Expanding The Power of U.S. Latinos

Former SBA boss/KC native Barreto: Hispanic businesses drive the economy

09/22/2017 2:42 PM | TLC Team (Administrator)

By Leslie Collins – Reporter, Kansas City Business Journal

Kansas City native Hector Barreto Jr. now lives in California, but on Oct. 12, the former head of the Small Business Administration coming back to his hometown for the Hispanic Chamber of Commerce of Greater Kansas City's 40th anniversary celebration.

Barreto is the keynote speaker for event, which is expected to attract 1,000 attendees from throughout the U.S., including other chambers and elected officials, he said.

Barreto, who led the SBA from 2001-2006, now is chairman of The Latino Coalition and also will lead an economic summit through his organization.

The Kansas City Business Journal caught up with Barreto to get his insight on how Hispanic businesses are driving the economy and what's in store for the local entrepreneurial scene.

The Hispanic population is growing in the U.S., and more Hispanics are becoming entrepreneurs. Can you talk about the growing importance of Hispanic businesses to the economy, both regionally and nationally?

When I was at the Small Business Administration, we measured these numbers on a pretty regular basis, and the Department of Commerce also measured small business growth. Oftentimes what you see is that when those numbers are reported, they're a couple of years old, but we believe there are 4 million Hispanic businesses in the United States. They can generate about $700 billion in revenue every year. That is the fastest-growing segment of small business in the United States.

Hispanics are 1.5 times more likely than the general population to start a small business, so they're very entrepreneurial. These businesses are growing 15 times faster than the national growth rate. A lot of these businesses are new and smaller, so you're going to see rapid growth in some of these businesses. Latinas, women-owned businesses, are growing five times faster than any other group, so there's a wave of growth. The demographers who look at these numbers tell us that those numbers could double every five years. ... This phenomenon is happening across the country. Those 4 million could turn into 16 million in the next 10 years.

What can Kansas City expect to see as it relates to Hispanic businesses?

I think Hispanic businesses are going to continue to grow. The Kansas City Hispanic Chamber made it for 40 years; it's been successful. It is one of the leading Hispanic chambers around the country, and a lot of leadership comes from here. I don't think it's an accident that not only did the local chamber start here, but the national (Hispanic) chamber started here.

There's a lot of leaders that have come from this area and have gone on to do other things in business, in the organization and politics. I think you'll see that continue. I think that Hispanic businesses are becoming more and more part of the mainstream. I live in California, and in L.A., 50 percent of the population is Hispanic, and that state will be 50 percent Hispanic in the next 20, 30 years. In the United States, the Hispanic community will be 25 percent of the population in the next 30 or so years. So, you're going to a see a continuous evolution in this community, and empowerment of this community, but also an assimilation and acculturation.

How would you describe the Hispanic entrepreneurial community in Kansas City?

I think it's vibrant. It's very committed. When my father started the (Hispanic) chamber, some folks would say: "Why do you need to start a chamber? There's very few Hispanic businesses, and if they want to join a chamber, they can join the general chamber." But my father felt like, you know what, we need to have a group that focuses on our community, our issues and doesn't get lost in the shuffle. And he was kind of visionary because he felt like we may not have a lot of Hispanic businesses now, and that was 40 years ago, but we will. So he was prescient in that regard. ... He could see the future, and that's what has happened.

Not only has the Hispanic business community grown here, but it's grown around the country. These businesses are very entrepreneurial. They're very innovative. They're very diligent and hard-working. And that's one of the reasons they're having the success that they're having. Again, that doesn't just benefit the Hispanic community. It benefits the greater Kansas City community, and for that matter, the nation.

What do you think is driving the business growth?

I think in the past it was the fact that people like my father came here – he came here in the '50s. The only jobs he could get were very basic jobs. He didn't have an education. He didn't speak the language very well. He didn't have money. He didn't have any political power. But he had his own ingenuity and his own work ethic. So he started off in the very basic jobs, as a lot of entrepreneurs do. My father picked potatoes for 50 cents an hour in rural Missouri, and then later on he was working on the meat-packing plant down here. Later on, he worked on the railroad, and then finally he was a janitor at my school. But my father always felt like, look that's just what I have to do right now. I'm an entrepreneur, and slowly but surely with my mother, they started restaurants and then later an import/export company and then later a little construction company.

None of those businesses were really successful in terms of being million-dollar enterprises, but they were very important to our family and helped not only support us but educate us. So I think that you see that entrepreneurial spirit. When they don't have opportunities, they create their own opportunities. ... (In the U.S.), they saw a tremendous environment where nobody was going to prevent them from working as much as they wanted to. Nobody was going to prevent them from taking a risk. There were tools available to grow your business, so they took advantage of that positive environment. We shouldn't ever take that for granted. Cities, states and federal governments need to be working constantly to create that environment so those small businesses are willing to start their businesses, take risks, risk their capital. ...

A lot of the businesses that have developed over the last eight years had a lot of headwinds and they were hitting a lot of walls. They are starting to feel optimistic, and that optimism is also what drives business growth. If you feel like you are going to have an opportunity to be successful, you'll make decisions that you don't usually make. You'll hire somebody, you'll buy more inventory, you'll take a risk, you'll expand, and you'll break into new markets. You will not do that if you feel that next year may not be as good or that something's coming down the pike that's going to hurt your business. The economy grew at 3 percent last quarter, and for the last eight years, it's been growing 1 to 2 percent. And some of that, I believe, is optimism. Businesses are starting to feel like this may be a good time to expand.

What's the perception of Kansas City nationally, and is it changing?

I think a lot of people don't understand that Kansas City is a very diverse and vibrant economy, great quality of life, good infrastructure, a good workforce, a good educational system. Little by little, people are starting to get wind of that, if you will. I think it helps when conventions come here and conferences come here. People come to Kansas City and have a good experience and they tell other people: "I've never been to Kansas City before, but I went there, had a great experience and my business has benefited from it."

I think in some ways Kansas City is still a well-kept secret – less and less now. I think it's starting to appear on some lists that it's one of the better places to be in business and a great place to raise a family. I think folks are going to be looking for that. I live in California. ... There may be some good things happening, but there's a lot of things that are not so popular, especially for business because the cost of doing business in California is so high. I just think that more and more people are going to be looking for alternatives, and Kansas City can be a good alternative for a lot of folks who want to start a business, grow a business or pursue a different career.

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