Hispanic small business ownership across the nation has been on the rise in recent years. In fact, according to the Minority Business Development Agency, there are now more than three million Hispanic-owned small businesses in the U.S., generating an estimated $473 billion in revenue. That's an impressive increase from 2007, when just 2.3 million Hispanic owned small businesses were in operation.
In its study of Hispanic business owners, Geoscape found that these business owners tend to be much more engaged with banking services, both at the commercial and personal level. In fact, nearly one third of Hispanic small business owners use online banking versus just 19 percent of the broader Hispanic population.
Taking a deeper look at Hispanic entrepreneurs reveals the interesting factors which motivated them to launch their own businesses. According to a recent small business survey conducted by TD Bank, nine in 10 Hispanic business owners reported that the control and flexibility offered by owning your own business was the core advantage.
As with all business ventures, small business ownership has its unique set of challenges. Most concerning is the high risk of failure associated with launching a business if not planned and executed effectively. With this in mind, TD Bank asked Hispanic small business owners to share tips which can help new entrepreneurs launch their own businesses, and listed here are the top three responses.
1. Build a Foundation with your Business Plan
It's important to craft a business plan that outlines the current status of your business, as well as how you want your business to grow over time. One third of Hispanic small business owners ranked having a well thought-out business and financial plan as the top priority for aspiring entrepreneurs.
Within the scope of the business plan, be sure you have laid out concrete expansion strategies. Nearly half of Hispanic small business owners listed expanding their business as the area they need the most advice on, compared to 30 percent of the broader population.
Business plans should differ depending on the industry, but you should be sure to include three essential financial components: an income statement, a balance sheet and a cash flow statement. This information will help you determine the amount of funds needed to finance the business and paints a clear picture for potential investors.
2. Keep Learning
TD research shows that Hispanics on average start their businesses four years earlier than the broader population, opting to go out on their own at 35 years old. Furthermore, an overwhelming 83 percent start their businesses from scratch rather than taking over a family business. That combination makes continuing education all the more important.
With that in mind, take advantage of tools and resources available for free or at low cost such as participating in online small business workshops. These workshops can help you plan for nearly everything you will need to know about starting a small business, and how to market and manage it as it grows.
Additionally, the Small Business Administration has resource partners such as SCORE, a nonprofit association dedicated to helping small businesses, Small Business Development Center and Women's Business Centers that provide additional business counseling and training. The SBA also offers business resources to help entrepreneurs start or grow a business in their area.
3. Feed the Piggy Bank before Cutting the Ribbon
The business start-up process can be financially taxing on you and your family. It's essential to determine where and when to spend money. In any business, you will often have to spend money to make money, but you can avoid unnecessary stress by ensuring you have a financial cushion before embarking on a new venture.
Meeting with a financial partner at the very beginning of the process is an important first step and will help prospective entrepreneurs get an accurate picture of their current financial state, as well as provide a solid foundation for achieving small business ownership. Small business owners should work with a lender to discuss financing options for their endeavor - whether that's opening a new office or purchasing a new piece of equipment. Through open and honest communication with a trusted financial partner, potential business owners will feel more comfortable and prepared for their new venture.