News Column

The Birth of the 500

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HB500 logo 2007

The early 1980s ushered in the Reagan administration, MTV, and a new era for Hispanic entrepreneurship.

In 1982, Hispanic Business magazine, itself only three years old, set out to map the growth and newfound maturity of the U.S. Hispanic marketplace a sector largely ignored by the mainstream business media. Its tool of choice? A list of the 500 biggest companies.

"The Hispanic Business 500 has brought legitimacy to Hispanic enterprise as a whole," recalls Jesus Chavarria, Hispanic Business magazine's founder, editor, and publisher. "When one reviews the 500, you can't avoid the impression that there's breadth and depth to the Hispanic enterprise marketplace."

Hispanic Business magazine set out to do several things with the annual directory. First, it would take the pulse of emerging Hispanic-owned firms. Secondly, it would supply Fortune 500 companies and federal procurement agencies with a list of Hispanic companies for potential business partnerships. And, lastly, the directory would provide readers with a sophisticated measurement of the growth of Hispanic-led companies and specific industries.

But it proved a Herculean effort for the small magazine, and that first 500 wasn't actually a list of 500 companies, but 400. The initial plan for the directory was to list 500 companies, but the task was much too large to complete in time for publication.

Assembling a list of the country's largest Hispanic-owned enterprises began with an exhaustive advertising and direct mail campaign and hundreds of telephone calls. Researchers painstakingly combed through a file containing more than 100,000 companies, whittling it down to 400 with reported revenues of $1 million a year or more.

Hispanic Business also convinced private business owners to release revenue figures publicly, something many had never done before. A first listing of 400 Hispanic companies in 1982 did not include revenues; the directory as we now know it debuted in June 1983.

"As I got more and more into their stories, I had to persuade them to disclose their numbers," Mr. Chavarria says of the companies. Eventually, more than 90 percent of the firms contacted agreed to participate.

In 1990, Hispanic Business began using line 1(c) of the U.S. Income Tax Return for a Corporation as the standard measurement of a company's revenues. This change resulted in much lower revenue figures for real estate brokerages, ad agencies, and financial institutions. Today, all financial information must be certified by the company's chief executive or chief financial officer.

Collecting data from privately held companies, which account for more than 95 percent of the Hispanic Business 500, remains a challenge.

"In the Fortune 500, all the data is publicly available since it is based on U.S. incorporated companies that have filed public financial statements with a government agency like the Securities and Exchange Commission," explains Juan Solana, chief economist at Hispanic Business magazine. "In our case it's just the opposite: Most of the companies are privately held and are not required to file public financial statements, only their private tax returns. They don't have to disclose those figures, but they do it because it's a relationship we have been building for 25 years."

The disclosure pays dividends for those firms that do participate.

"The list helps make you look valid," says Elizabeth Llama, CEO of Walnut Creek, California-based Malaco International. "We have a copy of the magazine and show it as part of our profile." Her chemical distribution company, which was founded 30 years ago, has been on the elite list every year.

"(We) take pride in being recognized and it's good exposure for us," echoes Ruben Garcia, CEO of Empire Maintenance, another California company on all 25 editions of the list.

In 1985, when Hispanic Business magazine added an additional 100 companies to total 500, less than half had revenues of $5 million or more. By 1996, businesses wanting to participate on the Hispanic Business 500 needed annual revenues of $5 million or more to make the cut.

Being on the list "signifies that Hispanics can grow their business," says Moses Cordova, CEO of Cordova Bolt in Buena Park, California.

The initial 400 companies one-quarter of them were from California
reported total combined revenues of $3.7 billion. Today, Brightstar Corp., the No.1 company on the Hispanic Business 500, reported revenues of $3.6 billion by itself.

"Size matters. It means you are selling more than anybody else and bringing in more people to work for you," says Brighstar CEO and founder R. Marcelo Claure. "It also means we have a higher sense of responsibility to the Hispanic community due to the fact that people are looking to the No. 1 company as an example."

Ultimately, of course, the ranking is just a reflection of what a company does every day.

"We are very pleased by it and we take a lot of pride in it," says Irma Elder, CEO of Elder Automotive, "but we also take it with a grain of salt. We tell our people, 'Don't focus on who's No. 1 or No. 2, just focus on being the best you can be.' Everything in our industry is so volatile and things change quickly, so it's just important for us to focus on ourselves and be the best we can be."

The Hispanic Business 500 has charted another kind of evolution, beyond numbers. Since the list debuted, Hispanic entrepreneurs have moved out of manufacturing and finance and into construction and services. Many have also grown more sophisticated, relying less on government contracts and working more in the private sector.

Topping the list in 1983 was General Coffee, a wholesaler that filed for bankruptcy the same year it debuted as No. 1. The next year, Goya Foods, the largest Hispanic-owned food company in the United States, moved into first place. Goya was bumped off the top spot in 1985 by Bacardi Imports, which held the position for seven straight years before its vast family holdings made it impossible for the magazine to verify its majority Hispanic ownership in the United States a benchmark used in compiling the directory.

After Bacardi dropped from the list, Goya made its way to the lead spot again in 1993. Over the next three years, Goya would swap the No. 1 spot with Burt Automotive, an auto dealership.

[In 2003, after being at the top of the Hispanic Business 500 for two decades, Goya fell off the list. A nasty family battle led to the ousting of Joe Unanue, Goya's chairman and chief executive for 28 years. The family-run company has since declined to participate in the annual listing and has remained tight-lipped about its financial information, which highlights another challenge of compiling the Hispanic Business 500.]

In 1999, MasTec Inc., a telecommunications company, moved into the top slot and would remain there until 2001. The telecom firm would be the first Hispanic Business 500 company to reach the $1 billion mark.

In 2004, the top three companies on the directory had also reached the $1 billion revenue milestone, and this year there are five.

For years, Brightstar's Mr. Claure told others that reaching No. 1 on the Hispanic Business 500 was a longtime goal. "I would definitely call it a major goal. It is something that we have been striving for."

Achieving the milestone brings him a sense of personal and professional satisfaction. "We are very proud to be a Hispanic-owned company and we are definitely now more proud," he said.

He has used Brightstar's steadily climbing Hispanic Business 500 rankings to help motivate employees. During the year-end meetings with employees, Mr. Claure would mention Brightstar's latest ranking and tell them to take pride in it.

"It's part of our company's identity."

The Hispanic Business 500 has helped define Hispanic-owned companies, but it has also been defined by them. And while the definitions continue to evolve, one truth remains consistent: Banks are a major source of capital for most companies on the elite list.

What has changed since the list debuted is an awareness of Hispanic entrepreneurship's critical role in the U.S. economy.

"It sets a record that Latinos are doing a great job," notes Anthony "Tony" Batarse Jr., CEO of Oakland, California-based Lloyd A. Wise Cos., another 25-year veteran of the list. "The list says that to everyone, not just to Latinos."

Ruben Guerra, chairman and chief executive of the Latin Business Association and owner of R.G. Packaging and Designs, Inc., a retail packaging firm, says the Hispanic Business 500's top firms serve as an inspiration for himself and other small-business owners to grow their companies.

"I believe (the list) is important because it represents the Latino community and helps elevate the confidence of smaller businesses to one day also be part of the top 500 Hispanic-owned business," Mr. Guerra says. "It really inspires me as a small [Hispanic-owned] business."

On The List From Day One ...

Creative Associates International
M. Charito Kruvant, president and CEO of Creative Associates International, faced significant challenges early in her career, primarily because of her gender.

M. Charito Kruvant

Creative Associates, which currently ranks No. 83, was founded by four women in 1977 and remains one of only a handful of Hispanic Business 500 companies led by a woman.

"I was one of the few women contractors in the government," Ms. Kruvant says. "It was a very high mountain to walk up and a very difficult time for women, in general, to be taken seriously."

Nevertheless, she worked hard and persevered, and that initial listing in Hispanic Business was one small reward, both for her firm and others on the pioneering directory. "Hispanic Business magazine has always been my connection to the world. I learned a lot of how Hispanics were not only having difficult times, but how many Hispanics were succeeding," Ms. Kruvant says. "When the list came out, it was not a surprise, it was a way of rejoicing."

It was also a way to validate and track the impressive strides she and her staff had made since joining the list. The Washington, D.C.-based firm has helped lead rebuilding projects in more than 60 countries.

The company has around 400 employees and offices around the world, including Afghanistan, Guatemala, Kenya, and Haiti.

It has won many multimillion-dollar contracts from the United States Agency for International Development, including a $62 million contract to rebuild schools in Iraq.

The Hispanic Business 500 has also served as a point of reference for several prospective employees seeking work at Creative Associates, Ms. Kruvant says.

"One of them, in particular, a young Hispanic woman, felt that us being recognized was important enough to share with her family."

Ruiz Foods Inc.
Ruiz Foods Inc., which now sells its wares under the brand name of El Monterey, began as a mom-and-pop shop in 1964.

Louis and Fred Ruiz

Louis Ruiz, a Mexican immigrant, began making and selling frozen enchiladas out of a converted poultry plant in Tulare, California. Starting a one-man food production business was easier 40 years ago, says Fred Ruiz, Louis's son and the company's CEO. [Louis Ruiz died in March at age 88.]

"In the grocery business, for example, there were so many independent grocery stores that you could talk to enough of them to sell $500 a day and be OK. But today, you have to have a minimum of probably $10,000 to $20,000 because of the size of the customer," Fred Ruiz explains. "In today's environment, you're dealing with large [market] chains; you have to be able to handle larger volumes."

In the years since Ruiz Foods was first listed on the Hispanic Business 500, its revenues have grown from $10 million to $326 million. And it currently ranks No. 18 on the directory.

The Hispanic Business 500, Mr. Ruiz says, has long been a valuable tool in measuring the progress of his company as well as that of others on the list.

"I like to know how we compare to other businesses. I know it helped me and it made me feel better about being successful."

Not only does being part of the Hispanic Business 500 encourage him, the directory provides a list of role models that would otherwise be lost in the crowd.

"To me, all these businesses are role models," Mr. Ruiz says. "They set a good example to Latino youth and Latino business people, it shows them that there's opportunity for them."

Tejas Office Products
It was 1961 and Lupe Fraga had just wrapped up three years in the military when he began working in a Houston firm as an accountant. He met an office supply vendor, Jim Kendig, who was eager to unload his business for $10,000.

Stephen Fraga

"He told me he was getting ready to get out of the office supply business and asked if I would be interested in buying his company," recalls Mr. Fraga, CEO of Tejas Office Products Inc. "I said, 'Yeah I'll do it.'"

The owner helped Mr. Fraga, then 26, secure a loan to buy Kendig's Office Supply, which featured one employee and very little inventory.

"I thought, 'You've got to start somewhere,'" Mr. Fraga says.

Forty-four years and a name change later, he has built Tejas Office Products into one of Houston's largest independent office supply companies despite facing steep competition from big-box retailers, such as Office Depot.

Tejas, No. 296 on the Hispanic Business 500, has grown to more than 60 employees and 2006 revenues of $15 million. From its 25,000-square-foot warehouse, the company distributes office supplies around the country.

Mr. Fraga says he has had numerous offers to sell the family-run business [his wife, Irene, is vice-president and his son, Stephen, is president].

"I always believed when you start your own business and you put in the blood, sweat, and tears, you leave it behind for your family. You just don't sell your company and leave with a bunch of money."

Being listed in the Hispanic Business 500 is a testament to the hard work and dedication of the Tejas team. "We take a lot of pride in that," Mr. Fraga says. "We also take pride in being a Hispanic-owned business."

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