Diverse California North Coast businesses work to grow operations, break barriers
“Sonoma Strong” is not just a statement, especially if you’re a person of color in business.
It’s a mission that constantly needs work, according to business owners from various racial and ethnic backgrounds, a Stanford economist and a county supervisor.
“Sonoma County is so long overdue on a reckoning with its inequities,” county Supervisor Lynda Hopkins said during the opening remarks of a virtual conference this week titled “Economic Perspective: BIPOC Impact.” That acronym stands for Black, Indigenous and people of color.
Hopkins, who cited how difficult it is to thrive in business with so many obstacles thrown at company owners these days, pledged the county’s involvement with the formation of an “equity team” intended to do a better job at addressing inequities for minority populations.
“We really need to listen. We really need to sit down and listen to our communities of color,” Hopkins said, further admitting the mere blanket-white color scheme of the Board of Supervisors itself is “dangerous” in terms of answering those needs.
A panel of diverse business owners supported that view during a discussion with Lorez Bailey, currently executive director of Chop’s Teen Club in Santa Rosa.
With most agreeing how hard it is to go and stay in business, the handful of owners decided to anyway — sometimes despite the advice of family members, who knew running a business would be tough.
“I always wanted to work for myself,” wardrobe stylist Malia Anderson told attendees, adding her 90-year-old grandmother did the same, but “it was the one thing she asked me not to do.”
The last three years have been difficult for Anderson running Style by Malia, with challenges exacerbated by the coronavirus shutdowns. It didn’t help that she didn’t secure a Paycheck Protection Program loan, which has served as a lifeline to many businesses.
“There were no PPP loans for me, and it saddens me. Some people just got a job, but there was no pivoting for me,” she said, adding few people needed new wardrobes during the pandemic while working remotely. “Those challenges keep pushing small business owners down.”
Take that and add fear of being deported and trying to get capital for a business is something the Latino community lives with every day.
“In the Latino community, there’s still a lot of fear with a lot of immigration issues,” La Michoacana ice cream shop owner Teresita Fernandez said.
She recommended Latino entrepreneurs seek help outside corporate banks, claiming community institutions tend to offer more of a personal approach rather than telling the prospects “to go online.”
Creser Capital founder Juan Hernandez pointed to the all-around inequity of wealth in a system that favors a power structure that leaves people of color behind. He sees it first hand as an investment specialist.
“We cannot have social justice without economic justice,” he said.
Hernandez cites the harsh reality that often times a bank may lean toward preferential treatment to prospective startups owned by non-minorities with more wealth brought to the table. The math is simple. The bank makes more in interest on the $1 million loan opposed to the $10,000 request for capital, equating the smaller operations with those run by minorities.
Hernandez provided a few suggestions to overcome inequities — gain access to capital by other means or tap into a more supportive network than those traditionally established in communities.
The financial adviser also noted that many in communities of color may have “no relationship with a bank.”
Open ears, close eyes
Inviting attendees to shut their eyes, Stanford Business School economic analyst Marlene Orozco then asked attendees to think of the word “entrepreneur.”
“What comes to mind, who comes to mind, and what industries do you think about?” Orozco asked.
The exercise is intended to clear preconceived notions of the Jeff Bezoses of the world and see others who fit the category, aside from the Amazon founder.
She said research she did in her 2018 report Latino Entrepreneurship Initiative found that, contrary to popular opinion, Latinos have started businesses at a faster rate across all industries than their counterparts. Despite their desire to go into business, the study adds that loan approval for Latinos dropped dramatically by 91% compared with white business owners.
They fund their business instead, her research shows, by using personal and family savings.
Diverse businesses show growth but face obstacles with securing loans
At least 10% of Black-owned business owners avoided additional funding because they “did not want to accrue debt,” 8% “did not think the business would be approved by the lender” and 5% decided the “financing costs would be too high.”
Still, if they take the leap, women of color running businesses are showing explosive growth, including the self-employed.
Between 2014 and 2019, Asian self-employed business owners witnessed a 15% growth before the pandemic hit, according to the Stanford Business study. Latinas experienced a 12% rise on their balance sheets, and Blacks saw a 1% rise. White women who were identified as working for themselves saw a decline of 7% in growth.
“All trends point to exponential growth to BIPOC business owners,” Orozco said.
With 23% of all Latino-owned businesses located in California, a $451 billion “opportunity gap” exists if they “generated the same average revenues as non-Latino-owned businesses,” the study adds.
But diverse women-owned businesses in particular need the advantages to help them succeed — especially with the risk of a prolonged pandemic.
“They’re more likely to face business closures,” Orozco said.
The conference was put on by the Sonoma County Economic Development Board.