Melanie and Mariana Montoya want to be entrepreneurs.
The sisters from Los Angeles are in their 20s. Melanie graduated from the University of California, Davis, with a graphic design degree in 2019, while Mariana is a journalism student at Cal State Northridge. They both thought it would be enough to secure a future, but when they went to a design conference a couple of years ago to look for jobs, they noticed they were the only Latinas.
“We looked at each other and we decided to go off on our own and become entrepreneurs,” Mariana said. “We knew this was the path we were going to pursue.”
They don’t have family money or a financial airbag if they fail. But they say that’s not going to stop them; they plan to tackle their goal the same way they put themselves through college.
The Montoyas are just one example of something I see over and over in Latino youth: enthusiasm, optimism, drive and the American spirit at its best — set a big goal, then work as hard as you can to hit it. But dreams and willpower are only part of the solution. To fully activate these young entrepreneurs, they need brass-tacks knowledge of how to use money and capital.
Here are the three steps we need to take to propel young Latino entrepreneurs.
1. Equip them.
Every business is about money. Entrepreneurs need not only capital, but also financial training and technology to leverage it well.
We must support and expand existing training courses on the fundamentals of business and personal finance. This includes business basics like cash flow and budget management, income forecasting and go-to-market strategies, and how-tos like getting a business line of credit approved, invoicing software and hyper-targeted customer acquisition. Where they don’t exist, we must create them.
Lessons need to be digital, modular, social and culturally relevant — not just bilingual — so they speak to this important audience in a way they’ll respond to.
We must also expand the range of financial tools accessible to young, cash-strapped businesses, such as low-cost cash flow, budgeting and tax applications. Software that enables tracking and management of critical business functions like sales and customer relationships are also crucial. Many of these tools exist today, but we have to make it easier for entrepreneurs to understand their utility.
Startups (including my own) have begun to make young Latinos aware of their economic power, and to enable them to wield it effectively. These efforts must accelerate.
2. Connect them.
Professional networks are a critical component of business success, and we should make every effort to incorporate Latinos into existing networks and to build new ones focused on Latino youth like the Montoya sisters.
Entrepreneurs need new systems to match them to mentors, capital and job opportunities. There are already networks devoted to building business ties and community between Latinos in many industries, from tech to capital to entertainment, and many more. But they will be more effective if they are unified into networks relevant to Millennials and Generation Z. Not only will this open doors for individuals, it makes Latino entrepreneurship more visible to all. My foundation along with other Latino leaders are working on this solution, and we welcome anyone with a fresh approach to similar goals.
3. Support them.
We have to open doors and access to capital for young Latinos so they can put their entrepreneurial energies to work.
Pandemic recovery programs are an obvious place to begin, especially because Latinos bore a disproportionate brunt of its economic toll. The $3 trillion for infrastructure, education and climate change expected from the new administration must include opportunities specifically for Latinos. Introducing more capital to Latino businesses and investing in their potential will create a spectacular return on investment.
New FinTech companies use alternative data sources so they can assess borrowers more accurately, leaving Latinos less susceptible to the biases of traditional credit evaluation. These companies should develop products specifically targeted to young Latino entrepreneurs and solopreneurs.
We need to unleash Latino entrepreneurship.
The entrepreneurial spirit of young Latinos can propel us past the economic catastrophe of the pandemic. But while we as a society stand up and start to dust off the ashes of Covid-19, it’s time to start thinking about rebuilding for the future, not just recovering the past. We need new approaches, new ideas and new businesses. We need lots of entrepreneurs like Melanie and Mariana, and we need to equip them to change our economy for the better.
Even though Latinos got the worst of the pandemic, we can offer the best of the world to come. We start businesses four times more frequently than other groups, and we drive three-quarters of U.S. labor force growth. If Latinos in the U.S. were a country, we’d have the eighth-largest GDP in the world, and the fastest-growing one too. We’re the engine of the U.S. economy.
Aiming support at young Latinos is particularly effective. Because Latinos are the fastest-growing demographic in the U.S., relatively small investments now will have disproportionately large payouts in the future.
Those investments in increasing financial health go even further because of the Latino Youth Effect — we tend to live in large households and tightly knit communities, so knowledge spreads fast and far: teach one, reach many. So giving even a single person the toolset for financial freedom creates opportunities for many, many more in the future.
Let’s lead Latino entrepreneurs to financial success so they can lead us to a brighter, more fair and more prosperous future.