Setting New Goals
Frank Moran, 37, is president of the Los Angeles-based Latin Business Assn., a national organization of 2,600 members that promotes rapport between big corporations and Latino businesses, assists companies seeking government contracts or capital for expansion and lobbies on behalf of Latino issues. He is founder, president and chief executive of Team-One Staffing Services, a bilingual employment agency in Los Angeles. He was interviewed by freelance writer Nancy Zubiri.
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Q: What is the state of the Latino business community in Southern California today?
A: We generate over $7 billion in revenue. We have over 300,000 employees. There are over 210,000 Hispanic businesses in the Southern California marketplace.
That is an enormous contribution to the economy. But what is really amazing is that the community has grown to this level by and large outside the normal mainstream business practices.
They’ve been doing it on their own with very little access to capital, very little legislative and governmental support. In fact, Hispanic business owners are only 2% of the recipients of any type of affirmative action. So once you educate and get involved with this community, you can accelerate the growth of the economy proportionately.
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Q: What are some of the strongest industries in the Latino business community?
A: Manufacturing, food services, apparel, and one of the real strong ones, surprisingly, is construction.
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Q: What are some of the hurdles facing the Latino business community in Southern California?
A: The No. 1 hurdle is for corporate America and the political policymakers to better understand why the Hispanic business owner is not part of mainstream America. Why is it that we don’t go to financial institutions or have readily available capital to expand our businesses? Why is it that we are not utilizing many of the institutions that could help secure the growth and prosperity of Hispanic business owners?
More often than not, a bank will call on a Hispanic business owner and say: “You should borrow money. You should do this.” And we’re not inclined to do that. We would rather go slowly. Our relationships are primarily based on trust, and you can’t develop a trusting relationship based on a one-time visit or a one-time sales call.
No. 2 is access to capital. Banking institutions want to fit the Hispanic business community into the traditional hole for access to capital. We really don’t work that way. We’re much more relationship-driven. We don’t usually retain CPAs and attorneys. We don’t retain the services of management consultants and such. We usually just work harder, and we work within the capabilities of understanding the customer.
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Q: Why is that a problem?
A: The banking institutions and the government regulators felt if we didn’t have certain types of documentation that we couldn’t fit into their capital lending programs. When the numbers came out and they started studying the demographics, guess who came out No. 1 of all trackable groups--all--of the lowest risk to lend to? Hispanics. We pay back our mortgages better. We pay back other loans better. We have the lowest ratio of bankruptcy of any measurable, trackable group.
This is one of the reasons Citibank became a partner with Latin Business Assn. to the tune of $100,000. That’s a huge commitment considering that we’re not a nonprofit. You have to ask why. They wanted two things from the LBA. A, they wanted access to our members. And B, they said now that we have access to them, how do we get them to come into our bank? They didn’t know how to do business with the Hispanic business community. The LBA is a very good vehicle to teach them, and because of our partnership, they’ve done tens of millions of dollars of loans.
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Q: What does it mean to be a partner with the LBA?
A: In the ‘70s and ‘80s, the LBA was a recipient of corporate donations and community outreach. Corporations didn’t really expect anything back from it. One of the messages that I took to corporate America was: “We don’t want your charity. What we want is a relationship.” Think of the LBA as your sales rep that has access to the Hispanic community. Being a partner means they are interested in our welfare now, because it’s good for their welfare.
Citibank has been a champion of helping our members understand how to do business with a bank. They didn’t just come in and say, “Here’s your decline, sorry, come back in a year.” They said: “You’re declined. These are the reasons. This is Mary who will help you get prepared for next year so you can get that loan approved. And if we can’t get that loan approved, we have relations with other banks that maybe collectively will be willing to share the risk.” That’s what partnering means.
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Q: Is the LBA more interested in helping members change and fit the mold to obtain that capital, or is it more interested in having banks accommodate its members?
A: Fifty-fifty. My call is to tell a business owner: “You cannot assume that a bank did not approve your loan because you are Hispanic. It’s only because you did not present your case properly.” Because of the way banks were communicating with the Hispanic business owner, we were destined to fail.
There are more and more programs to help us. And the people who are the heads of these tend to be more often than not Hispanic. So there’s an understanding about what needs to be done. An example would be a pilot program by the mayor--the Minority Business Opportunity Committee--which is a contract and procurement clearinghouse to the effect of $3.1 billion in public and private partnerships with minority- and women-owned businesses. I myself did not know that there were so many programs available to assist Team-One’s growth, economically and on a customer basis. It’s a great source to get new business.
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Q: What do you see as the future of the Latino business community in Los Angeles?
A: Small businesses are replacing large businesses at a ratio of 3 to 1, and we now employ over 80% of the market. That’s huge. We were the quiet engine that’s been humming, and if we learn to really feed it properly, it can even do more.
The Hispanic community needs to learn how to handle its newly acquired influence and power. We won’t gain the respect at large of America until they realize that we really want to participate in the security and prosperity of American society as a whole, not just ourselves.
