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Dr. Marlene Orozco demystifies misconceptions about Latinas through data 

Latina researcher, Marlene Orozco shares the importance of data in demystifying misconceptions and biases about Latinas. 

Dr. Marlene Orozco is the Principal Investigator and CEO of Stratified Insights, a Latina-owned research consulting firm that provides academic grade research solutions to organizations from research planning and design, data collection and analysis, to reports and presentations tailor-made for key stakeholders. 

Recently, Marlene was a guest speaker at our third annual Women Entrepreneurs Empowerment Summit last month where she shared key insights and data from the 2020 State of Latino Entrepreneurship report.  

We are honored to have the opportunity to share her amazing story with you today and how she is using her research to help demystify misconceptions about Latinas in business and entrepreneurship.

Latina researcher and founder of Stratified Insights, Dr. Marlene Orozco, shares the importance of data in demystifying misconceptions about Latinas.

As mixed methods researcher by training, Marlene has over 250 hours of in-depth interview experience and quantitative expertise in big data. She holds a Ph.D in Sociology from Stanford University, a Master’s in Education Policy and Management from the Harvard Graduate School of Education, and a B.A. with honors in Sociology from Stanford. 

Throughout her years of education training in the field of research, Marlene decided to use her research as a tool to make a real-world impact, especially for minority small business owners and entrepreneurs. Her research is guided by her passion for education and economic equity and exploring pathways of mobility for immigrants, women, and entrepreneurs from underrepresented backgrounds. 

Marlene’s work has been featured extensively, appearing in over 100s of media outlets including Bloomberg, MarketWatch, Forbes, NBC News, CNN en Español, and Univision, among others. She is also the lead editor and co-author of an academic volume, Advancing U.S. Latino Entrepreneurship, and has written academic publications in peer-reviewed journals in addition to several industry reports and research briefs. 

Additionally, Marlene’s tremendous skill and success has been recognized through various accolades such as being named 40 Under 40, Top Young Professionals by Silicon Valley Business Journal and presented the Stanford Community Impact Award by the Stanford Alumni Association. 

Demystifying misconceptions about Latinas through data 

It’s no secret that Latinas are often misrepresented, undervalued, and unappreciated in the professional world. Latinas are also the most underpaid group of women, making on average only 55 cents for every dollar earned by a white, non-hispanic man. Latinas have to work harder than almost every other group just to get the same recognition and struggle to gain access to resources such as capital to grow their businesses. These unfair biases have an impact on the rate of success for Latinas and other minority groups. Many feel isolated and hopeless when they see themselves and people like them failing to advance in their professions. 

This is why information and data is important. According to the 2020 State of Latino Entrepreneurship Report, the number of Latino-owned businesses has grown 34% over the last 10 years compared to just 1% for all other small businesses. In fact, Latino-owned employer businesses are growing revenues at a faster rate than White-owned employer businesses. Moreover, much of the growth in the number of new businesses among Latinos has been driven by women. Latinas represent 40% of all Latino business owners and the number of Latina-led employer firms has grown 20% within the last five-year period.

When we asked Marlene what pushed her to launch her own research consulting firm, it was the desire to see her research have a real-world impact. 

“As a Latina who appreciates the power of data, I seek opportunities to demystify misconceptions about Latinas’ contributions to society with hard facts.” (Photo courtesy Marlene Orozco)

“In the middle of graduate school, I was starting to feel unfulfilled by the lack of real-world impact that my research was having,” she told Latinas in Business. “Through much of my rigorous, academic training in producing peer-reviewed publications, I found that this research would largely live within the ivory tower. I started my company in December 2019 to bridge academic research grade solutions to industry needs. My first major client was the National Association of Investment Companies, where I produced a white paper on the state of growth equity for minority businesses as part of an initiative supported by the Minority Business Development agency to aggregate billions of dollars of growth equity capital to invest in ethnically diverse and women-owned business enterprises.” 

As a Latina, who appreciates the power of data, Marlene seeks opportunities to demystify misconceptions about Latinas’ contributions to society with hard facts. 

“I thus have a strong philosophy that reminds me to document my small wins. This philosophy is to never assume your work speaks for itself,” she says. “While I pride myself in the outputs that I produce, it is important that we communicate the milestones and successes along the way. Being able to readily produce these metrics are critical in instilling confidence in your clients that you can get the job done but also keeps you encouraged about the work that you are doing.” 

Marlene Orozco speaking as Keynote Speaker at the 6th annual State of the Latino Community in Sonoma County hosted by Los Cien. (Photo courtesy Marlene Orozco)

Along with her research work, Marlene provides coaches and provides expertise to reduce system-level bias facing women and people of color who are entrepreneurs, fund managers, or in the investment field through her position as a founding board member of CRESER Capital Fund and an Illumen Capital Ambassador. 

“We cannot do this alone” 

Marlene is a big believer in the power of community. As an entrepreneur, coach, and researcher she herself has experienced the immense benefits that come with being part of a community groups and networks. 

“I have been very fortunate that I am tapped into an extensive entrepreneurial network at Stanford Graduate School of Business as I also lead research efforts at the Stanford Latino Entrepreneurship Initiative. I would encourage readers to get connected to community organizations and structured networks as these are key to scaling and growing your business,” Marlene advises. “My research has shown that you are more likely to come into contact with capital providers if you are part of an organizational network. As we experienced first-hand in the pandemic, information impacting small businesses changes very quickly from local ordinances to relief aid.  Organizations such as chambers of commerce, trade associations, economic development centers, and nonprofits are able to synthesize and distill this information quickly. Get connected!”

Being part of a community of like-minded individuals will not only give you the support you need, but also allow you to be the inspiration for someone else. You never know who might be in your circle who is seeking your advice, expertise, and talent, so make those connections, reach out, and share your story! 

Latino entrepreneurship, Marlene Orozco

Marlene Orozco sharing insights on the latest trends in Latino entrepreneurship at the 6th annual State of the Latino Community in Sonoma County hosted by Los Cien. (Photo courtesy Marlene Orozco)

“A couple of years ago, I was a keynote speaker at the 6th annual State of the Latino Community in Sonoma County hosted by Los Cien. The event included many sponsor tables put peppered throughout the ballroom were high school students engaging with these business leaders,” Marlene shares, recalling a moment where she was able to guide and empower a young student. “After I shared the latest trends on Latino entrepreneurship, a high school student bravely took to the mic and asked a question about how to scale her craft business. I was so moved by her courage and by the fact that I was able to play a small role in compelling her to share her story publicly. Motivating others through the power of data and my research encourages me to keep pushing my public scholarship.”

Communities and networks allow emerging entrepreneurs to access the resources and aid they need to grow and succeed in their ventures. However, knowing when to ask for help from your community and peers is an area where Marlene has seen women struggle. We often think success is being able to do it all for ourselves, but this can sometimes hold women back from achieving the full potential of their success. 

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I would encourage women to get started even before you think you are ready. There are numerous research studies that show that women, especially Latinas, hold themselves back on applying for a job or financing due to their gendered perceptions about qualifications,” says Marlene. “Know your worth, have confidence in yourself, and keep personal and professional support groups to turn to for advice and encouragement. This past year, in addition to navigating the complexities of the pandemic, I was finishing graduate school, publishing a book and articles, working full time, kick starting my business, and raising a toddler. Call on others for help as we cannot do this alone!”

Key Insights from the 2020 State of Latino Entrepreneurship Report 

The 2020 State of Latino Entrepreneurship Report released by Stanford Graduate School of Business in collaboration with the Latino Business Action Network reveals that Latino-owned businesses are becoming the fastest-growing segment of the U.S. small business ecosystem. 

The New Latino Entrepreneur  

Data over the years have expanded the narrative on the average profile of all Latino business owners: they are more highly educated than the general U.S. Latino population, have higher homeownership rates relative to their wageworking counterparts, and in general, generate greater personal income, representing a path to upward mobility and community wealth. 

Latinos are starting businesses at a faster rate than the national average across almost all industries.

According to the 2020 State of Latino Entrepreneurship Report, the number of Latino-owned businesses has grown 34% over the last 10 years compared to just 1% for all other small businesses. Were it not for the growth in the number of Latino-owned firms, the total number of small businesses in the U.S. would actually have declined between 2007 and 2012.

Between the years 2012 to 2017, the number of employer Latino-owned businesses (LOBs) grew by 14%, over twice the U.S. average of 6%. Additionally, the number of employer LOBs grew across 44 out of 50 U.S. states, and grew at a faster rate than the national industry average across 13 of the 15 industry sectors that include a substantial number (over 1,000) of employer LOBs. Among these industries, the growth rate is highest in the following industries: 1) Construction, 2) Finance and Insurance, 3) Transportation and Warehousing, 4) Real Estate.

Latino-owned employer businesses are growing revenues at a faster rate than White-owned employer businesses. Over the past two years, Latino-owned firms grew revenues an average of 25% per year while White-owned businesses (WOB) revenue grew at 19%.

In pre-pandemic times, the roughly 400,000 Latino-owned employer businesses generated nearly $500 billion in annual revenue and employed 3.4 million people.

Latino-owned employer businesses are significantly less likely than White-owned employer businesses to have loan applications approved by national banks, despite reporting strong metrics on a variety of key lending criteria. 

Only 20% of LOBs that applied for national bank loans over $100,000 obtained funding, compared to 50% of WOBs. Considering only scaled firms (annual revenues greater than $1 million) requesting a similar size loan, only 29% of Latino-owned businesses were approved, compared to 76% for WOBs. If loans of all sizes are considered, 51% of LOBs were approved for all or most of their loans requested from national banks, compared to 77% of WOBs. Importantly, after controlling for business performance measures, the odds of loan approval from national banks are 60% lower for Latinos. Explored below are some key areas business performance measures from the report: 

  • Credit: Latinos who own employer businesses are no more likely to have high credit risk than their White counterparts. Additionally, when considering credit performance, among the most credit vulnerable business owners (e.g., undocumented and microbusiness owners) the default rates are no higher than those among non-Latinos. 
  • Profitability: While WOBs are more likely to operate profitably than LOBs, three quarters of all LOBs report breaking even or generating profit in the last 12 months — a similar rate relative to WOBs. This is despite the impact of the coronavirus generating greater losses than in previous years. 
  • Liquidity: LOBs and WOBs report comparable liquidity with 52% of LOBs and 55% of WOBs reporting they have ample liquidity to operate without the need for credit. 
  • Business age: Given the recent booming growth in the number of Latino-owned businesses, it follows that LOBs are younger than WOBs. On average, LOBs are 10 years old while WOBs are 14 years old. The median age for both is 12 years.

Scaled Latino-owned employer businesses are more likely to seek and receive funding from sources that expose them to more personal financial risk compared to White-owned employer businesses. 

After accounting for application rates, the survey data showed that the top sources of funding (over $100,000) with the highest approval rates for scaled LOBs include: 1) Personal or business lines of credit (51%),i 2) Personal/family savings (43%), 3) Business credit card(s) (40%), 4) Personal/family home equity loan (37%). On the other hand, the top sources for scaled WOBs include: 1) Business loans from national banks (76%), 2) Business loans from local or community banks (45%), 3) Private equity (36%), 4) Personal/family home equity loan (34%). 

Latino-owned employer businesses that participate in formal business organizations (e.g., chambers of commerce and trade associations) are more likely to experience funding success. 

LOBs that leverage formal business organizational networks are more than twice as likely to experience funding success as those that did not engage in any networking activities (63% versus 28%). The report’s data shows that businesses that leverage organizational and personal networks are more likely to come in contact with capital providers, which may provide opportunities to build the relationships needed to facilitate funding requests.

Pandemic has disproportionately impacted women, specifically Latinas  

Much of the growth in the number of new businesses among Latinos has been driven by women. Latinas represent 40% of all Latino business owners and the number of Latina-led employer firms has grown 20% within the last five-year period of data available. As part of the gender wage gap, Latinas earn 54 cents on the dollar relative to White non-Latino men, trailing women of all other racial and ethnic backgrounds, which might be one of the driving factors leading to Latinas exiting the formal labor market to start their own businesses.

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However, despite Latinas representing a large number of LOBs, they have been the most impacted negatively by the pandemic.

Source: 2020 State of Latino Entrepreneurship Report

Data shows that twice as many Latina-led companies experienced closure compared to Latino-led businesses (30% versus 16%). Layoffs were also higher for Latina-led companies (17% versus 12%). This gender gap holds among WOBs as well. The difference in industry distribution by gender does not fully explain the gap in business closure by industry. The data reveals some differences in having cash on hand. 

Source: 2020 State of Latino Entrepreneurship Report

Only about 1 in 10 Latina-owned businesses have enough cash on hand to survive beyond 6 months compared to 2 in 10 Latino-owned businesses. This gap is less pronounced for WOBs. In addition, working from home is also more challenging for Latina-led businesses. Only 20% report that the majority of their employees can work remotely, compared to 34% of Latino-led and 48% of White-male-led companies.

The 2020 State of Latino Entrepreneurship report reveals that while Latino-led businesses are clearly crucial to the U.S. small business ecosystem, there is still much work to be done to ensure that Latino entrepreneurs are awarded the same opportunities as White entrepreneurs. Latino-led businesses have also faced greater hardships in the past year due to the pandemic and future economic recovery efforts will need to include greater support and aid to minority business owners going forward.