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Immigrant Entrepreneurs ‘A Real Engine’ for Growth, Study Says

Written by: Stephen Parezo

Article Overview: A new study indicates that the growing number of immigrant entrepreneurs in major U.S. cities have been a real engine for economic and job growth in many sectors and are outpacing self-employed native-born Americans.

Immigrant Entrepreneurs ‘A Real Engine’ for Growth, Study Says

A new study indicates that the growing number of immigrant entrepreneurs in major U.S. cities have been a real engine for economic and job growth in many sectors and are outpacing self-employed native-born Americans.

“I think it’s no secret that immigrants have been starting businesses for a long time,” said Jonathan Bowles, director of the Center for an Urban Future (CUF), a non-profit think tank in New York that conducted the study. “What’s changing is the sheer number of new immigrants that has really created a marketplace for ethnic products and services that’s led to incredible business formation in both good times and bad.”

The study—which examined immigrant entrepreneurs in New York City, Boston, Houston and Los Angeles—indicated that a growing number of these businesses are actually going beyond the small ethnic market they serve in the larger cities.

In Los Angeles, for example, first generation immigrants accounted for 22 of the 100 fastest growing companies in 2005.

What Bowles says it comes down to is that immigrant entrepreneurs tend to be much more willing to take a risk.

“They have a high rate of starting businesses and are going to migrate to businesses where there is a niche in the market,” he said.

Seeing the bigger picture

Michael Vovakes, a Fiducial franchisee in Upper Montclair, NJ, has seen this time and time again with his immigrant entrepreneur clients.

“There’s no question about it, immigrants are able to see the bigger picture,” said Vovakes. It’s tough to put your finger on it but part of what makes this country so successful is that people are willing to take chances and work extra hard.”

One of his clients arrived in the U.S. as a qualified medical doctor from his native Yugoslavia but since his credentials weren’t accepted here, the former healthcare professional went the entrepreneurial route. After putting in years of late night hours, the client recently sold the fried chicken outlet he founded and is currently looking for his next business opportunity.

Vovakes wrote a letter on the client’s behalf to a construction industry client that renovates banks and gave him that lead. He also suggested that the entrepreneur check out a national franchise operation that sells soup to see if it would be a good fit. Like most opportunities, though, it comes with a heavy price tag requiring an investment of several hundred thousand dollars.

Industry watchers have observed the dissimilarity between the work ethic exhibited by immigrant entrepreneurs and their native-born U.S. counterparts.

“They [immigrants] have a different work ethic,” said David Felix, a senior business advisor in Fiducial’s San Bernardino, CA, office.

A number of his clients are Asian and Latin American immigrant entrepreneurs that own restaurants and furniture stores in this city that’s located 50 miles east of Los Angeles.

“When I talk with them they say they would rather work themselves at the restaurant or store to make sure the service is good,” he said. “They put in long hours.”

More willing to be risk-takers

Jim Crisafulli has witnessed first-hand that immigrant entrepreneurs are very industrious. The Fiducial franchisee in Woonsocket, RI, believes this group to some degree has got a lot of bad press over benefits and entitlements but by the same token he acknowledges that they are very hard workers.

“They seem to have a good understanding of what it takes to open a business with regard to personal investment,” said Crisafulli. “They know they need to gather friends and family and gather money to start up a business.”

Unlike U.S. born entrepreneurs, Crisafulli finds immigrant business owners usually don’t go to a bank seeking 100% financing with no risk. Instead they start with an equity investment.

“What I do see are immigrants as the types that are [more] willing to be risk-takers,” he said.

Bobbie Gibbens, who’s involved in operating a Fiducial franchise office in Houston, TX, says they serve a number of clients that are immigrant entrepreneurs committed to seeing their businesses succeed.

“They’re staying in business and they’re making money,” said Gibbens. “They work longer hours and they have their relatives and families working with them.”

Immigrant entrepreneurs often take more of an active part in their operation and by design, don’t take home as big a paycheck so the business won’t be in a bind. They still view America as the Land of Opportunity.

“They want to make a go of it,” Gibbens said.

Opening businesses to meet demand

Experts say immigrant entrepreneurs are very much in tune with the needs of their local communities and have opened businesses to meet that demand.

Such was the case in the transportation sector of New York City that saw the formation of Fung Wah Bus. Originally intended for transporting ethnic Chinese restaurant workers from one Chinatown to Chinatowns in other cities, the bus company gathered speed and in 1998 added routes between New York City and Boston. Their relatively competitive fares have also made them popular among non-Chinese customers, especially students.

CUF’s Bowles hopes the study opens some eyes across the nation because immigrant entrepreneurs are a blossoming economic force in many communities.

“I would hope maybe this report will send signals to some of the public officials and business leaders in these emerging immigrant destinations,” he said, “that they not just see immigrants as negative but a real potential for economic growth that, if harnessed, could really benefit local areas.”

Underscoring that message, Bowles pointed out that if chambers of commerce around the country do not reach out to immigrant entrepreneurs, their membership is not going to grow.

“Immigrant businesses are really driving the growth,” he said. “That’s just the reality.”

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