The Power of Latino Business Owners in the United States

Speaker 1:

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Eduardo Tobon:

Hola. I'm Eduardo Tobon, Latino segment head at BMO Commercial Bank. Welcome to our Markets Plus series where we are focusing on the Index 500 of the largest Latino-owned companies, which is a snapshot of the power of the Latino business owners in the United States. Today I have the privilege of being joined by Jorge Ferraez, publisher of Latino Leaders Magazine to discuss the partnership, how the Index 500 came to be and much more. Jorge, thanks for being here.

Jorge Ferraez:

Thank you, Eduardo. It's a privilege to share this podcast with you and discuss this great idea and this great project.

Eduardo Tobon:

Excellent, Jorge. Let's dive right in. Latino business owners have been creating businesses, employing people, creating wealth, and investing in opportunities in very powerful and impactful ways. So let's start there. Jorge, can you talk about the Index platform? How was it born and what does it mean to the Latino community and business leaders?

Jorge Ferraez:

That's right, Eduardo, exactly what you just said. There is a big need of having more information about the Latino business. Who are they? Where are they? What kind of industries they work? So when you and me were at the USHC Convention in Phoenix back in 2022, we were discussing about the necessity and the lack of information around these Latino-owned companies across the country. And that is when we came with the idea of maybe starting a list, a census, a vast research nationwide to see which were those companies that are impacting the economy locally, regionally, and of course give information about where is this Latino-owned business going.

So we started by dividing the country in different regions and we assigned researchers to each of the regions to work with Chambers of Commerce, to work with business census, and to start finding literally under the rocks all those companies that were important, relevant in all these regions. And in 2023, we put together this list. And the fortunate thing about you and BMO is that this list or this effort was needing the support of a bank because a bank is one of those organizations, Eduardo, that we have seen that can benefit maybe more of knowing this information. Why? Because a bank can support them to grow, to start new businesses, new lines, expand and everything. So we published the 200 Index in 2023, and then this year in February, we started with the Index 500. We expanded it to 500 and it has been a great project, I guess, and that's the main activity.

Eduardo Tobon:

Thank you for that, Jorge. My next question is around Latino-owned businesses contribute to growing the economy in a very recognizable way. Can you speak to that a bit more?

Jorge Ferraez:

Of course. Eduardo, we both know that there are five million Latino-owned businesses in this country, and five million compared to only 500 that we have in the Index is a huge, huge gap. The thing is that these five million businesses, most of them are very, very small businesses. The Index tries to capture the largest ones, right? Because we start by indexing them through the revenue. So we go down from the largest down to the smallest. Now, some of the great information that we are getting from putting together this list, Eduardo, is that, for example, we all know that the Latino GDP could be considered as the fifth-largest economy in the world if it were a country. And the Index makes sense with our own research in showcasing that California, Texas and Florida, those three states are the largest when it comes to Latino-owned business headquarters and operations.

And for example, the California Latino economy that is the 21st largest in the world has almost 30% of the Index 500 in them. As we go analyzing and observing all this information coming out from the Index, it becomes a very interesting and useful tool, not only for banks or not only for agencies or other business owners, but it will be very interesting information and a tool for everybody who wants to know, as you mentioned at the beginning, what is the muscle and where is the Latino business owners' community going?

Eduardo Tobon:

That's so true, Jorge. People don't realize the importance of data. You just mentioned a few data points, and I think it's very important that we go a little bit deeper into the economic overview of the Hispanic businesses in America. And so I'm going to throw in additional data. I just heard you talk about California. California itself, it's the fifth-largest economy in the world, and the Latino GDP in California is actually 21st largest economy in the world in and on itself. And Hispanics are the economic engine of the U.S. economy. We contribute, because I'm also Latino like you are, 3.2 trillion to the U.S. GDP, which according to the Latino Donor Collaborative, that makes the Latino economy the fifth-largest economy in the world in and itself. So perhaps Jorge, you can talk about the impactful data that you found when you were putting the Index together.

Jorge Ferraez:

Of course, and this is so important, Eduardo, what you're talking about, because knowing precisely this kind of information can make a business plan work better, or knowing what kind of industries are these Latinos on could work on expanding certain regions for businesses or things like that. One very important thing for the Index, Eduardo is that we wanted to partner with the highest and the most relevant business organizations through the country. So we started with the USHC, which is the largest group of Latino-owned businesses in the country. And they have been excellent partners in providing data and opening doors for us for businesses and getting their information and knowing people. And we are also looking to partner with some other organizations in this realm too, because it's so important to have the collaboration of everybody because this is a monumental effort, Eduardo. I think that sometimes we don't conceive that or realize the power of these things.

For example, in 10 years from now, Latinos will be 75% of the labor growth in this country according to Nielsen. Can you imagine a labor force that is going to grow that much with Latinos? And also, we all know that Latinos start more business per capita than any other racial or ethnic group in the United States, according to studies from McKinsey and some other advisory firms. We also know that, for example, first generation Latino immigrants have a higher success rate from any other group starting a new business, for example. So those things are so important and having this Index out there. And I just want to remind everybody that the Index 500 is out there, is published every February. You can get it through the website, Latinoleaders.com or through the magazine or the digital edition of the magazine through isu.com. And we are with our partners researching and putting out everyday more and more and more information.

Eduardo Tobon:

Thank you for that. One thing I would add to what you just said, which I think we'll have on the podcast listeners that are Latinas, and Latinas are incredibly powerful for us in this country, and they create six times more businesses than any other group in the U.S. So they're part of the Latino cohort, but Latinas are incredible human beings, just [foreign language 00:08:50]. And we're so proud of having Latinas in this country and them being so entrepreneurial. I'm sure you agree with that, and the Latino Community Foundation, which partners heavily with us, has done a lot of research on that front as well as others. But thank you, Jorge.

At BMO, we're very much driven by purpose and we have a very clear purpose, which is to boldly grow the good in business and life. And Eric Smith, who I report to, and he's the vice chair of BMO, said about the Index that we are focused on helping all of our communities make progress, which is why we're thrilled to continue our partnership with Latino Leaders Magazine to recognize the significant contributions of Latinos in the business world. Why do you think partnerships like this become so important? Perhaps you can expand on that for us.

Jorge Ferraez:

So the idea of the Index was to create a sense of community. If all the business owners, Latino business owners in the country could have this sense of community and start gathering and getting together to put together initiatives or to do things or projects or investments, and I think that underlying the effort of just putting out information through the Index and offering that information for free to everybody is trying to create this sense of community. And that is why since last year and this year, we are doing it even with more enthusiasm and more frequency. We are coming to many different cities and talk together and invite these communities to come with us. They will receive a recognition, but more important than the recognition is to have that conversation, that networking among ourselves and know each other because that will also be a tremendous force for the future that will empower all these Latino business owners, Eduardo.

And I think that, again, the role of BMO supporting this initiative will have many, many good consequences in the future. You will be helping, you will be partnering in creating this community of business owners that are always in need of support of capital, of AI, talent acquisition, succession planning, a lot of many different things needed for expanding and growing businesses.

Eduardo Tobon:

Fantastic, Jorge. I think with that, the Index 500 is a brilliant idea. We all agree that putting the spotlight on all these large companies is going to help even the smaller companies aspire to become larger companies, and they all do. No company starts right away to be large. They become large over time by growing organically and inorganically. So perhaps what can we expect next? Maybe we need another podcast for that, but if you can just give a glimpse of your thoughts on that, I'm happy to provide mine.

Jorge Ferraez:

Of course, what we're doing with Index now is just the beginning of many, many different ideas that could come in the future. Of course, fortifying and expanding these gatherings with leaders. Very soon we'll start having more stronger recognitions. That could be maybe by region or by industry, or even by, let's say, profile of the business owners. Let's say that we do a special recognition for women business owners, or let's say that we do a special recognition for business owners under 40 years of age, for example. So I think that we have many, many, many more, but more and very importantly too is to be able to serve as a link, as a bridge between these businesses and some other organizations out there that can also help them and support them in growing. So I think that there's a big, big, big vision for the future. This is just the beginning. I think the Index 500 is going to grow in many ways. Most importantly, unifying and getting together a community that, as you said, and we all been discussing, is the future economically and financially of this country in many senses.

Eduardo Tobon:

Jorge, thank you for that. I've heard many folks say, "If your company does not have a Latino strategy, your company does not have a growth strategy." So it encompasses efforts like this to bring the attention where it should be. We're very proud of doing that. We are going to, as you pointed out, to have multiple events this year as we did last year. So a lot of different places for us to celebrate a lot of different companies, and we hope that many of those companies get a chance to join and receive their recognition. As the eighth-largest bank in North America, BMO is committed to helping expand possibilities for Latino-owned businesses. So thank you, thank you again Jorge for this great conversation. And thanks to everyone for listening. Until next time, [foreign language 00:13:45].

Jorge Ferraez:

[foreign language 00:13:47] Eduardo and thank you for the BMO support for the Index 500.

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