The new
entrepreneurs
Across Oregon, Latino-owned small businesses are growing as
fast as the ambition that drives them.
By Oakley Brooks
Driving around the city of Medford with banker Susana Montalvo,
one begins to see the jumbled commercial landscape of malls,
orchards and corrugated steel with a new set of eyes. First,
there are the big employers, including sawmills and fruit
packers. For example, there’s Harry and David. It’s
more than a pear and goodie basket company to Montalvo:
It’s an employer of thousands of Latinos.
Then she begins to point out selected small shops and
businesses. Each one has a Latino owner.
Over there is the Mexican-themed restaurant, run by the cousin
of a restaurateur across town. See the café, tucked
behind the house? Hispanic-owned. And the curio shop in the
next block. And the body shop down an alley. “Some of
these places are known only to other Latinos,” says
Montalvo, a Wells Fargo business specialist who moved to
Southern Oregon from the Mexican state of Guanajuato seven
years ago.
Making her way into the heart of the Westside, she passes a
small grocery store, taco truck, car wash and strip mall owned
by the Castillos, a family with Mexican roots that moved into
the area 10 years ago. They also own a taqueria a few miles
away.
When the Castillos started, theirs was one of the early
authentic taquerias in town. Now, they are far from alone.
Montalvo counts as many as 50 Latino-owned restaurants and taco
shops in the greater Medford region. The number of Hispanic-run
landscaping businesses in the area has also mushroomed. And
Montalvo figures Latino-owned reforestation and firefighting
outfits — some of whom she serves — have doubled
from around 20 to 40 in the last five years.
Across Oregon it’s the same story: A surge of Latino
small businesses is changing the makeup of city landscapes and
the state’s entrepreneurial ranks. Latinos have been
starting businesses here for decades; some such as Don Pancho
Authentic Mexican Foods in Salem have grown to national
stature. But today, startups are more prolific.
Driven by an influx of immigrant laborers of Mexican descent,
Latinos — who number 345,000 or 9% of total population
— are the fastest-growing ethnic group in Oregon. Many of
those new arrivals are now leaving wage-earning jobs for their
own startups. They’re tapping into Latinos’ own
buying power of more than $3 billion in Oregon and meeting the
mainstream economy’s demand for service businesses,
forming everything from mom-and-pop painting outfits and
restaurants to graphic design firms and coffee import
mercantiles.
“All it takes is a drive through our downtowns across
the state to see the growth,” says Lydia Muniz, the
governor’s advocate for minorities’ businesses.
Although the growth is undeniable, Muniz says it’s
difficult for officials to quantify it. Neither the state nor
local governments ask for ethnicity as part of business license
applications or name registries. But four-year-old U.S. Census
Bureau statistics hint at Latino businesses’ growth: They
grew 6% between 1997 and 2002 to 6,300 total businesses, more
than double the rate of growth of all businesses in the state.
Small business experts say those statistics likely undercount
Latino ownership, given what they are seeing in their
communities around the state.
In Portland, the Hispanic Metropolitan Chamber of Commerce has
helped 300 Latino businesses in the last 18 months with
marketing, accounting expertise and business plans, according
to Jonath Colón, the chamber’s business
development specialist. “A lot of these people are in
emerging markets. We see a lot of informal businesses —
the volume is just huge,” Colón says.
Salem’s third annual Hispanic business conference last
fall drew 400 people. Conference organizer Marin Arreola, who
also trains and consults with growing businesses up and down
the state, estimates there are now 1,000 Latino entrepreneurs
up and running in the Salem area, where Latinos make up 15% of
the population.
In Eugene, there’s a huge push among Latinos to get into
the food service and contracting sectors, according to Shawn
Winkler-Rios, director of the startup assistance agency Lane
Microbusiness. Winkler-Rios has begun a business plan class in
Spanish that’s attended by as many as two dozen
entrepreneurs, many of them restaurant and bakery startups.
He’s planning another Spanish course in contractor
licensing. “We see a lot of Hispanics moving up from Los
Angeles and I think there’s a lot of opportunity for them
in the Eugene-Springfield area,” Winkler-Rios says.
Woodburn, where a majority of residents are Latino, now has a
downtown blanketed with Mexican-themed restaurants and shops,
earning it the nickname “Little Mexico.” Further
afield in Pendleton, Blue Mountain Community College has
responded to rising demand by starting a six-week
Spanish-language business-plan class titled Empresario
Latino — Spanish for entrepreneur — which is
being offered by community colleges statewide. Chambers of
commerce in Medford, Eugene and Salem have all formed Latino
business networks in recent years.
“We view it as part of our economic dev-elopment
strategy,” says Dave Hauser, president of the Eugene
chamber of commerce. “This is one of the fastest-growing
segments of small business.”
Across the state, new Latino business owners are driven by
universal motives: wealth, adventure and independence.
“Everyone wants to work for themselves, that’s why
they’re doing it,” says Martin Ochoa, president of
Woodburn’s Downtown Business Association. But Latinos are
also growing their small businesses in their own style. Many
are exclusively using family networks for labor and startup
capital. They’re reluctant to engage banks and are
repeatedly tripped up by the intricacies of contracts and
financial agreements. But they often manage to grow —
even thrive — for years under the radar of public
officials or the Anglo business community.
It’s a growing community hidden in plain view.
IN MEDFORD, THE CASTILLOS RUN their small El Gallo empire from
the back of their store building, past compact rows and cases
of piñatas, Jumex juice, pigs feet and Oaxaca cheese
made in California — crooning mariachi singer Vincente
Fernandez overhead — through a large room with an oven
used to make pastries and El Gallo brand tortillas, and back to
the windowless office stacked with file cabinets topped by TV
monitors relaying security camera feeds.
From here, the family has inched toward success with a blend
of determination, superstition, faith and familial
consensus.
“We work seven days a week just doing our best and
that’s how things came along,” says Margarita
Castillo, 39, a small, strong woman who wears a rose-colored
portrait of Jesus on a choker around her neck. “If you
look for a good deal it will never come along. I pray for our
business and we see what happens.”
Margarita’s 31-year-old brother, Carlo Castillo, helps
manage the store along with a third brother and co-owner,
Adrian. “We’re not lucky,” Carlo says.
“When a decision comes up, we sit around and discuss
it.” Even then, after 10 years’ experience,
proficiency in English and a heightened profile around town,
they sometimes struggle to keep equal footing with business
partners. “People have come and offered us a star and a
piece of sky and you realize the hard way it isn’t
true,” says Margarita.
The family, 10 brothers and sisters in all, grew up in the
city of Apatzingan in Michoacan, where their father, Camerino,
owned a custom tailoring operation that outfitted the policemen
and transit workers in town. The boys in the family worked in
the cutting room floor from the age of 8, and at 10 began
sewing buttons and zippers onto clothes.
By custom, Margarita did not work in Camerino’s factory,
something she chafed at. But she says she picked up a manner of
doing business from her father and others in Apatzingan before
she left for California as a teenager. “Down there
it’s a warm, welcoming relationship be-tween
partners,” she says.
In the early 1990s, her brother Adrian worked for a compost
and fertilizer company in Medford and he found the area ripe
for a taqueria. Margarita says she was looking to get out of
the San Francisco Bay Area where, after 10 years in various
jobs and courses at community colleges, she had worked her way
up to a $13 per hour bookkeeper position at a pizza parlor in
Mountain View. The Castillos also had an uncle in Medford, and
it seemed to Margarita like a good place to raise her two young
daughters.
Pooling their savings, Adrian and Mar-garita had about
$80,000. They found an old video store half a mile from
Medford’s city hall and a block from the town’s
largest Catholic church. Their landlord thought a taco venture
at the site was risky: “He was like ‘What are these
crazy Mexicans doing?’” Margarita says.
The two dropped the ceiling in the long, narrow space, located
a source for cow cabeza, lengua and tripitas (head, tongue and
intestines), and opened up in August 1996.
With Adrian and Margarita doing all the work, she says the
taqueria was profitable right away.
Two years later, they found a spot to lease for their grocery
store in the heart of Medford’s growing Latino
neighborhood on the Westside. Carlo and a fourth brother,
Uriel, came to work for them.
Then in 1999, the store property came up for sale and the
Castillos had their first brush with commercial banking. For
the better part of four years, they went through the
application processes at several local banks to get a loan and
were denied each time. Margarita took it personally.
“They didn’t believe in us,” she says.
“They asked, ‘How am I going to give you a loan
when you have no collateral?’” In 2003, the
Castillos read about the nonprofit Cascadia Revolving Fund. A
lender came to visit the store and agreed to finance the
purchase at 15% interest. “We really never expected them
to help us,” Margarita says, “I believe in miracles
and that was one of them.”
Soon thereafter, with the property in the Castillos name,
Susana Montalvo, who had befriended Margarita, arranged a
refinancing.
THE EL GALLO NAME NOW pops up all over Medford. There’s
a taco truck in the White City industrial area. Bags of El
Gallo pastries in Sherm’s Food 4 Less on the Eastside. A
stand at the Jackson County fair, where people have begun to
recognize Margarita Castillo as the taco lady!
The company’s total employee count has grown to 30, and
last year, with help from a friend from Montana, the Castillos
purchased the strip mall and the house behind it where their
parents now live.
“They know how to risk money,” Montalvo says,
adding that they’ve also managed to corner a market on
Hispanic cultural food items. “They knew the Hispanic
community would need things. There’s no Costco for them,
so to provide their own market was a smart move.”
Castillo won’t say how much money comes through the El
Gallo ventures every year. She only says that
“there’s enough left over to enjoy
ourselves.”
Keeping up with demand for Hispanic grocery items has led the
Castillos to pursue expansion. This spring, they looked at
moving the store to a 28,000-square-foot grocery space vacated
by Foodland in central Medford. The space was 10 times the size
of the Castillos’ current one and the rent around $10,000
per month.
But just before they signed the contract an attorney found
language which, according to the family, asked them to put all
of their property up as collateral on the lease and required
them to get grocery products through a specified distributor,
which would have locked in higher prices. The Castillos backed
out of the contract with a sour taste in their mouth.
“Taking people at their word — I think it’s
a cultural thing,” Carlo Castillo says. “In Mexico,
business is more than what’s on paper. But here I think
you learn that there are times when you can’t take
someone’s word for something.”
WHILE SOME OF THE STRUGGLES of Latino small-business owners
can be chalked up to the naiveté any business owner
brings to his first venture, business consultants across the
state clearly identify some cultural gaps that hamper
Latinos’ growth. The philosophy Latinos bring to business
deals may hurt them initially.
“They’re too trusting,” Shawn Winkler-Rios
says. “I’ve seen all kinds of problematic
contracts.”
Winkler-Rios cites the example of a local Latino couple who
put $40,000 into a restaurant with another partner but
didn’t fully understand that he was the only one who had
check-signing privileges on the company account. As the
restaurant failed to produce profits this year, they ran out of
money and couldn’t access savings in the company
account.
Because Mexican and other Latin American currencies fluctuate
and local economies there tend to operate almost exclusively in
cash, Latinos recently arrived in the United States are also
distrustful of storing their money in banks. Many will spend
decades in the country without engaging the banking system
much. When it comes time to establish a business relationship
with a bank, they have to start from scratch.
Large savings outside banks can also present a legal issue
— for instance, if the money is being kept in Mexico.
“They’ll come in and say, ‘I have $120,000
to start a restaurant,’” Jonath Colón says.
“Where is it? In Mexico. Well, have they thought about
how they’re going to get it through customs?”
Banking relations with Latinos are starting to change with
increased homeownership, bilingual tellers around the state and
outreach efforts such as Wells Fargo’s in Southern Oregon
and U.S. Bank’s in Salem.
But until there’s some hard evidence of the size of the
Latino business market, financial and other business services
geared toward Latinos may not grow.
“The stats aren’t there yet and banks aren’t
attracted to it,” says Colón. “This is still
an emerging market so we’re in a painful growth mode.
We’re only just starting to see some movement.”
THE DIFFICULTIES OF A MORE FORMAL U.S. economy have led many
newly arrived Latinos to build on existing businesses and
industries, where friends and family have a foothold and an
understanding of how to operate them. Susana Montalvo tells of
how Latino-owned firefighting and reforestation companies tend
to grow in Southern Oregon: Once they hit 100 employees, one
employee will spin off and start a new business. Most of these
outfits can trace their roots back to the Bencomo family, which
owns Ponderosa Reforestation in Medford.
Oregon and the Northwest’s Mexican restaurants are
similarly connected.
“Whatever Mexican restaurant you go to, you’re
going to see a connection to someone else in the industry
through blood or money,” says George Puentes, CEO of Don
Pancho Authentic Mexican Foods in Salem. “Starting a
business is a huge networking thing and these folks are helping
each other out, giving loans.”
Puentes’ connections to the restaurant network are many,
including employees who left to start outfits such as El
Mirador restaurant and La Bonita Bakery in Salem. Sometimes he
will give them a loan or extend several months credit on orders
if they hit a dry sales patch.
Washington’s powerful restaurant families, most of who
emigrated from the tiny Jaliscan town of Cuautla more than 30
years ago, have turned their networks into financial successes
that reach into Oregon.
One Cuautlanese restaurateur, Gregorio Rodriguez, opened up
his first Si, Casa Flores in Ashland 10 years ago. Rodriguez
left a budding banking career in Mexico City in 1980 to join
his brother’s Toreros restaurant in Renton, Wash. He
struggled to learn English in between shifts at Toreros and
dreaded the dark winters in Seattle. “I cried many
times,” he says.
But he eventually opened up his own restaurant on Mercer
Island in Washington before moving to Southern Oregon.
He’s now on the verge of starting a fifth Si, Casa Flores
around Medford, and he’s planning his retirement in
Mazatlan. “I’ve always been a hard worker,”
he says. “You have to fight.”
Marcos Ramos, who’s from another Cuautlanese family
known for the Azteca restaurants, also set up shop in Southern
Oregon. (Ramos employed the Castillos’ uncle and gave
them some pointers and names of suppliers when they were first
starting up.)
Rodriguez says the huge success of the Cuautlanese
restaurateurs is now evident in the mansions they are erecting
in the old Mexican hometown.
COUNTLESS YOUNG MEXICANS MAY HARBOR dreams of a new, lucrative
life north of the border. But there’s a distinction in
those who actually make it here, one that may explain the rise
of Oregon’s Latino entrepreneurs and bear on the
group’s future growth. Fernando Sánchez Ugarte,
the Mexican consul general in Portland, suggests that those who
land here are a more ambitious and driven slice of Mexican
society. And they have a greater desire to start businesses of
their own.
“For a given level of income and education, the people
with more drive are the ones migrating,” says Ugarte, an
economist by trade. “I think you see that in the
entrepreneurial activity going on in Oregon. It’s really
quite remarkable.”
Oscar Banuelos, 24, turned down several scholarship offers at
Mexican high schools before coming to Medford six years ago. By
2003, he’d gotten his high school diploma from South
Medford and secured a year-round job as one of the
Castillos’ butchers at El Gallo market. Last summer, he
and his brother, Gabriel, started a floor tiling business on
weekends, working out of the city’s flea market. Then
late this spring, they found a new showroom for The Brothers
Tile in a mall less than a mile from El Gallo.
In some ways, The Brothers Tile resembles existing Latino
startups — the Banuelos pooled their wage savings and
tapped a cousin in L.A. for expertise and some tile
samples.
But the Banuelos also show how younger Mexicans grow ever more
adept at getting a foothold in Oregon and starting their own
business. They are a glimpse of the next generation of Latino
entrepreneurs. Adrian Castillo warned Oscar Banuelos that
permitting and insurance regulations might trip the brothers
up. “He said it was really hard,” Banuelos says.
But they have figured out how to navigate local rules and
procedures, even pushing a remodeling plan drawn up by a friend
for free through the planning department.
Oscar, who sports a thin black mustache and grout-stained
boots, has yet to secure a contractor’s license for
commercial installations. But he is boning up on the rules
using a thick licensing guide and he’ll soon take a crack
at the English test.
He has big plans for the company: “We want franchises in
Grants Pass, Eugene and eventually Portland,” he
says.
If Gregorio Rodriquez and the Castillos reached a measure of
success with a long and unsteady climb, Banuelos doesn’t
have time for that. He’s watched the Castillos and
seen how it’s done. He’s ready to go
faster.
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