Did you know that the Latinx-American business market is growing significantly faster than every other business segment in the United States?
If you’re looking to expand your accounting firm’s small business clientele, you should consider partnering with Latinx-owned businesses. They’re growing exponentially, yet they’re far more underserved than other business segments.
Here at Gusto, we aim to equip accountants with invaluable tools for expanding their firms while improving their ability to serve their clients. On this episode of On the Margins: LIVE, hosts Will Lopez, head of Gusto’s accounting community, and Caleb Newquist, Gusto’s Editor-at-Large, discussed the many opportunities presented by an undervalued business segment: the Latinx community.
In addition to this article, which is Part One of the series, you can read Part Two to learn how you can support Latino and Latina entrepreneurs and accountants.
Will and Caleb discussed many critical topics relating to Latinx-owned businesses, including the Latinx community’s business growth statistics and what accountants and professional service providers can do to assist Latin-owned businesses.
Latinx business owners’ growing community
Caleb and Will went in-depth as they discussed the rapidly growing Latinx business community. Although the Latinx community is underserved, the Latinx business market is growing significantly faster than every other segment in the United States:
“Latinos are opening up more small businesses than anyone else in America, despite the opportunity gap between Latinos and other Americans. It is the fastest-growing segment. … [According to the] International Society of Logistics, … over the past ten years, the number of Latino business owners grew 34% … compared to 1% for all other business owners in the U.S.”– Will Lopez
The Latinx business community is growing 34 times faster than any other business community in the United States. Additionally, the annual revenue for Latinx-owned businesses is rapidly increasing yearly:
“[According to] Biz2credit, the average annual revenue just year over year because of that fast-growing demographic, culture, and background [has grown by] 46%. I mean, it’s through the roof.”– Will Lopez
Between 2018 and 2019, the average annual revenue for Latinx-owned businesses grew from $327,189 to $479,413. The annual revenue increase indicates that the Latinx community represents an invaluable segment of America’s population. Yet, they often face linguistic barriers because business products and services are typically only offered in English. Additionally, Latinx-American communities are far more likely to be underserved and have less access to healthcare.
Family-owned businesses in the Latinx community
Numerous family-owned Latinx businesses thrive in the United States, despite being underserved. Will discussed his own family’s background and experiences running businesses:
“My dad’s from Puerto Rico, my mom’s from Mexico. … They loved owning their business. They were extremely passionate [about] owning their business. In fact, a lot of my family owns businesses. My cousins, my nephews, other uncles, and aunts [are] just extremely entrepreneurial and, for lack of a better way to express it, love to hustle the business side of things.”– Will Lopez
Will came from an incredibly entrepreneurial family. He noted that business ownership is appealing both to migrants and people born in the United States:
“There’s just a lot of freedom and autonomy that you achieve through business ownership. I grew up in a family that was just so pervasive with it that it was just very commonplace in my family to just do a bunch of [business endeavors].”– Will Lopez
Although members of the Latinx community often face an uphill battle when running a business because of linguistic limitations or lack of access to business resources, Latinx-owned businesses still thrive through perseverance and hard work. Will’s parents used to discuss how their business’s success depended on their own work despite their circumstances:
“[Latino Americans are the] fast-growing demographic and people group and entrepreneurial skillset, yet it’s the most underserved. It’s just really interesting that even though it’s underserved, it doesn’t slow them down. … My father and my mom used to tell me all the time growing up [that], despite the environment, we had full control and autonomy over our own decision-making. Either we could be successful in our own right or not, and it takes work. It’s never easy. It always takes work, and you always move through it.”– Will Lopez
Will’s parents didn’t have the same resources that many small businesses today have like a credit line, tax planning, or people advisory, but they made the most out of their resources, and they enjoyed running their business:
“My parents didn’t have … a trusted advisor. My parents didn’t work with accountants. They did it all on their own. … They didn’t go through the motions to try to apply for a credit line or anything like that. … I don’t have any memories of them actually saying to themselves, … ‘How can we be better business owners? How can we unlock additional liquidity? How can we just access more stuff?’ … They just knew that they … loved owning a business. … For them, they were just making the most of what they had, and they thought that that was sufficient.”– Will Lopez
Will’s family faced certain limitations that many Latinx-owned businesses are up against, such as a lack of professional services. But they still had a strong entrepreneurial spirit and ran their business founded on hard work.
What’s holding the Latinx market back?
Although there are many successful Latinx-owned businesses across the United States, Latinx-American business owners often face adversity because they lack the small business resources that other companies have. There’s a linguistic barrier for some Latinx business owners because business resources are typically only offered in English.
Will speculated that the main reason why Latinx-owned businesses don’t have access to the same resources is that professional service companies fail to acknowledge the significance of this business segment:
“It could be probably a lack of awareness as far as visibility into the growth or the needs of … the Latinx community group or business owner community group. I would say [we need] more representation to say, ‘Hey, this is a community that is fast and growing. [It] does need more enablement, … more unlocking, and it takes committed parties to actually bring that about.’”– Will Lopez
Accounting firms and companies that provide financial and bookkeeping services need to recognize that the Latinx-American community is underserved. Partnering with Latinx-owned businesses is beneficial for those providing accounting and advisory services because they’re a fast-growing market:
“There’s a really good business case for this because the Latino businesses are the fastest-growing segment of businesses in the United States. … [Also], we patronize their businesses every day, and we want them to be successful. I think getting [them] the tools that they need in order to run their businesses as best they can [is] critical for them.”– Caleb Newquist
Latinx-owned businesses need equal access to the small business resources that other companies have. This benefits both the Latinx-owned small businesses and the company providing the tools. Will noted that companies need to make an effort to partner with Latinx-owned businesses:
“I think companies saying to themselves, ‘We’re committed to this segment. We want to push forward this segment. We want to partner with this segment,’ is really just what it comes down to. … There’s a real shortage of … banking resources [and] then also professional advisors like accountants for Latino businesses.”– Will Lopez
If professional service providers and accounting firms consciously partner with Latinx-owned businesses, the Latinx business community will experience further growth and success. Additionally, professional service providers and accounting firms can benefit financially from working with Latinx-owned businesses because their business segment is underserved yet growing rapidly.
Learn more about partnering with Latinx-owned businesses
The Latinx business community is expanding significantly faster than every other segment in the United States. Still, Latinx-owned businesses often don’t have access to the same banking and professional services as other small businesses. You can help Latinx businesses expand by partnering with them, and you’ll also create new opportunities for your accounting firm because the Latinx market size is increasing exponentially.
You can watch Part Two of this article series based on the episode to learn more about serving the Latinx-American business community. You can also watch the entire On the Margins: LIVE episode here, and don’t forget to subscribe to our YouTube channel to learn more about accounting trends and tools.
If you’re looking for ways to assist Latinx-owned businesses, consider becoming a people advisor. People advisors assist small businesses with people-based operations like payroll, benefits, and HR. Here at Gusto, we offer an exceptional People Advisory Certification program that can help get you started. Additionally, you’ll join a community of accountants and bookkeepers building for the future with our People Advisory Certification and Gusto Pro’s modern tools. As a People Advisor, you can better serve your clients and their incredible teams. Get certified.