Photo: De Colores Consulting
Small businesses are the backbone of a stable and strong economy. In California, this fact holds true and steady. We recognize all the ways they create meaningful jobs in our communities, unleash the creativity of creators and artists, and add vibrancy and cultural diversity to our neighborhoods. Latina entrepreneurs (“Latinapreneurs”) are leading the way. They continue to launch new businesses at six times the national average, outpacing all other demographics in revenue growth, and leading the charge towards an economic renaissance.
In collaboration with the Latino Community Foundation and the California Commission on Status of Women and Girls, the Stanford Latino Entrepreneurship Initiative has released new data highlighting Latinapreneurs in California, whose over 21,000 Latina-owned businesses make the golden state home to 24% of all Latina-owned businesses in the nation. Despite this impressive presence, the data also illustrates an incredible gap and opportunity for federal, state, and local governments to match the drive of Latinapreneurs with equitable contracting and support.
California is the fourth largest economy in the world with the largest state budget in the nation, and is receiving the largest share of both the American Rescue Plan and the Infrastructure Investment and Jobs Act. With all these investments flowing to and through the state, government contracting opportunities for businesses will be at an all-time high. But, Latinapreneurs are being slow-played and short-changed. They have to negotiate longer and earn just 13 cents on state government contracts and 10 cents on local government contracts for every dollar earned by White men-owned businesses based in California.
The Latino Community Foundation hosted a listening session with Latinapreneurs from across multiple sectors – tech, logistics, service – to unpack this new data and ground the statistics in real-world experience. And while some of the data, like the vast gap in contracts awarded, would seem surprising, the participants were not surprised at all. In fact, one Latinapreneur, the owner of an independent translation company in the Bay Area, noted how the few cents awarded to Latina-owned businesses in the data was actually more than she’d seen. And all of them emphasized how difficult, opaque, and slow bidding processes can be for government contracts.
Another recurring theme that Latinapreneurs raised in the session was extremely long delays in contract payments – sometimes running as long as ten months in arrears. Regardless of payment delays, these diligent Latinapreneurs find ways to execute on contracts, sustain business operations, and pay their employees, a challenge made even more difficult by the inequitable access to capital that Latino-owned businesses face and a hurdle that often makes them think twice about pursuing future government contracts. It also didn’t help that there is an existing distrust of government in many of their communities, especially among immigrants who’ve been so often stigmatized or at best neglected by our institutions.
The stories of these Latinapreneurs affirmed the concerns underscored by the data, but also pointed to what can help ensure a once-in-a-generation influx of government investment reaches all of our community, especially the Latinapreneurs fueling our local economies. One step state and local governments can take to build trust and opportunity is to invest in culturally and linguistically relevant outreach, support, and technical assistance for small businesses. Grassroots nonprofits can be trusted partners and lead the way in direct service to Latinapreneurs and others, providing support and even capital to help them launch and grow their businesses. It’s why the state should also support the nonprofit ecosystem with reforms like those included in the California Nonprofit Equity Initiative to more equitably work and contract with nonprofits that will be there for our entrepreneurs.
Latinapreneurs are already proving they can execute in the market and provide great services and products, but the tedium and hurdle of bureaucracy is not letting them compete for public contracts. Support from trusted partners as they navigate those processes, coupled with more streamlined government contracting in the first place, would allow just competition and improve the way government serves the public, all while benefiting our state and local economies. And, given how Latino entrepreneurs are still unjustly denied business loans even when they outperform other businesses, the state’s ability to support access to business capital and to reduce payment delays to businesses it does contracts with, will be paramount for all, but especially Latinapreneurs and small business owners.
Latinapreneurs aren’t just the backbone of California’s economy, they are our best bet at an economic renaissance. The billions of government dollars flowing to California have the potential to change the economic landscape of the state, but if we fail to meet this moment we will miss our shot to build a more just and inclusive economy and that would be a costly market and moral failure.
The Stanford Latino Entrepreneurship Initiative surveyed 10,000 employer businesses in 2022 as part of its annual national survey to assess the current state of U.S. Latino entrepreneurship. We have compiled some of the most pressing insights about Latina-owned employer businesses in the state of California.
By: Max Vargas, Vice President of Economic Justice
Veronica Vences, Entrepreneurship Director