Latino Entrepreneurs Drive U.S. Business Growth Despite Challenges

Latino-owned small businesses are fueling entrepreneurship in the United States, growing faster than any other demographic group. According to a McKinsey study, Latinos created 36% of all new businesses in 2023, nearly double their 19% representation in the population. However, this entrepreneurial dynamism comes despite persistent barriers.

Today, 19% of the US population identifies as Latino or Hispanic. By 2060, Latinos are expected to comprise approximately 28 percent of the total US population, according to the US Census Bureau. And the fact that Latino entrepreneurs are younger opens up the possibility of long-term value creation and growth, as the education levels of these entrepreneurs are expected to continue to rise.

Cities like Miami illustrate the potential for growth when the right support systems are in place. In Miami, Latinos make up 47% of the population and own 27% of small businesses, generating more revenue per employee than non-Latino-owned businesses. McKinsey attributes this success to higher educational attainment, robust local networks, and better access to funding, which create a thriving ecosystem for entrepreneurs.

However, many places don't offer all three of these pillars as Miami does, leading Latino entrepreneurs to face considerable challenges. Latino small and medium-size enterprises (SMEs), for instance, have more trouble scaling up, hiring and retaining talent, and getting access to funding than non-Latino peers.

One way to address the parity gap is by increasing the revenue per employee of existing Latino-owned SMEs. In 2021, the roughly 350,000 Latino-owned small and medium enterprises in the U.S. generated around $500 billion in revenue, a significant rise from $370 billion in 2017. However, these businesses still lag behind non-Latino, White-owned SMEs across most industries. Bridging the revenue-per-employee gap in these sectors could unlock a $217 billion opportunity, the study shows.

Closing these gaps and creating similar conditions across the U.S. could unlock $1.4 trillion in additional economic value and generate five to six million new jobs, according to McKinsey. Fostering Latino small-business growth through targeted initiatives—such as expanding access to capital, developing mentorship programs, and increasing educational opportunities—could transform these enterprises into powerful drivers of the national economy.

Despite systemic obstacles, Latino entrepreneurs are demonstrating resilience and growth, showcasing a promising path for economic development if their full potential is realized. In this sense, the business of Latina women deserves to be highlighted.

Latina small-business owners are emerging as dynamic force in the entrepreneurial landscape, accounting for 31% of all new Latino-owned employer firms between 2017 and 2021. This group is growing rapidly, with the number of Latina-owned businesses increasing by 33% during that period—outpacing the 7% growth of non-Latina-owned firms.

Latinas also demonstrate higher educational attainment compared to their Latino male counterparts, with 73% having completed at least some college or technical education, a crucial factor in equipping them for leadership in high-growth sectors.

The profile of female Latino entrepreneurs highlights their youth and ambition. Approximately 34% of Latina small-business owners are under 45, compared to 31% of Latino male business owners, reflecting broader demographic trends in the Latino community. Many of these women leverage their education and entrepreneurial spirit to break into higher-revenue industries, such as professional services and healthcare, where their impact is increasingly felt.