Struggle and Opportunity for Diverse Business Owners
This week, we talk about how Latino businesses are struggling because of the pandemic and how Black entrepreneurs are being encouraged to ride the wave of support from the anti-racism movement.
Welcome to our weekly chat about the environmental and social issues that influence the way we work, spend our money and live our lives. We're your hosts, Maitane Sardon and Dieter Holger. Want to get our newsletter every Wednesday? Hit the subscribe button in the upper right corner and please share with your friends!
Hi, Maitane. Did you know that Latino immigrants own 10% of small businesses in the U.S., according to the Small Business Administration? Those business owners have been hit especially hard by the coronavirus pandemic. One reason they are struggling is because only 29% of those owners applied for government assistance, a survey by loan agency Camino Financial shows, compared with 80% of small businesses overall, according to the National Federation of Independent Business. Many immigrants run their businesses from their personal accounts and don’t have the required relationships with banks to get loans, according to the Fort Worth Hispanic Chamber of Commerce. Family members also often help out so they might not have the payroll paperwork they need for government aid.
That can create challenges in some parts of the country like Texas, where Latino immigrants are more likely to run small businesses than other segments of the population. In fact, the number of Latino immigrant business owners in America grew 36% between 2008 and 2018, compared with almost no growth among U.S.-born owners, according to Census data analyzed by research firm New American Economy.
On a more positive note, now might be the time for Black entrepreneurs to seize the moment. Small-business advisers say people of color should take the leap and start a business as consumers could be more receptive to their products. An example is the 15 Percent Pledge (which we mentioned last week) that encourages major retailers to stock their shelves with at least 15% Black-owned brands. U.S. searches on Yelp for Black-owned businesses surged 71% from May 10 to July 10. Still, like Latinos, Black business owners have faced challenges in securing loans from banks during the pandemic.
Anything catch your eye in the finance world this week, Maitane?
Yes! Gold prices have hit all-time highs during the pandemic and experts say they could climb even higher. Gold rose by nearly 11% in July, its largest monthly gain in four years. The surge has been fueled by elevated uncertainty about the global economy, a decline in interest rates, growing tensions between the U.S. and China and a weaker dollar.
But, how can I invest in gold, by buying a gold bar or coins?
That’s an option. You can also buy shares of a mutual or exchange-traded fund that tracks the price of gold. If you buy a gold ETF you won’t own any gold, but the fund will generally rise and fall with the price of gold. You can buy and sell an ETF just like a stock, so it's easier than buying and selling actual gold. You can also buy gold futures, but those are sophisticated investments that require a lot more knowledge.
What else do I need to know before investing in the yellow metal?
Gold is usually seen as a safe-haven asset and owning a small amount can be a way to diversify your portfolio. But you should keep in mind that when an asset is rising it can be tempting to jump in and invest but you may end up buying at the peak and see lackluster returns in the near-term.
What am I looking at? The chart above shows the performance year-to-date of gold futures. Gold prices have gained about 30% in 2020 to above $2,000 a troy ounce, making the metal one of the strongest performing major assets this year. The price of gold typically rises when the stock market performs poorly.
On another note, did you see that Microsoft is in talks to buy the U.S. business of TikTok? The tech company made the announcement a few days after President Trump threatened to ban TikTok, which has become one of the most popular apps among (dancing) teenagers. The Trump administration has raised concerns over the app’s ties to the Chinese government, its use of private data and the censorship of topics that are sensitive to China. Microsoft said the private data of American users would be transferred to and remain in the U.S. should the deal go through.
It will be interesting to see how this transaction affects U.S.-China relations and the global tech landscape. Facebook’s Instagram plans to launch its own version of TikTok, called Instagram Reels, this month. The social-media platform has been offering financial incentives to TikTok creators with large followings to persuade them to use Instagram Reels.
OMG, one more video app to choose from? I’m running out of space on my phone! We’ll keep watching how this evolves. Now, let’s open it up to our readers: Do you or anyone you know own a small business? How has the pandemic affected the business?
Share your thoughts below, email us or catch us on Twitter. Your words could appear in our next edition! Have a great week and remember to wash your hands. 👋
Meet the team:
Elevate the Conversation is produced by the editorial teams of The Wall Street Journal and Dow Jones Newswires. Here's a little bit more about us, along with our contact information. We'd love to hear from you.
Dieter Holger, Reporter: I have a knack for uncovering values-based investing trends and I’m obsessed with spreadsheets and charts. I really enjoy ‘80s music, skateboarding and yoga (but I’m bad at both). dieter.holger@wsj.com @dieterholger
Maitane Sardon, Reporter: I have a passion for amplifying the voices of those at the center of stories. I love running on Barcelona’s beaches and binging on chocolate ice-cream to compensate (it’s all about balance). maitane.sardon@wsj.com @sardomaitane
Catherine Lindsay, Editor: I like breaking down complex ideas and explaining them. On the weekend, you’ll find me wandering the city with my film camera at the ready. catherine.lindsay@wsj.com @CathsLindsay
Tammy Lian, Designer: As a visual producer, I'm always excited by the challenge of creative problem solving. In my spare time, you can usually find me taking care of my ever-growing collection of plants and drinking tea. tammy.lian@wsj.com @violian.tammy