By MARK R. MADLER Staff Reporter Oscar Recinos is one of four brothers who bought Roland’s Hardwood Floors from its founder in 2010. At the time of the sale, the Northridge company had only three employees and now it has a workforce of about 17 employees. Recinos plans to maintain the forward momentum. “The plan we have is to keep growing as a business,” he told the Business Journal. That optimism reflects the attitudes of Hispanic business owners in a report released last month by Bank of America Corp. In the report, 89 percent of Hispanic business owners said they planned to expand in the upcoming 12 months as compared to 68 percent of non-Hispanic owners. Also, 79 percent of the Hispanics questioned said they expected revenue to increase in the coming year as compared to 57 percent of non-Hispanics. The interviews, however, were conducted last year prior to the coronavirus pandemic that forced many small businesses across the country to close. Michele Linares, a speech pathologist and owner of The Learning Grove: Speech-Language Pathology, Inc. in Reseda, said that business as she knows it is changing every day. Still, as a customer of Bank of America, she liked the service she receives from the institution. On March 17 she was to meet with Wilber Cabrera, her personal business banker, to discuss what she would do if she had to close her business and layoff or furlough her employees. “I don’t know what it’s going to be like a week or a month from now, but I have this confidence that they have my back,” Linares said. Recinos said that he, too, has been affected by the pandemic as customers have called to postpone or cancel installation jobs. “For the next two or three weeks, we will have jobs we won’t be able to do,” he added. Miriam Burgos, associate professor in clinical marketing and academic director of the online MBA Program at the USC Marshall School of Business, said the uncertainty over the economy will drive Hispanic businesses to explore other ways to build a market. If their current business model isn’t working, they will be forced to do something different. “What that something is going to be is hard to say,” she added. “There is so much uncertainty right now but again the fact that, for example, food service is a well-represented industry among Hispanic entrepreneurs makes the roller coaster for Hispanic businesses is that much more harrowing than for non-Hispanic owned businesses.” Anti-debt attitude The 2020 Hispanic Business Owner Spotlight released by the North Carolina-based financial institution was based on interviews done by Ipsos Group S.A., a market research and consulting firm headquartered in Paris. Ipsos contacted a national sample of 1,323 small business owners with revenue between $100,000 and $5 million from July to September, as well as 428 Hispanic business owners. Additionally, another 300 owners were contacted in 10 target markets including Los Angeles, San Francisco, Chicago and New York. In her introduction to the report, Elizabeth Romero, client and franchise solutions executive with Bank of America, said that plans by Hispanic business owners to expand, hire more employees and obtain financing remained high. “Hispanic entrepreneurs express a more bullish outlook on their local and national economies compared to their non-Hispanic peers, while their concern over many major economic issues has remained flat or declined,” Romero wrote. Seventy-eight percent of the Hispanic business owners interviewed said they planned to obtain financing this year. The most popular source of financing by Hispanics was personal savings, with 38 percent saying that is what they would use. That was followed by 31 percent saying they would use bank loans and 23 percent saying they would use personal credit cards. Linares said that culturally, Hispanics do not talk about money like their counterparts in different cultures. “It is not a little taboo; it is a lot taboo,” Linares said. “No one tells you it is OK to get a loan or to have debt. We come from a culture that does business in cash very often. You are not always taught about even your financial security and having a 401(k) and the importance of that.” Recinos agreed with that assessment. When he and his brothers bought Roland’s, it was done with their own money, he said, adding that it wasn’t until 2014 or 2015 that they started to use the bank’s money. “That is the mentality that we grew up with – don’t get into debt because it’s bad for you,” Recinos said. Management challenges According to the report, the top three challenges identified by Hispanic business owners were lack of resources, lack of experience in back office management and access to capital. For Linares, the challenges she has faced were of the kind stemming from the second one – lack of experience in back office management. She had gone to graduate school at California State University – Northridge to become a speech pathologist and she knows how to provide treatment to her patients, she said. “But to be a business owner with a business that is solvent and healthy and having employees and understanding what all the laws are to hire them, I think that was a huge learning curve,” she added. “I had to reach out to professionals to help me.” Another obstacle she faced was having – and keeping – the mindset of a small business. She did this by putting policies and procedures in place so that employees knew what they had to do, she said. “I did have to implement rules and regulations and expectations that you would if you worked for any large corporation, even if I was a very small one,” Linares said. And, finally, another obstacle was being compliant with the Health Insurance Portability and Accountability Act, a federal law that protects patient privacy. The onus placed on a private practitioner like herself is the same as it would be on a large caregiver such as a Kaiser Permanente, Linares said. “So you would need the money to get the proper servers to protect and encrypt things electronically,” she added. Burgos, from USC, said that access to capital will always be a challenge for Hispanic businesses, especially when they are just starting out. What these entrepreneurs learn is that a bank will not look at them without having a history or about 15 employees, she said. Burgos added that because these smaller businesses are family-operated, they are more susceptible to dips and changes in the economy. “The whole family may be more vulnerable in a small business because they are the ones financing operations to get the business off the ground,” Burgos said. “You are looking at a more direct impact to the family’s financial situation when it’s a family-owned business, which Hispanic businesses often are.”
