Hispanic companies are more exposed to financial risks than the average U.S. firm due to the owners' lack of access to good advice in making business decisions, according to a study published Tuesday by insurer MassMutual.
The Business Owner Financial Wellness Study emphasizes the lack of a long-term strategy by many Hispanic entrepreneurs, who in 89 percent of the cases founded their firms to economically support their families and seven of 10 of whom want to hand the company down to their children although the majority do not have any concrete succession plans.
"Latino businessmen lack much information, basic information," Chris Mendoza, assistant vice president of multicultural markets at Massachusetts Mutual Life Insurance Company, told Efe.
The findings were formally presented on Tuesday at the Association of Latino Professionals in Finance and Accounting's national convention in Anaheim.
"Hispanic companies are a little more at risk than the rest of suffering financial problems," confirmed Mendoza, who warned that some Latino businessmen have very scanty training in dealing with possible unexpected problems.
"If they have not made plans for the future to maintain the business, for it to remain in their family if they die or if they can no longer run it, well then there's a lot of risk," he said.
The report reveals that the typical profile of an Hispanic businessman is a first-generation immigrant without formal business training, who created his company thinking more about his family than about getting rich.
In addition, the average Hispanic entrepreneur aspires to be his or her own boss and to help his community in the future, but his management of the company is usually focused more on its day to day operations.
About 28 percent of Hispanic businessmen say that they don't have time to handle investments and 23 percent say that they have too many immediate financial concerns to think about retirement.
The comparable figures for all U.S. business owners are 18 percent and 16 percent, respectively.
Many Latino entrepreneurs, according to Mendoza, "don't know the value of their business because they have not informed themselves (about it) or because they make their analysis based only on sales" and are reluctant to seek outside advice.
"The majority want to work with someone who understands them, who knows the (Spanish) language, the Latino culture and is recommended" to them, Mendoza said.
The difficulty of first-generation Hispanic businessmen getting financing due to their lack of credit history in the United States is also a problem at the time they want to expand a business, the MassMutual executive said.
Therefore, generally "the funds that their businesses can have (available) are loaned to them by their relatives," said Mendoza, who emphasized - however - that the number of companies created by Hispanics is growing in this country at a rate twice the national average.
[Editors Note: A previous version on this article was published with a different photograph.]