Burgeoning Hispanic Market Exerts Its Force

WASHINGTON (By Krissah Williams, Hispanic Business) June 7, 2004 -- When attorney Michael Veve moved to Washington from Puerto Rico in 1973, most Hispanics worked in civil service jobs or for the World Bank, Inter-Development Bank or embassies. Hispanic-owned businesses were a rarity, he said.

"Now you can do banking in Spanish with Hispanic tellers in the major banks. You can buy your food in bodegas, have your landscaping done by Hispanic landscaping companies. There are home-improvement contractors who are Hispanic. And you can do business with a variety of [Hispanic] white-collar businesses from lawyers to accountants to architects throughout the city," Veve said.

A study funded by the Greater Washington Ibero American Chamber of Commerce, which Veve chairs, found that the number of Hispanic-owned businesses in the region has grown to 32,000 in 2002 from about 500 in 1970. The surge began in the 1980s after Hispanic immigrants fleeing El Salvador's civil war poured into the area and has increased as more Central American immigrants have moved here to join their families.

The largest group, Salvadorans, have started about 3,000 small family-run businesses -- restaurants, construction companies and retail stores -- in the Washington area, said Elmer Arias, president of the region's Salvadoran American Chamber of Commerce and owner of La Hacienda restaurant in Springfield. At first, these businesses were concentrated in the Adams Morgan area, but as immigrants saved money and moved out to the suburbs, businesses followed.

Now bustling centers of Hispanic commerce can be found in Langley Park, Wheaton, Bailey's Crossroads, Woodbridge, Manassas, Fredericksburg, Arlandria and at least a dozen other communities and neighborhoods. Latino-owned businesses have changed the face of many neighborhoods, as Hispanic mom-and-pop stores have filled once-abandoned buildings and brought commerce back to some neighborhoods.

The flood of immigrant business owners from Latin America was preceded by a smaller number of Hispanics who came to the area in the early 1960s and 1970s to work for the federal government. Veve said Hispanic businesses gravitated toward government procurement because of the federal program that sets aside business for minority-owned companies.

This led to the creation of scores of Hispanic-owned contracting companies, including MVM Inc., a Vienna-based company that provides guards and other security services and reported revenue of $164 million last year, and computer network developer Force 3 Inc., which reported revenue of $168 million. Soza & Co., a government information technology company founded by Hispanic Fairfax businessman William Soza, had more than $137 million in revenue when it was sold last year to Perot Systems Government Services Inc. for $107 million in cash and stock.

There are 38.8 million Hispanics in the United States, or 13 percent of the total population, making the group the largest minority in the country. In the Washington area, from 1990 to 2000, the Hispanic community doubled, to 447,000, or 8 percent of the total population, according to the U.S. Census Bureau. Latino advocates say the number is even higher, because the government failed to count some illegal immigrants.

"If you look at what's happened in the population across the country since 1990, it has grown more than 73 percent. That's explosive growth. Those sheer numbers are fueling most of the business growth," said Judi Erickson, a Hispanic Business magazine editor, citing figures from HispanTelligence, a research group owned by the magazine. "What you're seeing in D.C. is what you're seeing in other areas across the county. Los Angeles and New York have long had concentrations of Hispanic businesses. Now what we're seeing is an entrepreneurial trend going across the county."

By 1997, the last time the Census Bureau measured it, Washington area Hispanic businesses had sales of nearly $1 billion. Hispanic business leaders say that substantial growth has occurred since then.

At the same time, national retailers, like Safeway Inc., aware of the growing buying power of Latino consumers, are trying to adjust their operations to win more of them.

These changes can be measured in a number of different ways. For example, the growth of advertising and clasificados aimed at Latinos here now supports nearly two dozen weekly newspapers, a dozen radio stations and three local television channels. Twenty years ago there were only a couple of weekly Spanish-language television shows, one radio station and three newspapers.

The size and diversity of the business community is also reflected in the evolution of the area's Hispanic chambers of commerce. The granddaddy chamber, Greater Washington Ibero American Chamber of Commerce, was founded in 1976 by federal contractors, firms that still dominate the group today.

In the past few years, as the number of Hispanic businesses has soared and diversified, other chambers have sprouted up, including the Salvadoran chamber, the Hispanic Chamber of Montgomery County, and statewide Hispanic chambers in Maryland and Virginia. Last year, a Hispanic chamber formed in Prince George's County, which has one of the smallest Latino populations in the region but is home to Langley Park, where 63 percent of the residents are Hispanic.

Some of these business groups focus on writing business plans or networking or making changes to the federal minority business contracting programs. But the biggest problem facing most Hispanic business people is access to capital, several business leaders said.

"People think we're asking for a handout. No, we want access," said Elizabeth Lisboa-Farrow, owner of District-based public relations firm Lisboa Inc. and the first Latina chair of the D.C. Chamber of Commerce. "Access [to capital] is still very difficult."

When José Barahona, who immigrated to this area in 1973 and started his janitorial business in 1978, he said raising capital was "very difficult."

"One bank denied me a $50,000 credit line. They said, 'José, your papers are looking very good, but come to us in two years.' "

"I say the reason was my broken English. They think I'm going to be a risky loan," Barahona said. Able Services Contractors Inc., the janitorial company he founded and sold to his children, now has about 300 employees. He is also owner of the franchise rights for Pollo Campero, the popular Guatemalan chicken chain with outlets in Herndon and Falls Church. "I said one day, they are going to come to me, and now today they are coming to me, and I'm going to be a little arrogant because they were arrogant with me," he said.

One problem is that immigrant businessmen sometimes don't have the local assets or work history that banks want before they will make substantial loans. But another problem, say many Hispanic leaders, is that many immigrants don't speak English well.

"Without the language, it is difficult to conduct a relationship with a bank or attorney, to network, share ideas or even understand how business is conducted in this area," said Juan Albert, a business consultant who led the local Hispanic chamber of commerce for five years.

But Albert said as Spanish-speaking immigrants and their children learn the language, they will move from owning small family businesses and working in restaurants and construction into more professional jobs and running larger companies. "If you look at immigrants' patterns in this country, we are following the same pattern," Albert said. "When Greeks came to this country, they were the ones working in hotels. They started working in restaurants, working in construction. The trend is going to continue."