News Column

Past, Present, Future

Page 4 of 6



Mr. Pinto sees growth opportunities for media, financial services, and higher educational services in the U.S. Hispanic market. He expects "a very dynamic generation of younger Latinos who were born in the U.S. " to become the next generation of entrepreneurs. "The country needs that younger generation to keep the country developing, and a lot of that will be borne on the shoulders of Latinos," he predicts.

With more Hispanic start-ups entering the development pipeline, more mature Hispanic firms will reach the institutional middle market, defined as companies with revenues between $5 million and $50 million. For the last 20 years, the Hispanic Business 500 has provided a measure of the Hispanic middle market. In 1985, less than half the list had revenues of more than $5 million; currently, 399 companies on the list fall in the middle market, with the remainder above the $50 million level.

As more Hispanic firms enter the middle market, banks, business services, and government development programs will cater to larger firms in addition to start-ups. "In many senses, governments should rejoice in the fact that these [large] companies are taxpayers and employers," says Mr. Pinto. "The government will have to treat Hispanic businesses according to their contribution to the community."

At some point, financing middle-market growth becomes a crucial issue. But currently, only 10.2 percent of CEOs on the Hispanic Business 500 name access to capital as their top constraint on growth. In contrast, 37 percent cite market conditions and another 19.2 percent cite competition.

Still, to keep growing, these companies will require access to markets, an aspect of economic development still impacted by past discrimination. In the federal procurement market, for example, minority companies in the 8(a) program accounted for only 2.39 percent of the total pie, although minorities represent approximately 28 percent of the nation's population. The same holds true in corporate procurement. "Minority businesses represent only 15 percent of total businesses, 3 percent of gross receipts, and 4 percent of total corporate purchases," according to information from the National Minority Supplier Development Council. For Hispanic entrepreneurs to attain their potential, "much more remains to be done," in the words of the NMSDC.

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