Economic Development

Minority Business

Hispanic Hustle
The surging number of Latino-owned businesses proves
that North Carolina's economy is healthy and open to all entrepreneurs

Two Durham entrepreneurs are about to savor the sweet smell of success. Story below.
When Julio Cordoba (below right) established Valcor Inc., a computer components company, in Raleigh in 1989, "I thought I was the only Hispanic in this area." Today, the state's Latino business community is thriving, and the Hispanic Chamber of Commerce of North Carolina has more than 200 members.

By Stephanie Gibbs

Julio Cordoba rarely saw a Latino face at the mall in 1989, when he moved to Raleigh to set up his electronics manufacturing plant.

“When I first came here, I thought I was the only Hispanic in this area,” said Cordoba, a Colombian raised in Florida whose company, Valcor Inc., assembles products for several Fortune 500 companies in the Triangle. “I just basically dealt with corporate America. I really didn't know any Hispanics in the area. All my contacts were with Anglos, if you will.”

If there were few Hispanics shopping at the mall a decade ago, Cordoba said, even fewer owned stores and businesses. But Cordoba has seen a world of change in the Latino business community since then.

To begin with, there is a Latino business community.

Four years ago, Cordoba and several other Latino business owners founded the Hispanic Chamber of Commerce of North Carolina. Its first membership drive attracted only 15 members, he said. The chamber now has more than 200 members, offices in Wilmington and Raleigh and plans to expand to other parts of the state.

From the coast to the mountains, the growth of Latino-owned businesses in North Carolina has surged in the past decade. “It is past the embryonic stage and it is growing,” said Michael Lopez, president of Project Expediters Inc., a construction consulting firm based in Chapel Hill.

Small convenience stores and groceries, called “tiendas,” now dot the landscapes of cities and small towns. Restaurants serving Mexican, Brazilian, Argentinean and other Latin cuisine have become commonplace. More frequently than ever, the South Americans and Mexicans replacing roofs, framing houses and laying brick are employed by a fellow Hispanic.

The state's growing Hispanic population has created a new market with buying power estimated at $2.3 billion last year, according to a new study prepared for the North Carolina Institute of Minority Economic Development. The $2.3 billion represents roughly three times the buying power Hispanics had in 1990 — $836 million — according to the study.

With the greater cash flow came a variety of businesses aimed at filling the void of faraway cultures and loved ones. Spanish-language satellite TV packages are big sellers in the Hispanic community, observers say, as are long-distance telephone cards and foods imported from Latin countries.

Hispanics are seeing those needs and seizing the opportunities to fulfill them, Cordoba and others say. Yet the Hispanic portion of North Carolina's business sector remains very small and vulnerable, some say. Despite tremendous growth, the number of Hispanic-owned businesses in North Carolina is estimated to be no more than 2 percent to 3 percent of the total number of businesses.

“I think it's very low, close to precarious,” said John Herrera, vice president of Hispanic/Latino affairs for Self Help Credit Union of Durham, which helped establish the state's first credit union geared toward Latinos.

“There's a lot of work to do to provide people with access to capital, and teach them how to navigate the system.

“People have great ideas. We are entrepreneurs by nature and we know how to survive. But what we need to do now is navigate the system, not just survive.”

The vast majority of North Carolina's Latino-owned businesses are one-person or family-run operations, Cordoba and others say. Those entrepreneurs encounter the same challenges most small business owners confront, from lack of start-up capital to a need for technical assistance.

But Hispanic business owners also may face additional problems: language and cultural barriers, immigration issues and, sometimes, prejudice.

“When you have an influx of an outside group, the perception can be that jobs are being taken away by these people,” Cordoba said, recalling tensions in Miami following the Cuban immigration wave of the 1960s and '70s. “Or, people will think, `We don't understand what these people are saying, so they must be talking about me.' One of my goals is to see that the same thing doesn't happen here.”

Despite obstacles, Hispanics in North Carolina apparently enjoy self-employment. “Many of them have not necessarily worked for large corporations in their own countries, so they have that independent spirit,” Cordoba said.

“Certainly, they are risk-takers, just by the fact that they have moved to another country,” said Nolo Martinez, director of Hispanic/Latino affairs for the Office of the Governor. Some Latinos, particularly those with immigration status issues, may open their own businesses if they've encountered problems landing jobs in the mainstream economy, Martinez said.

Or they may realize, after working for an employer, that they can make more money on their own. Lopez said that frequently occurs in the construction industry.

“Guys are sick of being used as day labor. . . . They're making contacts on jobs, and they're being asked to do jobs on the side,” said Lopez, whose company assisted in the construction of the N.C. Museum of Natural Sciences, the Knapp building on the UNC-Chapel Hill campus and other state projects.

“Why do they work and get peanuts, when you can work for yourself and make more?”

The Numbers

The surge of Hispanic-owned businesses in North Carolina coincided with two national trends: The Latino population exploded over the past decade, its rate of growth surpassing that of all other ethnic and racial groups. And, the number of Latino-owned businesses increased 82.9 percent between 1987 and 1992, according to the U.S. Small Business Administration.

In North Carolina, the Latino population more than doubled in the 1990s to 161,000, according to the U.S. Census Bureau. Some estimates place the number at 450,000 or more. Of the 30 U.S. counties with the fastest-growing Latino populations, five are in North Carolina.

Observers say it is impossible to know how many of the Latino newcomers opened new businesses in North Carolina, but judging by census figures, they believe the numbers took a huge jump.

In 1987, the census counted 918 Hispanic-owned businesses statewide, said Andrea L. Harris, president of the North Carolina Institute of Minority Economic Development. When the bureau counted again in 1992, the number had more than tripled to 2,802, she said.

“We expect that number will have more than tripled again,” Harris said. “Between 1987 and 1992, the rate of increase for Hispanic-owned businesses was six times that of all firms in North Carolina.”

Even more dramatic was the economic impact of those businesses, she said. In 1987, 695 workers were employed by Hispanic-owned businesses, earning a total of $10.8 million. Five years later, the payroll for Latino-owned businesses included more than 3,600 workers statewide. The payout had increased nearly sixfold — $62.7 million.

The census bureau tallies such business figures every five years, but has not yet released its data for 1997. Harris' nonprofit organization conducts its own survey after the bureau releases its results.

Not Just Mexican Restaurants

Ten or 15 years ago, the phrase “Latino-owned business” usually meant “Mexican restaurant” in North Carolina. Cordoba's electronics manufacturing plant challenged that stereotype in 1989. But Cordoba was one of only a few Latinos, back then, who broke the mold.

The majority of Latino-owned businesses cater to a mostly Hispanic market, say those who track minority business trends.

“Latinos are still trying to get comfortable with their schools, their neighborhoods. They do business with each other, exchange dollars with each other, because that's what's comfortable for them,” said Elizabeth Mills, a consultant who certifies minority businesses for the city of Charlotte and the Small Business Administration.

Increasingly, Hispanics are getting into the construction trades, Lopez and other observers say.

In 1992, Harris said, 40 percent of Hispanic-owned businesses were in the service sector, while 17 percent were in construction and 13 percent were retailers.

Harris said she expects an upheaval of those statistics by the next census tally. “There is so much construction demand, and such a small number of contractors available, that (Latinos) are going out and starting their own businesses because people need that, those skills,” she said.

Nor are Latino-owned construction companies necessarily small businesses.

Lopez, a second-generation American of Mexican descent, said his firm grosses $500,000 to $1 million a year. “We do OK,” laughed Lopez, who moved to Chapel Hill from Pittsburgh seven years ago.

Meeting the Challenges

About 25 percent of all the businesses that were operating in the U.S. in 1992 had shut their doors by 1996, according to the U.S. Small Business Administration.

Generally, about half of all small businesses operating today, which do not grow, will not be around in five years, according to the SBA. Of that 50 percent, about 7 percent will close owing debt, indicating the business failed. The remaining 43 percent will close for a variety of reasons.

The failure rate appears to be no different for mainstream and Hispanic small businesses in North Carolina, Harris said.

That's somewhat remarkable, considering the additional obstacles Hispanics often face as they enter the business sector.

Some don't speak English. And there are cultural differences. For instance, some Latinos may have only a vague understanding of the American banking system. Others may not be aware of state and federal regulatory requirements.

“Businesses here are very regulated, particularly restaurants,” Cordoba said. “A person may have all they need to go into business, but they need to understand that they can't just start laying bricks somewhere without a license. And they have to have workmans' compensation so that if a person gets hurt on the job, they are taken care of. Those are requirements in this country, whereas in their native countries, that may not be the case.”

The financial requirements of a new business also may pose challenges.

Banking, for many Hispanics, is rife with cultural barriers. Many Hispanics come from countries where unstable economies make banking risky, or where banking procedures are far more flexible and informal than in the U.S.

Many Latinos don't realize that deposits are government-insured in the U.S., said John Herrera, vice-president of Hispanic/Latino affairs for Self Help Credit Union of Durham. Herrera's agency and other community groups helped establish the first Latino-oriented credit union in North Carolina following a wave of robberies targeting Hispanics.

The Latino Community Credit Union, which opens its doors this month, is the first in the Southeast in 16 years, Herrera said.

Because they are not necessarily used to banking, Herrera said, Latinos may not have any experience in balancing a checkbook — let alone drawing up a month-by-month business plan with cash-flow estimates.

“One of the biggest challenges we have is financial literacy,” Herrera said. “We need to empower people with the tools. They need to know the zoning. They need to know how the system works, and where to go for help. They need to be able to navigate the business system at the local level and the state level.

“In underdeveloped countries, business operates at an informal level. That's how people feed their families, that's how people survive. But here in the U.S., they can't do that.”

The credit union is primarily aimed at individuals, and for now will offer personal loans of up to $20,000, Herrera said. While that amount could get some small-business owners started, Herrera said, the true value of the loans will be borrowers' ability to build credit histories. With good credit, access to business capital becomes a possibility, he noted.

The Institute of Minority Economic Development also has begun lending money to small businesses through a revolving loan program, Harris said. Other programs designed to help Hispanics get businesses off the ground are popping up across the state.

Pitt Community College and Central Piedmont Community College now offer Spanish-language classes in starting a small businesses. Plans are under way to link the Pitt Community College class, through the Information Highway, to Lenoir, Brunwick and Cape Fear community colleges.

Last April, Gov. Jim Hunt stepped up state efforts to contract with minority-owned businesses, including those owned by Latinos, when he formed the Historically Underutilized Business Advisory Council. The task force — comprising state purchasing officials, minority business owners and members of advocacy groups — is working to increase awareness of government contracting among minority groups, Department of Administration spokeswoman Priscilla Smith said.

The Charlotte Chamber of Commerce last year launched a nine-month program for minority and women business owners, including Hispanics. The Minority Business Leadership Institute, which includes mentoring for business owners, is designed to help new entrepreneurs “strengthen and solidify their businesses,” chamber spokeswoman Blair Stanford said. It also is aimed at drawing more Hispanic members.

Yet none of last year's institute graduates are Hispanic, Stanford said. Of this year's class of 16, one is Hispanic.

LaRita Barber, the chamber's vice president of area councils/member service, said she and other chamber officials hope to step up minority outreach efforts through the organization's Business Diversity Council. Barber said she also tries to recruit Hispanic members through visits to churches and ads in minority-owned publications.

The chamber, Barber said, doesn't want to miss out on the potentially large number of members that the new Hispanic growth could bring.

“If you look at Charlotte as a community and a demographic region, you see the change,” Barber said. “We really want to make sure we are ahead of the curve, that we are reaching out to the diversity of the community. And we want to ensure that the chamber is perceived as — and is, in reality — embracing the Latino community.''

With the growth of Hispanic businesses, and buying power, those goals are not surprising.

But Hispanics aren't embraced in every community. Earlier this year, white supremacist David Duke led a rally in Siler City, Chatham County. Duke brought his strongly anti-immigrant message to a community where a large proportion of Hispanics have begun to build new lives and businesses.

Bill Bussey of the Chatham County United Chamber of Commerce described his area as “the poster child” for Latino business growth in North Carolina. He and other chamber members hope that growth will continue, he said, and that the rally didn't scare away Latinos.

“There's always going to be prejudice. There always has been, since this country was started,” Bussey said. “There's been prejudice in New York, there's been prejudice in Denver. It's different for us here in Siler City, but a lot of cities have faced it, overcome it and moved on.”

Prejudice may be old as the ages, but for some Hispanics who have lived in North Carolina for longer periods, times have changed considerably.

“I remember when (the newspaper) lumped everyone together,” said Javier Castillo, a Nicaraguan banker who moved to Greenville in 1980 as an executive with a U.S. company, and now teaches the Spanish-language small-business class at Pitt Community College. “Every Spanish-speaking person was a Mexican, and every Mexican was a migrant worker. That stereotype has changed completely.”

Freelance writer Stephanie Gibbs is a former state government reporter for the Charlotte Observer who left the paper to attend law school.

Ana Borges and Raquel Siqueira will begin marketing Cheese Bite Rolls, a Brazilian snack, in June from a leased warehouse in Durham
Savoring the Sweet Smell of Success

One of Raquel Siqueira's favorite snacks, in her native Brazil, was “pao-de-queijo” — a baked, cheese-filled bread made from yucca flour.

Last year, she and a friend from Brazil, Ana Borges, hit upon a business idea: They could introduce the snack to the Triangle. They felt certain that Americans would like it.

“We put it in several places, and a lot of people tasted it, and they loved it,” said Siqueira, a government economist in Brazil who has lived in Durham since 1998. “It's an established international product, and it's very popular in Australia and Spain.”

At first, Siqueira and Borges thought they might open a teahouse in downtown Durham where they could sell the snack. But after speaking with several consultants, they instead decided to open a factory where they will produce and quick-freeze their product, which they call Cheese Bite Rolls.

The factory will be open to the public, and located in a leased warehouse in Durham, Siqueira said.

For Siqueira and Borges, an architect who moved to the Triangle in 1990, launching a business was less difficult than it has been for other Hispanic entrepreneurs. They had $140,000 to buy machinery and ingredients from Brazil. They found a consultant in Brazil who helped them arrange contracts to import yucca flour and other products. And they hired a lawyer and accountant here to help them set up their partnership — CASEIRO International LLC — and draw up a business plan. Finally, they found a food broker locally to help them wholesale their product.

Now, all Siqueira and Borges have to do is start making dough — literally.

Beginning this month, Siqueira and Borges plan to begin producing thousands of Cheese Bite Rolls. In July, after they've produced and frozen enough product to meet an expected demand, they plan to open to the public. Siqueira said they will hire three production employees and a secretary.

Their production equipment, Siqueira said, will be located behind a glass wall in their warehouse, so that customers can watch the dough being processed into rolls, then quick-frozen. They plan to sell the rolls for about $3.50 a pound, she said.

Siqueira said she and Borges expect to earn back the cost of their equipment in about two and a half years.

The partners spent more than six months planning their business before signing contracts and announcing an opening date, Siqueira said. As first-time business owners, the temptation was to leap right into their first idea. But with the help of friends, advisors and paid consultants, Siqueira said, they believe they have a sturdy foundation for their money-making dream.

The only time they encountered a cultural barrier, Siqueira said, was in trying to decide whether Americans would like the taste of a Brazilian snack.

“It's a challenge for us because we wonder, we are always wondering, if they are going to like it — whether the market will accept it or not,” she said.

“But we didn't find any difficulty because we are Latino. The only difficulty was being new in the market. Actually, we found a lot of good people who are helping us.”

—Stephanie Gibbs