Number of Latino Firms Up 76% in 5 Years; California Has the Most

The number of Latino-owned businesses soared 76% between 1987 and 1992, and their sales receipts rose 134%, far outstripping the general growth in U.S. business, the Census Bureau reported Wednesday.

Latino-owned firms, which are moving rapidly beyond small mom-and-pop enterprises into a wide variety of sophisticated ventures, now account for 4.5% of all U.S. businesses and generate 2.2% of gross receipts.

California was the leading state for Latino entrepreneurs. Its 249,717 Latino-owned firms account for 11.1% of the businesses in the state and generate $19.6 billion in receipts, or 4.8% of the statewide total.

“Entrepreneurship is the flame that heats the American melting pot,” Everett M. Ehrlich, undersecretary of commerce for economic affairs, said at a news conference at which the report was released.

Business creation is traditionally “the way we integrate all the groups into the American economy,” he said. The survey of changes between 1987 and 1992 demonstrates that “a vibrant Hispanic private sector is growing in America both in numbers and volume.”

The extraordinarily rapid increase “confirms all our findings in the Chamber of Commerce about the growth of Hispanic entrepreneurs,” said Jose Nino, president of the U.S. Hispanic Chamber of Commerce, which has had its own sharp expansion, to 250 chapters today from 60 chapters in the early 1980s.

The growth reflects “part of the evolution of we as a people in America,” he said. “We have become more educated. . . . Doors have opened for us.”

The hot spot for Latino business is Los Angeles, which had 109,104 firms with 65,000 paid employees and receipts of $7.8 billion. Orange County had 19,270 companies with 14,503 workers and receipts of $1.6 billion.

The number of Latino-owned businesses nationwide rose to 862,605 in 1992, up from 489,973 five years earlier, a spurt of 76%. The total number of U.S. businesses climbed 26%, from 13.7 million to 17.3 million, over the same period.

In those five years, revenues at Latino-owned enterprises jumped to $76.8 billion from $32.8 billion, a gain of 134%. The figure for all U.S. enterprises climbed 67%, from $2 trillion to $3.3 trillion.

Despite the boom in business, lack of capital has restricted Latino participation in a number of businesses, particularly finance, insurance, real estate, wholesale trade, pharmaceuticals and manufacturing, Nino said.

In the Southland, Latinos are often lacking in high-technology fields but are well represented in retailing, manufacturing, transportation and construction, said Jack Kyser, chief economist with the Economic Development Corp. of Los Angeles County.

The economic expansion far surpassed the population growth. The Latino population expanded by about 7%, and Latinos accounted for 9.5% of the nation’s population in 1992.

Many Latino companies are eager to cross over into markets outside the Latino community, said Linda Griego, president and CEO of RLA, an economic development corporation.

She cited a Los Angeles furniture manufacturer that began in 1989 in a garage and which, by expanding its customer base, grew into a $10-million business with a factory in South-Central.

“The companies that we deal with right now have been in business for five years, and their goal is to enter the mainstream,” Griego said.

California had 250,000 firms, or 32% of all Latino-owned enterprises, followed by Texas with 155,909, or 20% of the total, and Florida with 118,208, or 15%.

The companies are smaller, with an average of $89,000 in receipts per firm, compared with $193,000 for all U.S. companies.

There is a heavy concentration of very small enterprises--47% of the firms had revenue of less than $10,000. Just a tiny handful--9,200 of the 863,000--had receipts of $1 million or more.

The Census Bureau report is released every five years. The government gathers a sample of firms from Internal Revenue Service tax returns and matches the names of owners with records from Social Security, which has information on the ethnic background of Americans.

Rosenblatt reported from Washington and Torres from Los Angeles.

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How the States Rank

California ranks first among the states in number of Latino-owned businesses. But in terms of Latino firms as a percentage of total businesses in the state, it drops to fourth.

Total Latino Firms

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State Number Receipts (billions) California 249,717 $19.6 Florida 118,208 16.1 Texas 155,909 11.8 New York 50,601 4.7 New Jersey 22,198 2.8 New Mexico 21,586 1.5 Illinois 18,368 2.0 Arizona 17,835 1.3 Colorado 13,817 1.2 Virginia 7,654 1.0

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Latino Firms as % of Total Firms

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Latino firms Latinos as % State as % of total of population New Mexico 20.1% 38.9% Texas 12.4 26.5 Florida 11.8 12.9 California 11.1 27.0 Arizona 7.2 19.6 Nevada 4.4 11.2 New York 4.4 13.1 New Jersey 4.3 10.3 Colorado 4.3 13.2 District of Columbia 4.1 6.0

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Sources: Census Bureau, Commerce Department