University Study Identifies Growth Path For Hispanic-Owned Small Businesses in Texas

The two most critical challenges for Hispanic-owned businesses to grow are overcoming a lack of training in management and communication skills and gaining better access to markets, according to new research of Hispanic-owned businesses in Texas from The University of Texas at Austin. The study provides a fresh look at the challenges these mostly small businesses face.

The “Survey of Texas Hispanic-owned Businesses with Paid Employees” was produced by the university’s Bureau of Business Research (BBR) for the Texas Association of Mexican American Chambers of Commerce (TAMACC). The report findings are being presented today at the TAMACC annual meeting in San Antonio by the Bureau’s Bruce Kellison and Elsie Echeverri-Carroll, the principal investigators.

The university invested $155,000 in the survey through the Herb Kelleher Center at the McCombs School of Business and the Office of the President of The University of Texas at Austin. The Ewing Marion Kauffman Foundation also funded the survey.

“We were pleased to help the Texas Association of Mexican American Chambers of Commerce in studying this important economic issue,” said university President Bill Powers. “A better understanding of the challenges faced by Texas’ Hispanic businesses will allow TAMACC to identify strategies to help these businesses grow and help create jobs and new opportunity in Texas.”

“We’re paying attention to this demographic because Hispanic-owned businesses create jobs for Texans, and their ability to scale is critical to the Texas economy,” said McCombs Dean Tom Gilligan.

The survey is based on the results of a mail survey of 2,811 Texas-based Hispanic businesses with paid employees conducted between July 2011 and August 2012. Findings include:

Most Hispanic-owned businesses in Texas start small and stay small even after many years of operation.

• Forty-seven percent of Hispanic businesses with paid employees have between 1 and 4 employees, and 73 percent have fewer than 25 employees.
• Eighty percent of young firms (5 years or younger) have fewer than 10 employees, while 66 percent of mature firms (16 years or older) still have fewer than 10 employees.

Hispanic business owners have high educational attainment.

• Hispanic owners of businesses with paid employees have higher educational achievements than the general Hispanic population: 77 percent of the employers have some kind of post-high-school education, compared with 34 percent of Texas Hispanics in general over the age of 25.
• Hispanic entrepreneurs also have many years of business experience; 56 percent of respondents have more than 20 years of business experience in their current business.
• Many of the Hispanic business owners indicated that their employees need training, particularly in team management and leadership (24 percent), business/customer relations (16 percent) and written and oral communication (14 percent).

Promoting Hispanic business ownership can increase Hispanic employment.

• More than 80 percent of the respondents indicated that they hire mainly Hispanics or an equal number of Hispanics and non-Hispanics. These findings are in line with previous census results that show business owners tend to hire more employees in their own ethnic groups.

Hispanic business owners feel they have less access to private and public market opportunities.

• A larger percentage of respondents agree that they do not have equal access to government and private sector customers than disagree with such statements. Moreover, while 34 percent of respondents agree that they do not have equal opportunities in the private sector, a much larger proportion 49 percent agree that they do not have equal opportunities in the public sector.

“The information provided has yielded valuable insights, and we hope that this report will be useful to the survey participants as well as to other business owners who plan to start or expand their businesses,” said Echeverri-Carroll, one of the study’s principal investigators. “The Bureau of Business Research at The University of Texas at Austin is pleased to have produced this study in order to help Hispanic business owners succeed and continue to contribute vital strength to the Texas economy.”

A download link to the full report is available at ic2.utexas.edu/hob.