Migrants Keep Small-Business Faith

June 14, 2012. Newcomers to the U.S. are increasingly  opening firms beyond major cities, energizing local economies. An article by Miriam  Jordan, Wall Street Journal.

Immigrants are more inclined to own small businesses than native-born Americans and are increasingly opening shop in areas beyond the major cities in which they have traditionally settled, a trend that is energizing local economies and reshaping communities.

Immigrants accounted for 18% of the country’s 4.9 million small-business owners in 2010, a six-percentage-point increase from two decades earlier, according to analysis of census data by the nonpartisan Fiscal Policy Institute. Immigrants, who represent 13% of the population, accounted for a third of the increase in the number of small-business owners between 1990 and 2010.

Small businesses are defined as companies with fewer than 100 employees. Small businesses owned by immigrants employed 4.7 million people in 2010 and generated an estimated $776 billion in revenue, according to FPI calculations.

The study confirms that business ownership remains a favored way to earn a living among immigrants. The latest surge in immigrant business owners began in the 1980s, when the country experienced a large wave of newcomers from Latin America and Asia.

The study downplays the role of immigrant-founded technology titans, such as Yahoo Inc. and Google Inc. Like a century ago, immigrant firms remain more likely to be mom-and-pop stores, which thrive despite the predominance of big-box retailers and the growth of online shopping.

“A bigger part of the immigrant business story is still the bread-and-butter grocery store, restaurant and retail shop, as well as doctors’ offices, taxi services and dry cleaners,” said David Kallick, principal author of the FPI report.

Traditionally, immigrants established businesses in enclaves of big cities that boast large populations from the same country, making it possible to operate with little or no English.

But in the past decade or so, many Asian and Latin American newcomers have rooted ethnic eateries and grocery stores in small towns in the U.S. heartland. In Schuyler, Neb., a meatpacking town of just 6,211 people, Mexican and Guatemalan immigrants have flocked to B Street, transforming a neighborhood where storefronts had stood vacant for years

“Our downtown is mostly immigrant businesses now,” said Mayor David Reinecke. “If they weren’t here, we’d be dying.”

Delfino Bello emigrated from Mexico unable to speak English. Now, he runs three popular Mexican restaurants about 40 miles from Chicago.

In 1995, Mr. Bello opened his first eatery, called “El Faro,” in a shopping strip in Bartlett, Ill., that had fallen on hard times. As the taqueria flourished, it attracted other businesses. A few years later, he opened restaurants in Elgin and East Dundee, serving a clientele that includes both immigrants and Americans.

“I had nothing, nothing when I arrived in this country,” said Mr. Bello, 55 years old. If the economy continues to recover, he says he plans to open a fourth restaurant.

National Supermarket Association represents independent supermarket owners, including many Dominican immigrants who started as small grocers in New York’s Hispanic neighborhoods. Now, many have found a niche by moving into non-immigrant, low-income areas in the city and beyond.

“They’re not small businesses anymore,” said Ramona Hernandez, a professor at the City College of New York who studies Dominican entrepreneurship. “They’re chains that move billions of dollars each year.”

The FPI study found that immigrants concentrate in some industries, such as taxi services, dry cleaners and gas stations. They also have a large presence in lodging and restaurants.

Mexicans, the single largest group of immigrants, own the greatest number of immigrant-owned small firms. They are followed by immigrants from India, Korea, Cuba, China and Vietnam.

Immigrants from countries with relatively small numbers in the overall population, such as Greece, are disproportionately more likely to own businesses, while immigrant women are twice as likely as U.S.-born women to be business owners.

The FPI found that the largest number of Indian-born small-business owners are in education, health and social services, followed by leisure and hospitality and computers and technology.

In the medical field, Indians have helped offset a shortage of primary-care doctors and dentists in some parts of the U.S.

India-born dentist Savpreet S. Dhami and his family moved to Cortland, N.Y., 35 miles from Syracuse, in 2005, where he joined an Indian-owned practice. After six years, Dr. Dhami, 48, got a $600,000 bank loan and bought a practice from a retiring dentist in nearby Cicero. Since opening in December, he has more than doubled his staff and recently invested in a $30,000 digital x-ray machine

Dr. Dhami says he hopes to bring another dentist into the practice, and in three or four years he hopes to open another practice. “Only in America can you become owner of a business like this,” he said.