SAN ANTONIO -- San Antonio ranks second in the nation among similar-sized cities for the percentage of businesses that are Hispanic-owned, making them vital to the region's economic health. While these business owners report strong knowledge in finances, few have taken action to put a financial strategy in place, an issue that could impact the region's overall economic future. Startlingly, while more than half plan to pass their businesses on to family members, less than 20 percent report having a succession plan. These are just a few of the dramatic findings in a recent study conducted by faculty members in The University of Texas at San Antonio College of Business.
The San Antonio financial planning survey was conducted in partnership with the San Antonio Hispanic Chamber of Commerce, and was sponsored by South Texas' Sapient Financial Group, a general agency of Massachusetts Mutual Life Insurance Company (MassMutual). The study's findings are a guidepost to MassMutual's Fiscal Fitness Initiative created to arm Latinos with the information and tools they need to improve their fiscal health.
"The survey findings indicate that there are differences between knowledge of, interest in, and use of financial services. Only 46 percent of Hispanic business owners use financial services. However, the data show that one factor that may be related to the use of these services is revenue. The results revealed that the greater the revenue the more likely the business owner is to use financial services," said Dianna Stone, professor of management at UTSA.
Hispanic businesses' contribution to the local economy is significant. Almost 40 percent of San Antonio's businesses are Hispanic-owned, according to a 2007 U.S. Census Bureau study, making it second in the nation among cities with more than 500,000 people. Bexar County came in at 37.3 percent, putting it in the top five among counties with populations of more than 500,000 people. There are 37,000 Hispanic-owned businesses in San Antonio, according to the Texas Governor's Office.
These business owners are confident in their knowledge of financial strategies when compared to their national counterparts(1), according to the UTSA study. However, a sizable number are not using financial services for themselves, their businesses, or their employees.
Ironically, survey respondents recognize the significance of their inaction -- they worry they will not be able to meet long-term financial goals, and wish they knew more about the subject. They recognize the importance of financial strategies, and understand that implementation of such a strategy will increase their success.
Of the 171 Hispanic business owners who responded to the poll, which was conducted in July and August 2010, most were male (54 percent), averaged 43.5 years old, married, and were well educated (62 percent with undergraduate or graduate degrees). Respondents were fairly evenly split in terms of business revenues, with 51 percent reporting less than $100,000 in revenue and 48.9 percent reporting revenues of $100,000 or more. The types of businesses represented covered a variety of industries, though larger companies were more likely to be finance or retail/wholesale businesses.
Key findings of the survey reveal that local Hispanic business owners:
Recognize that financial planning is one of their top priorities but many still need to take action. Almost 85 percent said they understood that a financial plan will increase their success but only 38 percent have a documented financial strategy in place for their business.
Are concerned about their long-term financial future, despite being knowledgeable about financial services. Although some 65 percent of respondents indicated that they were somewhat to extremely knowledgeable about financial planning for themselves and their families, almost 47 percent agree that "they worry about being able to meet long term financial goals."
Lack time and confidence in their ability to make good financial decisions. Almost 57 percent of respondents said they "wish they were in more control of their finances" and approximately 46 percent of respondents feel that they do not have time to manage all of their investments.
Are unprepared to transition their businesses to family members. Over half of respondents (56 percent) plan to pass their business onto a family member but only 18 percent have a succession plan in place.
"After giving their blood, sweat and tears to establish their businesses, Latinos deserve to be rewarded with the confidence and tools that will help them lay the foundation for a more secure future for their businesses and their families," said Frank Woodruff, CEO of Sapient Financial Group. "The lack of succession planning is particularly disturbing. Too often we've seen successful business shutter once the business owner dies or becomes ill."
MassMutual's Fiscal Fitness Initiative includes partnerships with local organizations to host workshops and an integrated communication campaign that provides financial information and coaching to San Antonio Latinos. In San Antonio, Sapient Financial Group is developing educational tools and planning to conduct speaking engagements to enlist the leaders from all sectors of the San Antonio community to help Latinos bridge the gap in fiscal fitness.
As the leading regional advocate for the Hispanic business community, the San Antonio Hispanic Chamber of Commerce is an ideal partner to work with Sapient Financial Group and MassMutual to help Hispanic business owners and professionals improve their financial health.
"Hispanic entrepreneurs are busy people, and as they focus on their businesses, they need help creating a structured financial strategy. We know that all business owners need a succession plan," said San Antonio Hispanic Chamber of Commerce President & CEO Ramiro Cavazos. "We all have a responsibility to take control of our fiscal fitness. We know that when Hispanic business owners plan correctly for the future, they become successful in carrying on their legacy through their designated loved ones."