Minority Businesses: Knowledge and Facts

By: Power Media Group-Shirley Teran

The economy these past years has been very hard for everyone, especially the Hispanic culture. Hispanics around the United States say that they have the “worst of a bad economy” and see themselves in the dark side of this recession more than any other ethnicity.
Although Hispanics are struggling they still have a positive attitude tow
ards their future, more than any other ethnicity in fact. According to studies, two-thirds (67%) of Hispanics say they expect their financial situation to improve over the next year compared to 58% of the general population. Also two thirds also expect their children to enjoy the standard living that surpasses their living today. This is a dramatic difference compared to 48% of the general public.
Not only is the Hispanic culture the largest minority group in the country but they are now the youngest. According to the 2006 American Community Survey, 33.8 percent of the Hispanic population is under age 18 compared to 21.3 percent of non-Hispanic whites. Young generation Hispanics are the population that is choosing the television shows, music, sports, and products that the general public is exposed to. These young generation consumers, much like the majority of the population now are online and focused on the new trends. Hispanics are always seen to be “ahead of the game” when it comes to the technological trend. Studies have shown that 44% Hispanics own a smart phone compared to 34% of other ethnicities and 81% of them use video sharing sites such as YouTube and Facebook. All this buying power that they have has grown dramatically in the last decade. It is estimated that the Hispanics market is worth 1.2 trillion dollars, which is the biggest than all thirteen countries in the world. It is also expected to rise to 1.6 trillion by the year 2015.
Hispanics have not only grown by population but through businesses as well. Minority owned businesses have also increased dramatically over the last ten years. According to the U.S Minority Business Development Agency reports that between 2002 and 2007, Hispanics owned businesses grew faster than the national average of 44% in 28 states.
If this growth is so, then why do we see so many small businesses close down? Studies have shown that minority businesses have a great idea and knowledge for what they sell but many do not have a great “capability statement” which is similar to a snapshot of the business when a consumer first looks, or learns about the company. A capability statement is used to market or promote a business to current and future consumers. Without this or an appealing one, most minority companies cannot hold up against competitors.
According to Llopis another reason why minority businesses are not ahead compare to its competitors is because of their lack of leadership and successful business operator. Leadership styles he found that were common upon minority businesses and unsuccessful were:
• Leadership was transactional only
• There is no exit strategy
• Unable to power up their team
• No successor was ever identified
• Poor communication
All these factors effect whether a business succeeds or fails in the business market.
So what does one need to know in order to market to the Hispanics and help minority businesses create brand recognition? First thing any marketer must know is that Hispanics are not homogenous. Studies have shown that Hispanics themselves are one of the most diverse ethnic groups within the United States. Secondly, the Hispanic population is urban and can be found everywhere. The states with the fastest growing population of Hispanics are South Carolina, Alabama, Tennessee, and Kentucky. Third, upscale brands should market to the Hispanics culture as well. Many businesses think that because they sell high priced items that the Hispanic culture does not matter. This myth is false, studies have shown that upscale Hispanic households had grown rapidly in the past years and their buying power increases to 680 billion. Next, a business must realize that Spanish campaigns are not enough to target to the Hispanic culture. The majority of Spanish dominant Hispanics agree that when they see a Spanish advertisement they feel a relationship towards that company or product. But English dominant Hispanics think otherwise. Some English dominant Hispanics actually feel insulted when they see a certain campaign demonstrating Hispanics a certain way. Lastly, Hispanics are brand loyal to several companies but they are also most likely to try new brands than non-Hispanics. According to the Experian Simmons, 26% of Hispanics adults “like to change brands often for the sake of variety” compare to 16% of non-Hispanics.
There are seven sectors of business that can gain revenue for minority businesses. These include:
• Food: Hispanics spend about 7.7% of their income eating at home compare to 6% for non-Hispanics. They also spend .9% more than non-Hispanics on food for the home.
• Retail: Many retailers today try to interact with the Hispanics market through English and Spanish medians such as using an artist for both language advertisements. They also try to attract through brand loyalty and building relationships with their consumers.
• Education: According to the Pew Research Center, Hispanics are the mains source of the higher education sector. This sector has grown rapidly is the past five years. Community schools and trade schools are the most popular because although tuitions increase, these schools offer a high degree at lower costs.
• Real Estate: With the amount of Hispanics entering the work force because of a higher education, there dream of owning a house is still in mind and staying at a neutral level.
• Financial Services: Studies have shown that in the next five years the Hispanics contribution to commercial banking and money transferring industries will grow faster by 7.3%.
• Transportation: Studies have shown that Hispanics will contribute 7.4% more growth to the automobile manufacturing industry, which means 14 billion more than in 2011. The top five brands among Hispanics between the ages of 18 and 34 are; Mitsubishi, Nissan, Toyota, Honda, and Suzuki.
• Entertainment and Media: Because most Hispanics are second generation they are younger and for tech-savvy. The most successful way of reaching out them is through mobile and internet channels. After 2009 recession, the Hispanic media grew 1.9% with the largest success being in television, magazines, and especially the Internet.
Hispanics are the fastest growing population in the market and their opinions and ideas are taking over businesses everywhere. It is important, as a business owner, to know everything it is about your target market and focus on what their needs and wants are. These facts and knowledge are a key step to understanding one of the biggest minority groups in the United States.