By Jennifer Elena,
As a Latina entrepreneur, I am optimistic on the future of Hispanic Businesses but I see that there is still work to be done in the Latino entrepreneurship space. For instance, Latino businesses made one-quarter of what non-Latino firms made in sales in 2012 presenting an opportunity gap of $1.38 trillion in the U.S. economy1. For reasons like this, I feel emboldened to share my story and a few lessons learned from my peers that may help fellow Latino entrepreneurs.
I had seen and lived the gaps that Latino entrepreneurs face, but nothing has been more beneficial than the lessons imparted to me during my time with Stanford Latino Entrepreneurship Leaders Program. Now I feel it’s my turn to share useful insights to help our community grow, provide jobs, plan for our futures and live up to our potential. My advice for Latino Business owners is to learn from the spirit of Silicon Valley and start looking beyond our immediate needs to larger opportunities.
Share the Risk
According to Stanford’s 2016 State of Latino Entrepreneurship study, Hispanic businesses are open to support themselves but not necessarily for market opportunities[1]. Silicon Valley start-ups think the opposite. They don’t limit their ideas to the size of their current bank accounts, but rather ask themselves “where is the biggest opportunity?” and “how do I rally my resources?” Share the risks with other people’s money and use outside funding sources. A smart idea is to work with your banker early in the process and establish reasonable amounts needed for a working line of credit for your business. There is a balance between taking a reasonable risk and over reaching with borrowed money.
Over half (55 percent) of Latino business owners use one or no capital sources to finance their business at the early stages1. If Latino firms adapted the Silicon Valley mindset and sought out resources and capital, within reasonable amounts, they could close the $1.3 trillion dollar opportunity gap that exists today1.
And the first thing to ask yourself before you reach out to partners or investors: Who will buy what I am offering and will there be enough buyers to ensure my success in this business?
Think Big (But Smart)
There is a Chinese proverb that I think every entrepreneur should be familiar with, it reads, “If you want to go fast, go alone. If you want to go far, go with a team.” Scaling businesses is a challenge for Hispanic business owners, but research suggests a pattern where owners who use external funding sources early on are more likely to use external funding sources to grow their businesses1. The reason behind this pattern is multi-faceted, but the implication is that looking to external resources inadvertently builds a team and network of mentors, partners, and venture capitalists that can help you grow your business. Hispanic-owned businesses are hesitant to give up equity, but what’s more valuable- 100 percent of a $1 million business or 60 percent of $20 million business? The key to building a successful business is to build an ecosystem, be authentic, ask for what you need and be willing help others when they ask you. Namaste.
Look for team members who understand that small businesses are very different than large businesses. The same skills and traits that may be effective in large business rarely translate well to a small business. Look for individuals who come from a small business background. People that have had to be simultaneously Chief Financial Officer and “Call Key Operator” for the copy machine. Big company personnel are used to having a specialized staff behind them and often lack the ability to cover all the areas that a small business needs of its staff.
Build Your Ecosystem
Your success relies on your ecosystem. The peers, vendors, consultants, advisors, coffee shops, interns, and the risk takers you surround yourself with. If you want to be an entrepreneur, find entrepreneurs who did it before and were successful. We need a trusted ecosystem we can turn to and figure out our next step, but 45 percent of Latino businesses don’t belong to an organization or netowrk1. As entrepreneurs, we are problem solvers and need to learn to pick up the phone and share our challenges so we can keep moving forward.
A great place to start building your ecosystem is your bank. Bankers experienced with successful small business entrepreneurs can put you in touch with potential mentors and team members. Bankers are not, however entrepreneurs. Nor are accountants or lawyers. Accountants and lawyers may not understand marketing or how business finances, operations and marketing are so closely connected. Surround yourself with previously successful entrepreneurs who understand how these elements work together, and one day you’ll be the “successful entrepreneur” giving back to your ecosystem of new entrepreneurs and with helpful advice.
Jennifer Elena is the founder & CEO- of Jelena Group
