COVER STORY : Hispanic entrepreneurs
Posted on Sunday, October 15, 2006
Editor’s Note: With the exponential growth in Northwest Arkansas’ Hispanic population has come an increase in the number of Hispanic-owned businesses. This boom has also factored into the planned opening of a Mexican consulate in Little Rock. In light of these developments, Business Matters will examine over the next three weeks the Hispanic business community and the role it plays in the area’s bustling economy. This is part one of the series.
There is no “typical” Hispanic
business owner, according to a
Northwest Arkansas consultant
who specializes in marketing to
Hispanics. “There is no such thing. That’s like asking, ‘Who is the typical car dealer ?’ There is no typical car dealer,” says Leo Cruz, who is also a Fayetteville real estate agent. Hispanic business owners can be as varied as any other business owner, he says. Entire retail centers in area cities such as Rogers and Springdale, especially along U. S. 71 Business, display signs in Spanish, leaving shoppers wondering if they have strayed south of the border. But quantifying the impact Hispanicowned businesses have on the region’s economics is more difficult than just counting the number of businesses, which area chambers of commerce are only beginning to do.
The chambers are trying various means of establishing ties with Hispanic business owners, but say a comprehensive study is needed to measure how big a slice of the area’s economic pie these businesses represent.
“I don’t know where we would be as a region without the contribution of the Hispanic community,” says Bill Ramsey, president and chief executive officer of the Fayetteville Chamber of Commerce.
Jeff Collins, director of the Center for Business and Economic Research at the Sam M. Walton College of Business at the University of Arkansas at Fayetteville, says no one has researched the economic impact of the growth in the Hispanic population in Arkansas.
Those studies would have to be commissioned, according to Kathy Deck, the center’s assistant director. She says the costs would vary according to how much information was requested of the study.
“We would love to do one, but someone would need to hire us to do it,” she says.
The cost of commissioning a study might be the largest obstacle to any one chamber signing on to pay for it, says Bill Rogers, the Springdale Chamber of Commerce’s economic development director.
Ramsey says the information gathered would be invaluable.
“That is information we would need to know as the need arises,” he says.
Ed Clifford, president and chief executive officer of the Bentonville / Bella Vista Chamber of Commerce, says he would be delighted to take part in any type of study to measure the economic impact of the Hispanic population in Northwest Arkansas.
“We would even assign a staff member to it. It is that important to us, and it is that important to do,” he says.
SEEKING A BETTER LIFE Many Hispanics are drawn to the state to work in food processing, Collins told the Democrat-Gazette in August. As Hispanics arrived here — often from other states rather than directly from other countries — they created networks that then attracted more Hispanic workers, he says. “The grapevine is pretty active,” he says. “People come here, and they’re saying there are a lot of jobs out here.” After immigrants have established themselves in the area, they tend to start looking to improve their situation. Often included in those improvements is the idea to start their own business. Cruz says small business is entrepreneur-based and that immigrants are natural entrepreneurs. “That’s what they came here for. If they had something in their country, why would they leave it ?”
GROWING QUICKLY The number of Hispanics in Arkansas has grown more than 12 times faster than the state’s population as a whole between 2000 and 2005, according to U. S. Census estimates released in August. Attracted by jobs in poultry processing, agriculture and construction, the Natural State’s Hispanic population grew 51 percent to 130, 846; the state’s entire population grew 4 percent to 2. 78 million. The census figures confirm established demographic and economic trends in Arkansas. Benton and Washington counties in booming Northwest Arkansas added large numbers of Hispanics, more than 20, 000 total.
Between 2000 and 2005, Benton County’s Hispanic population grew 78 percent from 13, 469 to 23, 996, while the county’s total population grew 22 percent from ™, 406 to 186, 938. In Washington County, the Hispanic population grew 73 percent from 12, 932 to 22, 415 in the same period. The overall population there grew 14 percent from 157, 715 to 180, 357.
Hispanics are the largest minority in the United States, with an estimated population of 40 million, according to the Census Bureau. That number is expected to grow by more than 1. 7 million a year.
There were 1. 6 million Hispanicowned businesses in 2002 in the United States, up 31 percent from 1997. Their total receipts in 2002 were $ 226. 5 billion, up 22 percent from 1997, according to the U. S. Hispanic Chamber of Commerce.
Although no local or regional data is available, an IRS report predicts that one out of every 10 U. S. small businesses will be Hispanic-owned by 2007. Today, the proportion stands at 1 in 13 and rising, according to Hispanic Trends magazine.
About 40 percent of U. S. Hispanicowned firms are in administrative and support fields and in waste management, health care and other service industries. Another 13 percent are in construction, the Hispanic chamber states.
BUILDING A BASE The Rogers-Lowell Area Chamber of Commerce moved a small-business support job from the background to the forefront when Vilma Dominguez took on the account representative position five months ago.
Dominguez says she remembers her family being the only Hispanic children in Rogers High School when they attended after moving to the area nearly 30 years ago.
She has been working to integrate Hispanic businesses into the chamber’s community, but it is an uphill battle.
“Many Hispanic business owners associate a chamber of commerce with the government. In their home countries, they [chambers of commerce ] are part of the government,” Dominguez says.
She is trying to build a working relationship with the Hispanic-owned businesses on the chamber’s membership list. She visits each business, one by one, to verify that it still exists and to speak personally with the owner.
A native of Nicaragua, Dominguez has no problem with the language and is familiar with the cultural differences that would trip up an outsider.
“You have to get to know Hispanic business owners personally before they will speak business,” she says.
Dominguez says the Rogers-Lowell chamber is gaining new Hispanic members mainly through building relationships with current Hispanic members.
The Springdale chamber has tracked the number of business licenses issued to people with Hispanic names for two years. Rogers says that number has been fairly steady at 200.
“We don’t track the revenue these businesses generate because we don’t have a vehicle to track it with,” he says.
The city has seen an increase in the number of visible Hispanic businesses in the past five years, Rogers says. That observed increase led to the chamber dedicating a staff member to reach out to minority small-business owners.
The most obvious problem most potential Hispanic business owners may face is a language barrier, Rogers says.
“Most of the questions we get is informational, like, ‘Where do I go to find this out ?’ Or what paperwork is needed or how to get involved in a particular field of work,” he says.
The Springdale chamber has started working with the area’s Spanish-language newspapers, supplying articles with basic information about the chamber and how it can help business owners.
Rogers says the outreach is working, but he doesn’t have any quantifiable numbers to prove it.
“Right now we are really just working on raising the awareness of the chamber and what it can do to help businesses in the area,” Rogers says. “It has been better in the last 60 days than it has ever been before. But we do need to be even better than that.”
The Fayetteville chamber does have a minority small-business focused subcommittee, Ramsey says, but no special programs to recruit Hispanic business owners or entrepreneurs.
Ramsey says creating a program to target minority business ownership for membership in the chamber might need to be a discussion topic during the board retreat at the end of October.
“We do have participation on our board from the Hispanic community,” Ramsey says. “We keep our ears open for the demand for such services, but we haven’t heard it yet.”
The Bentonville / Bella Vista chamber has considered minority small-business outreach programs, but would probably target Asian business owners rather than Hispanic.
“We have more Asians than Hispanics” Clifford. Other than a couple of restaurants that are satellite locations for restaurants based in other Northwest Arkansas cities, Clifford could not think of any other Hispanic-owned businesses in Bentonville.
GETTING STARTED The first generation of immigrants often deal in cash because they learned to distrust the banking institutions in their home countries. That mistrust carries over to the United States, Cruz says. Since dealing in cash does not establish any credit or banking history, these want-to-be entrepreneurs have trouble getting business loans through traditional banking sources. Hispanics tend to either save up until they can buy a business in cash, or work with a business owner for favorable terms. Most often, those terms involve a large cash down payment, then terms to work off the remaining debt, Cruz says.
Seeking alternate methods to achieve their goals is, however, typical of most immigrants’ work ethics, he says.
“They have a drive to succeed and will not accept failure. It is reflective of the generation of Americans that grew up in the Depression,” he says.
Hispanics tend to stick to the businesses they already know how to do, Cruz says, such as opening restaurants specializing in the foods they grew up with.
“It forms a base, a little bit of back home. Then, later, they may expand,” he says.
Expansion may include everyone in the family. Like most small-business owners, Hispanics incorporate their immediate — and sometimes not-so-immediate — family members as employees and contributors to the business. Cruz says it was not unusual for several generations of a family to work and live together in order to cut expenses and save money.
Some businesses are more flexible with how additional family members can help, like restaurants where the children might bus tables, the father runs the kitchen and the mother takes orders. A grandmother or aunt might work the cash register.
Banks have started several efforts to reach out to the Hispanic market. First Security Bank in Springdale began offering classes this year about basic banking procedures such as opening checking accounts. Arvest Bank hired a Hispanic marketing manager, a new position in the company, in September to reach the expanding Hispanic population. Manuel Ocasio was selected mainly for his background as a pioneer in supporting commercial lending through outreach to businesses with Hispanic employees, Arvest spokesman Jason Kincy says.
Kincy says commissioning a study of the Hispanic community’s economic power could be a future Arvest task.
“We haven’t discussed that, but it would certainly be something we would be interested in seeing done,” he says. FOOD, INFORMATION, MUSIC
The need to help family is what drew prominent Hispanic businessman Eddie Vega to Northwest Arkansas. A native of California’s San Fernando Valley, Vega’s parents were immigrants from Mexico.
Vega was finishing his computer science degree at the University of California at Los Angeles in 1993 when he answered the call for help from his sister, Virginia Vega.
Virginia Vega was running the first Hispanic grocery store in Northwest Arkansas, La Mexicana, and was so successful she needed help to handle the growing business.
“At the time, that store was the center here for information, the Hispanic gathering place,” Eddie Vega says of the Springdale store.
When his sister closed it in 1994, Vega went to work with the then-Power Radio Group to launch a Spanish-language radio station. When that group dropped the popular format, Vega adopted it and moved on to run two Spanish-language stations.
He says he became the first Hispanic in the state to own a radio station, which is now one of the highest-powered and highest-ranking stations in the area, he says.
He also started the area’s first Spanish-language newspaper, La Prensa del Noroeste de Arkansas, in 1998 and sold it to Stephens Media in 2003.
Along with the radio stations, Vega also runs music promotions company Aztlan Promotions and owns the Springdale Civic Center on Old Missouri Road under the title of EZ Spanish Media.
The Springdale resident, who would only say he is not yet 40, is married with three children.
“The hardest part was getting started, but I haven’t had many obstacles. I’m positive about what I want, and I will do it,” he says.
It took Vega more than a year to get the loan when he bought the radio station license.
“But that happens to everyone buying a radio station. A license is just a piece of paper. Banks don’t have a lot of faith in one piece of paper,” he says. “I had to knock on a lot of doors, but I knew it was going to happen.”
And the banks are very happy with the results, Vega says.
“We’ve exceeded our expectations and are five years ahead of our goals. And I purposely set those goals higher than I thought we could achieve so they would look good to the bank,” he says.
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