In times of crisis like the ones we are facing, new startups have suffered from the lack of risk-taking investors and limited access to small business financing. While the companies established prior to the Covid-19 are struggling to stay on their feet and address the current needs of their clients.
The first months of the pandemic in the United States presented a catastrophic scenario, with new business creation figures registering a decrease of up to -33.8 percent compared to 2019 numbers. By the end of 2020, the statistics became more encouraging. Despite the global situation, 59,490 new business registration applications were filed, 17,000 more than the previous year, according to information from the United States Census Bureau.
Meanwhile, Latino startups have faced a complex situation due to the negative impact of the Covid-19 pandemic. These effects include decreased profits, productivity, and even business closings. The likelihood of recovery for Latino-owned firms, however, is as high as 80 percent, according to The Ongoing Impact of COVID-19 on Latino-Owned Businesses.
It’s time to take a balance of profits and losses so that Latino startups can prepare for the year 2021.
Gains of Latino Startups in 2020
In such a challenging year for all businesses, it is difficult to find gains. But, difficulties in any aspect bring learning and this is where we identify a great treasure for all Latino entrepreneurs.
The world has opened more possibilities to generate innovation and disruption within entrepreneurships. There is a great opportunity for specialized startups in fields such as online commerce, distance communication and education, cybersecurity, automation, sustainability, and social commitment. Some lines of business demand a greater injection of capital than others, an option that entrepreneurs can take advantage of is small business financing, in case they do not have enough capital.
Over the years, the Latino community has faced various challenges and adversities to get their business off the ground. Yet, despite this, they are the most entrepreneurial ethnic group in the United States even before the pandemic. According to information from the Stanford Latino Entrepreneurship Initiative, the number of Latino owners increased by 34 percent in the past decade.
Another important fact is that the number of bachelor’s degrees awarded to Latino students has increased in fields such as Earth Science, Mathematics and Engineering by as much as 100 percent over the past 20 years. If the next Latino entrepreneurs are supported with scholarships, grants and have access to the best options for small business financing, the outreaches will be unimaginable.
Losses of Latino Startups in 2020
The losses have been reflected in various social and economic aspects. Since June 2020, 83 percent of Latino businesses reported immediate negative impacts and only 16 percent of these businesses might sustain more than seven months of the cash flow registered during the pandemic. One of the options to counteract the situation is to seek the support of the best small business financing.
Meanwhile, the situation of the rest of the businesses in the United States is no different. Data published in Yelp: Local Economic Impact Report, shows that up until September 2020, 163,735 businesses had closed since the beginning of the pandemic. Lives, businesses, jobs have been lost and, without exception, habits and customs have changed for everyone.
What’s Coming in 2021
Considering the predictions and delays of the U.S. government’s vaccination schedule, the return to supposed normality will not come until 2022, existing and new startups will have to focus on current needs and future trends in order to survive, but above all, to last.
According to data from Yelp’s study, the companies that have stayed afloat belong to the following sectors:
– Automotive Services
– HVAC (Heating – Ventilation – Air conditioning)
These are trends that entrepreneurs can take into account to get ahead next year. In case your business is already in operation, it is necessary to make use of all the resources available to improve your numbers. Use social media to promote your brand, networking groups to generate alliances or get small business financing to adapt to the needs of your clients.
According to the projections of the U.S. government’s Census Bureau, Latinos will represent 28.6 percent of the total population in the year 2060, this situation has a promising future for Latino startups. Meanwhile, today’s Hispanic entrepreneurs have the mission to get through these times of crisis by highlighting their roots and exploiting the potential of creating businesses that contribute to a better world for all.