Hispanic Heritage Month is a time when businesses have the opportunity to showcase their connection and commitment to the Hispanic community. Many businesses are very good about making social media announcements, adding banners to their websites, or including mentions of the occasion in their corporate communications. Some even take things a step further, with company-wide events or themed care packages for staff. What fewer companies do, however, is walk the talk by ensuring their Heritage Month purchases are made at Hispanic-owned businesses. It’s time for this to change.
Consider it a classic case of needing to “put your money where your mouth is” for companies that say they care about equality and empowerment within the Hispanic community. Hispanics are currently nearly 20 percent of the population – and set to rise over 30 percent in the near future -- yet the latest research from the Latino Business Action Network (LBAN) reveals only 400,000-450,000 Latino-owned employer businesses. Why?
There are a few barriers to rise above. One major hurdle? Capital. It turns out that one of the biggest struggles Hispanic business owners face is raising capital and forming relationships with corporations. This is true for both life-long citizens and doubly true for Hispanic business owner who were born abroad and later immigrated.
As reported by the Stanford Latino Entrepreneurship Initiative (SLEI), Hispanic-owned businesses received less than one percent of the total capital invested by VC groups throughout the pandemic. That’s unfortunate, but not unusual. Even in more traditional financing settings, Hispanics come up with less than others. Hispanic owned businesses are more likely to be asked to provide personal guarantees and large down payments/deposits when getting lines of credit, inventory financing, or loans. In fact, fewer than half of Latino owned businesses ever secure any form of outside funding. The vast majority relies on personal savings to get their companies launched and to provide the working capital that keeps the business running.
Due to this capitalization reality, landing a contract with a major corporation is a massive “big deal” for a Hispanic owned business. Even small Tier 2 or Tier 3 contracts can be a major milestone. It’s a vote of confidence in what they’re doing and a chance to prove that their company can deliver as needed, when needed. And if leaning on the themes of Hispanic Heritage Month is what it takes to get these conversations started and those first contracts signed, so much the better.
The contracts may also provide a space to discuss certification and why it matters so much for long-term business success. According to a survey conducted by SLEI just before the pandemic, throughout the United States and Puerto Rico only 12 percent of all Hispanic-owned businesses were certified as minority-owned. That’s a huge missed opportunity, and a place where a sponsoring business or advocate can make a huge difference in the life story of a Hispanic-owned business.
Pushing for certification is also a way to ensure that Hispanic Heritage Month spending – even if it’s only seasonal – has a continual, positive impact on the community. Businesses with certifications have greater access to small and large vendor contracts, and more contracts means a greater likelihood of the company growing and thriving over time. Using Hispanic Heritage Month as the starting platform for the conversation may feel a bit awkward at first, but it’s worth pushing through it.
After all, companies have embraced Hispanic Heritage Month as a time to celebrate and showcase their commitment to the Hispanic community. Yet for all the press releases and social posts, corporate actions speak much louder (and much longer) than any set of positive press. By making the effort to “walk the talk” with spending during Hispanic Heritage Month, companies can show exactly how much they’re willing to back up their supportive platitudes and themed posts – and there’s no better time than right now to back up those supportive statements with cold, hard cash.