Nothing says "I have achieved the American dream" like naming a son or a daughter to take over the family business. Yet, according to the "Business Owner Financial Wellness Study," conducted by MassMutual Financial Group in Massachusetts, only one in four Hispanic small-business entrepreneurs has a financial succession plan.
There were about 2.6 million Hispanic-owned firms in the United States in 2010, according to HispanTelligence, the research arm of HispanicBusiness. The United States Hispanic Chamber of Commerce said those businesses generate a combined $400 billion in annual revenue.
The financial wellness study reveals that the primary reason why Hispanics go into business in the first place is to provide for their families.
But what are Hispanic enterprise owners doing to ensure their legacy?
Chris Mendoza, assistant vice president of MassMutual's multicultural markets, said a large number of Hispanic enterprise owners select a family member to succeed them in lieu of creating a formal plan. Forty-seven percent said they plan on passing their business to a child, while 21 percent said a spouse would be named their successor, according to the study.
However, Mr. Mendoza said, simply selecting a successor does not address the need for a basic, foundational knowledge of how to create that plan for the actual transfer of leadership.
"The biggest finding our research shows is that Hispanic small-business owners lack knowledge and confidence in their business planning skills and, for that critical reason, do not create a formal plan," Mr. Mendoza said. "This is perhaps best illustrated by the study findings which show that, despite being extremely hands-on in the day-today finances of their businesses, more than one-third of Hispanic (enterprise) owners say they are worried about meeting long-term financial goals."
The financial wellness study's criteria required that businesses had 500 or fewer employees, had 2010 total sales or revenue of $50,000 or more and had been in business at least one year. Mr. Mendoza said businesses that made $500,000 or more in 2010 were more likely to have a succession plan in place.
Teaming With ALPFA
MassMutual partners with ALPFA, the Hispanic professionals association, to help further ALPFA's goal of expanding Hispanic leadership in the global workforce.
"The partnership is important because both organizations are committed to helping and educating the Latino business community," ALPFA CEO Manny Espinoza told HispanicBusiness magazine.
"The most interesting part of the study was that Latino business owners put a high priority on the financial sustainability of their businesses, but their actions did not reflect this," he said. "Awareness of solutions is of utmost importance. The next step is continued communication to the Latino business community."
Mr. Mendoza said the partnership with ALPFA was always a part of the strategy to close the gap in fiscal fitness for Hispanic enterprise owners.
"ALPFA is on the front lines of developing Latino financial professionals and providing them with the tools and knowledge they need to serve their clients," Mr. Mendoza said. He added that there is no one set solution to offer entrepreneurs.
"That's why we recommend business owners sit down with an expert in the finances of business owners to evaluate not only their current financial situation, but also their long-term dreams for themselves and their families," he said.
He suggests asking fellow business owners for advice about financial services companies, and participating in local chambers of commerce.
"In our experience, not only do they provide a wealth of resources, but Hispanic chambers in particular offer the cultural insights to running businesses as well as address the language needs that so many Hispanic entrepreneurs say are important to them," Mr. Mendoza said.
According to the MassMutual study, 60 percent of enterprise owners want an adviser who can speak in their preferred language and 69 percent want an adviser who is specifically certified to work with small businesses.
"As an industry, we need to better understand the challenges, cultural attitudes and knowledge barriers that keep Hispanic enterprise owners from taking action," said Roger W. Crandall, MassMutual chairman, president and CEO. "This survey is one way MassMutual is helping to address these issues and enable them to make good decisions for the future long-term health of their businesses."
Most Popular Stories
- Top Hispanic Tech Companies Push for the Top
- 5 Notable Hispanic Technology Executives
- Taco Bell Rings Up Breakfast Menu
- Russia, Crimea Discuss Referendum
- California Establishes Center for Coffee Study
- China Urges Malaysia Flight Emergency Response
- For Obama, a Last Stab at Improving Ties with Capitol Hill
- 'Holy grail of guitars' OM-45 Deluxe Available in in NY Auction
- Visa, MasterCard Team Up to Focus on Payment Security
- Sunday Starts Daylight Saving Time