Hispanic-Owned businesses in West Michigan

any vibrant neighborhoods in West Michigan have large, growing Hispanic populations. In fact, Hispanics are one of the fastest growing segments of West Michigan’s population, due to high immigration and birth rates. According to the U.S. Census, over 94,000 Hispanics lived in Kent, Ottawa, Muskegon, and Allegan Counties in 2006 — a little more than 7% of the total population — and that population has doubled since 1994. But the population of Hispanic individuals is not all that is growing. The number and variety of Hispanic-owned or Hispanic-focused businesses in Kent County is also increasing, evidenced by block after block of colorful retail storefronts on south Grandville Avenue (a.k.a. “Cesar E. Chavez Boulevard” for the legendary leader of migrant workers), on the west end of Bridge Street, and on South Division to 44th Street. There you will find an array of stores and services, from accountants and beauty shops to restaurants and supermarkets, most of which appear to be targeted to Spanish-speaking customers. Hispanic-owned businesses are growing quickly in the United States, in Michigan, and in West Michigan. According to the U.S. Census, between 1997 and 2002, the number of Hispanic-owned businesses in the U.S. grew 31%: three times the national average for all businesses. Hispanics owned 1.6 million nonfarm U.S. businesses in 2002, employing 1.5 million people and generating $222 billion in revenues. This represents nearly 7% of all nonfarm businesses in the U.S., 1.4% of employment, and 1% of receipts. Of the 50 states, Michigan was 16th in the number of Hispanic-owned businesses (over 9,800), and 12th in sales (over $3.1 billion) by Hispanic-owned businesses. This represents about 1.3% of all firms in Michigan. Hispanic-owned firms in the state employed almost 16,000 people.In 2002, there were about 1,400 Hispanic-owned firms in the West Michigan Combined Statistical Area (WMCSA) that generated $163 million in sales. But little else is known about the nature and characteristics of Hispanic-owned businesses in this area. This paper reports results of a preliminary study of Hispanic-owned businesses in Kent County. It describes some interesting characteristics about these businesses: how they began, with what kinds of resources, how large they are, how successful they are, who they employ, and characteristics of the people who own them. The project began in February 2007 as a partnership with the West Michigan Hispanic Chamber of Commerce, GVSU’s Small Business and Technology Development Center, and the International Business Program at GVSU’s Seidman College of Business. We conducted over 100 interviews with owners of Hispanic businesses in West Michigan to determine how Hispanic-owned firms in West Michigan were founded, in what industries, how they are financed, what knowledge, experience, skill, and other resources they brought to the table, and what markets they serve. The interviews were conducted in Spanish by GVSU students who are native Spanish speakers, at the owner’s place of business. The questionnaire was first tested on 20 business owners, modified to correct errors, and then used in interviews with the other 80 respondents.Two of the most striking findings are that these firms are quite young and very small. Nearly half of the Hispanic-owned firms started four years ago or less. Most of them are family-owned firms, but most report no employees aside from the owner. Sales are relatively low, with nearly half reporting annual revenue of less than $48,000. Most owners started their businesses with their own savings. Given that Kent County’s population has declined and has lost about 10,000 jobs since 2000, this suggests that this robust new business start-up rate may be driven by a lack of alternative jobs and a strong need to provide some supplemental, if not primary, income for the owners’ families. Some firms reported strong growth in the past few years, but most are not growing as they would like. Although a significant number of business owners have college degrees and claim to have an acceptable or good command of English, over three-quarters report less than $100,000 in assets. Another interesting finding is that the majority of Hispanic-owned businesses (nearly 45%) are retail operations, followed by services (about 21%). Only a small percentage (8%) is restaurants, perhaps contrary to a stereotype that restaurant is the most prevalent type of business owned by Hispanics (see Figure 1). Other results of the study are summarized below.