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As population jumps, Hispanic startups soar

David Cruz went from busboy to businessman in a decade. The Mexican native started working in an Italian restaurant on Manhattan’s Upper East Side when he first arrived in New York City from Oaxaca with his parents 10 years ago.

But he grew weary of having to work for minimum wage and made the decision to start his own business, an Internet cafe on East 116th Street in Harlem, four years ago.

“I wanted to be my own boss and to be in charge of my own success,” said Cruz, 27, who plans to open a second branch in the Bronx this year.

Cruz’s story is not unique. Hispanic entrepreneurial activity hit a peak in 2010, according to the Kauffman Foundation, which looks at start-up trends. It found the business-creation rate among Latinos  rose from 0.46 percent  in 2009 to 0.56 percent in 2010. This is the highest rate in the 15 years the foundation has been collecting such data.

David Cruz started his own business, an Internet cafe, in New York City. (Photo by Surekha Yadav/CNS)

More and more Americans are striking out on their own, many unable to find jobs in the economic downturn. But  several factors contribute to the  growth among Hispanic entrepreneurs, say experts. One is the large number of Hispanics in this country. Another is the influx of recent immigrants, and a third is the support network the Hispanic community has built.

As the number of Hispanics in the U.S. soars, so do their entrepreneurial ranks, experts said.  The nation’s Hispanic population hit 50.5 million in 2010, up 46.3 percent over the past 10 years, according to a Pew Hispanic Center analysis of the latest Census data.

“With a larger Hispanic population, more are likely to go into business,” said Luis Nevaver, director for Hispanic Economics, a research firm. “Most of this increase is from small businesses.”

Hispanic entrepreneurs also see a vast untapped market in their community. They are hoping to capture a share of the buying power of Hispanics, which exceeded $1 trillion in 2010, according to Packaged Facts, a U.S. market research company.

“It is a considerably big market,” said Nevaver. “So, going into business makes a lot of sense. There is, readily available, a large customer base.”

Another factor is the drive found within an immigration population. The Kauffman study showed that the rate of entrepreneurial activity for all immigrant groups has increased substantially – from 0.51 percent in 2009 to 0.62 percent in 2010 —  and declined slightly for the native-born.

“America offers many opportunities, and immigrants come here with the desire to capitalize on these opportunities and to make it big after having left their homes,” said Juan Tornoe , an expert on the Latino market and owner of Hispanic Trending, a Latino marketing and advertising blog.

Another key driver is the lack of recognition that many immigrants receive for qualifications and experience they bring from their home countries, says Magda Cardenas, a spokeswoman with the Greater Washington Hispanic Chamber of Commerce.

“A lot of them are professionals in their own countries, but their qualifications are not recognized here,” Cardenas said. “So they start their own business instead of accepting work that is not on par with their experience.”

For recent immigrants Pastor Ramiro Payllo and Carmen Segales, this meant delving into a whole new industry — confectionery. The couple moved to Vienna, Va., from Bolivia four years ago because they believed they had hit an economic ceiling in La Paz.

Back home, Payllo was trained in international commerce, while Segales was a professional engineer. But in America, they both agreed that starting a business was the way forward.

“If you want to make it big, then you have to start a business here” said Payllo. “That, I believe, is the only way.”

The couple import fine dark chocolate from their home country. The brand, El Ceibo, is available in 50 stores across the U.S. and Payllo says that the support of the Hispanic community has been an integral part of their success.

“It is a strong community and we are all determined to help one another succeed,” he said.

For Cruz, friends and family helped him raise his initial capital of $60,000 through small personal loans.

“Everybody helped me out when I first got into this, and now they are still there for me, and help me out by working in the store when I am short-staffed,” Cruz said.

The number of small Hispanic businesses is set to keep growing, say experts. The Hispanic population is expected to triple in size by 2050, according to the Pew Center. And the revenue from Hispanic businesses is expected to surge more than 39 percent, to more than $539 billion in the next six years, based on estimates by HispanTelligence, a market research firm.

“A large growing population with tight-knit communities and the immigrant drive — with all of these factors, this trend is going to continue,” said Cardenas.

Email: say2107@columbia.edu

April 21, 2011