Minority entrepreneurs like Rene Diaz are playing a bigger role in America’s growth story. Diaz was featured in a Forbes magazine article last year about the growing impact of minority entrepreneurship. In 2010 immigrants accounted for nearly 30% of new business owners in the United States, versus 13% in 1996, according to the Kauffman Foundation. Nationally, 40% of minority-owned businesses are owned by Hispanics, and about 28% each by Asian- and African-Americans.
Urban futurist Joel Kotkin provides unique insights into what drives the increased rate of entrepreneurship among minorities. Those who are immigrants, he argues, are far more likely to start businesses because they are risk-takers in general, as evidenced by their willingness to pick up and move. Kotkin and a couple of other researchers were asked by Forbes magazine to examine the immigrant entrepreneur phenomena across the top 52 metropolitan areas. Based on rates of self-employment, housing affordability, income growth and migration, immigrant entrepreneurs tend to prefer sprawling, heavily suburbanized regions, many of them clustered in the South and Southwest. Cities in these regions (Raleigh-Cary ranked 22nd on the list) are usually characterized by cheap rents, affordable space, job growth, strong immigration and general economic health. Traditional hotbeds of entrepreneurship have not fared as well among minority entrepreneurs (San Francisco was 35th, Minneapolis, New York #39, Boston#45, San Diego #48, San Jose #46, and Chicago #50, all in the same strata as cities like Detroit, Cleveland, and Milwaukee), largely due to the affordability issue.
North Carolina is now 6th in the country in number of African-American residents and 11th in Hispanics. North Carolina has seen a boom in its Hispanic population, with the percentage of total residents growing by 111% over the past 10 years. Locally, we have seen many minorities move to our area due to a stronger economy than other parts of the country. As these newcomers begin to start businesses, we expect our market to look very different. From 2007 to 2011, Hispanic-owned businesses in North Carolina grew from 9,000 to 21,301, according to the census and the Latino chamber. The Research Triangle Park is also home to a large and growing Asian population, with the two biggest subgroups being Indian and Chinese. There are now an estimated 200,000 minority-owned businesses in North Carolina, increasing at a rate of 50-60% every five years.
Minorities own 15% of all businesses, but 20% of franchises nationally.
Why are minorities attracted to franchise concepts?
Survival rates among minority-owned businesses ranked highest among Asians, and Asians were the only minority population whose rate surpassed the general population.
Why do non-Asian minorities struggle to attain similar survival rates?
We think the answers to these questions are actually one-and-the same. The franchise concept is attractive because it comes with a business plan, a blueprint as to how to make an idea profitable, complete with templates for each and every category of decisions to be made. When the business is not a franchise, it is imperative that the entrepreneur find a mentor and other key resources to guide the preparation and implementtation of a solid business plan as well as the other key decisions. Perhaps the Asian-Americans are doing a better job of this than others?