Credit for success
Hispanic entrepreneurs tell of surmounting capital challenges to build businesses
MARIA Rios needed two trucks to start her solid waste removal and recycling company in 1997. She had savings, but not enough to cover the half-million dollars needed for a rolloff truck and a front-loading truck. Bank financing, she said, was essential for starting and growing her business to where it is today, with 34 trucks and 48 employees.
“If I wouldn’t have got the credit granted,” said Rios, president and CEO of Nation Waste, “then I could never have this business.”
Rios’ success running Houston-based Nation Waste earned her the distinction three years ago of being named one of Fortune magazine’s Most Powerful Women Entrepreneurs. Goldman Sachs later named her among its 100 Most Intriguing Entrepreneurs.
As more Hispanics open their own businesses across the U.S., they are also becoming “more business savvy and also money savvy,” the head of the Houston Hispanic
Chamber of Commerce said Tuesday. But many remain hesitant to approach banks, other lenders and investors.
“Do not be afraid. Ask for those resources,” chamber president Laura Murillo told a room full of Hispanic entrepreneurs Tuesday. “And as Latinos, we don’t ask because we don’t want someone to tell us no.”
Raising capital was one of several topics discussed during the Su Negocio event for Hispanic entrepreneurs. About 60 people attended the panel discussion and educational sessions hosted by MassMutual, the Hispanic National Bar Association and the small-business mentoring program SCORE. Houston is one of five cities where Su Negocio is being presented.
After the event, Murillo explained that Hispanics are often first-generation college graduates or business owners.
They may be the first in their family to open a bank account or establish credit. Hispanics are hardworking, but she said seeking capital can be unfamiliar territory.
Murillo said that’s changing with each generation.
There were an estimated 4 million-plus Hispanicowned businesses nationwide in 2015, up 57 percent from 2007, according to a September report from Geoscape, a business intelligence company.
But Latino-owned businesses lag non-Latino businesses in an important metric: sales.
In 2012, a separate report from the Stanford Latino Entrepreneurship Initiative found in November, some 3.3 million Latino-owned businesses had an average of $155,806 in annual sales. The 24 million non-Latino businesses averaged $573,209.
Exit strategies
The panel of speakers at Su Negocio also discussed exit strategies. A survey by HawkPartners for MassMutual in early 2015 found some 80 percent of Latino business owners planned to pass their business to a family member. However, 37 percent said the chosen successor may not know he or she is to inherit the business.
“That’s not something that we typically think about or talk about through the startup process and really through the maturity process,” said Ken Yancey Jr., CEO of SCORE. “And it should be top of mind all the time.”
Business owners need to decide if the business will be passed to family, sold to employees, sold to an outside company, merged with another business, etc. They need to know how to build the parts of the business that will make it look as valuable as possible when it comes time to exit.
‘It’s who knows you’
The panel also discussed the importance of networking and taking advantage of resources available to small-business owners.
“A lot of people say it’s who you know,” Murillo said. “I disagree. I believe it’s who knows you.”
At events like Su Negocio, she said, entrepreneurs should sit next to strangers, collect business cards and actually follow up with those individuals.
Brian Trzcinski, director of business market development for MassMutual, said Su Negocio brings several organizations together for Hispanic business owners.
“The whole genesis of this program is to provide that education to the Latino business owner community so they realize that they’re not going on it alone,” he said. “There are people out there, there are organizations out there that can help them achieve their American dream.”
For Rios, the Nation Waste founder and CEO, being part of the Goldman Sachs 10,000 Small Businesses program at Houston Community College prompted her to create an exit strategy and to determine the value of her business. It also helped her gain access to larger lines of credit. She even met investing giant Warren Buffett.
“The program was an eye-opener,” she said. “I was able to repolish my business skills.”