latest employment estimate shows that there are 27.1 million Latino and Hispanic workers in the U.S. who are over the age of 18. Fifteen percent of 27.1 million is 4 million. 

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