Sonoma County’s Latino community sows seeds of entrepreneurship

Neil Pacheco smiled as he unrolled the banana leaf on one of the specialty tamales he sells at his Tamales Oaxaqueños stand in front of the Mitote Food Park on Sebastopol Road in Roseland.

Pacheco, a second-generation Latino entrepreneur, and a business partner have a kitchen where a five-person crew makes fresh tamales around the clock, about 2,500 a day. Area farmers and construction workers stop by his stand from 5 a.m. to noon for a tamale, usually for breakfast.

His tamales are what you’d find in southern Mexico, in the Oaxaca region, where he grew up after his birth near San Antonio, Texas. What makes them special and different from most others sold in the county, Pacheco said, are the variety of red, green and dark moles, the mixture of sauces and meats inside the tamales — and the presentation.

He tops them off with a dash of herb, grated cheese, edible flowers, pumpkin seeds and extra virgin olive oil.

Across the parking lot, right inside the front door of the Mercadito Roseland Market, Janet Sanchez runs Sanchez Artesanias, a small variety shop. The mother of five children started a year ago, by selling aprons and masks handmade in Mexico.

The two members of the burgeoning local Latino community represent the strong entrepreneurial bent of their Latin American heritage.

They are among 6,760 Latino-owned businesses in Sonoma County, representing 13% of total companies, with large numbers in food, landscaping and construction and an expanding group providing a variety of personal and professional services like car washing and real estate.

In the Mercadito, Sanchez is one of nearly 20 micro-retailers operating from the mini-market that serves as an incubator for startup shops offering an array of children’s and adult apparel, sneakers, jewelry, toys, handbags, kitchenware and artwork, among other goods.

Her shop carries items made by family artisans representing 18 of the 31 Mexican states plus the nation’s capital, Mexico City. Sanchez launched the enterprise after she had an accident while pregnant with her youngest and could no longer work as an adult caregiver.

Like Pacheco, Sanchez told me she’s driven to bring to the area “a little bit from Mexico, things that we don’t see every day.”

Marlene Orozco, lead research analyst with the Stanford Latino Entrepreneurship Initiative, said Latinos are twice as likely as other ethnic groups to become business owners, no matter if their families had operated businesses or not.

An economic sociologist contracted to work on entrepreneurship research for local Latino leadership group Los Cien, Orozco said the U.S. growth of Latino-owned companies is a two-decade trend that coincides with population increases. Indeed, the county’s Latino population grew 17.4%, from 120,430 residents in 2010, to 141,438 in 2020, according to new U.S. census data released in August.

Latinos now make up nearly 29% of Sonoma County residents, up from a decade ago when their share was just under 25%. White residents comprise slightly less than 59% of the total local population of 488,863 people. That’s a sharp decline from 66% 10 years ago.

Although the county’s population growth slowed considerably to a scant 1% in the past decade, clearly Latinos continue to relocate here.

As a result, Latinos’ latest estimated local aggregate annual household income was $2.3 billion in 2019, representing strong consumer buying power that’s growing, according to Orozco’s research.

Despite the economic and health challenges of the coronavirus pandemic, which dealt a well-documented disproportionate blow to Latino people, they stayed resilient rather than giving up, and more of them still managed to start their own ventures.

“They have gone through many challenges just to come to this country, pretty much coming from nothing,” Marcos Suarez, business diversity program manager at the Sonoma County Economic Development Board, told me. “After that, you know how to persevere and push forward.”

In fact, the business startup trend among Latinos has accelerated during the pandemic, Suarez said, noting that after job losses many opted to take the entrepreneurial leap, rather than taking the risk of going back to work for somebody else.

Spawning microbusinesses

Roseland’s Mercadito and the Mitote Food Park outside, complete with picnic tables for patrons to dine under a canopy while listening to Spanish music, are prime examples of giving budding Latino entrepreneurs and food truck purveyors the chance to strike out on their own in the pandemic and celebrate their culture — and food is a big part of that. Both opened a few months after the pandemic had begun in March 2020.

Pacheco and Sanchez took full advantage of the opportunity. The Sebastopol Road/Roseland area of Santa Rosa made sense because it already was an established hub for Latino-run businesses and the heart of the Latino population in the city.

Pacheco’s parents ran a neighborhood grocery store when he was a young boy in Mexico. His family moved back to America to Atlantic City, New Jersey, in 1993 when he was 12.

Now 40, the father of a 17-year-old son and an 11-year-old daughter told me after seeing his mom and dad work long hours and contend with the tough job of selling food, he told himself, he didn't want food sales for a vocation.

He moved to Sonoma County in 2004. As fate would have it, his work the past few years led him to where he didn’t intend to be: selling tamales.

Pacheco recently had a social media show for three years called “What’s Cookin’ Sonoma County.” He featured Latino restaurants from Cloverdale to Petaluma. Through that, he got acquainted with and learned from a network of Latino business leaders, such as Suarez and others.

Pacheco opened the tamales stand right in the middle of the pandemic when downtown Santa Rosa restaurants and most businesses were shut down.

“Everything was dead in downtown Santa Rosa,” he said, recalling last year in the throes of the public health crisis. “Here it was busy. Mitote Park was packed every day.”

Although Pacheco said running his own business for a year has offered the satisfaction of his customers enjoying his tamales, the part-time casino host at Graton casino in Rohnert Park has bigger things in mind.

Eventually, he hopes to sell the tamales at area Oliver’s Market locations and in Costco warehouse stores.

“It’s a marathon. You start growing slowly and then expand,” Pacheco said. “This is just the beginning.”

Sanchez’s effusive personality suits retailing quite well. So well that strong sales have enabled her to expand and take the equivalent of two adjacent rental spaces inside the Mercadito, formerly a Dollar Tree store.

When you ask her, she’s not shy about saying she’s just gaining momentum, building toward her ambitious goals: opening her own store in another year, carrying handcrafted goods from each Mexican state and ultimately getting five stores going across the county, one for each of her kids who motivate her to work hard.

She co-owns the retail business she runs in the market, with her 20-year-old daughter Aranni, a bilingual instructional assistant at nearby Sheppard Accelerated Elementary School.

Opening capital pipeline

Creser Capital Fund is working to become the financial launchpad for many Hispanics in the county to fulfill their entrepreneurial dreams.

Since getting off the ground in November, Creser has raised $350,000 from private donors and foundations to lend to Latino startups, Juan Hernandez III, CEO and co-founder, told me.

The fund has so far extended five loans totaling $90,000, including to a Petaluma female chocolate maker and a Sonoma man who sanitizes homes for real estate agents before houses are sold.

Creser Capital is now an emerging Community Development Financial Institution aimed at lending money to small Latino businesses that don’t have the operating track record to secure commercial loans from banks.

In three to six months, Hernandez expects the company will be a full-fledged federally designated community development lender.

“This is not a GoFundMe page. This is a big nut to crack,” said the former eight-year La Luz Center executive director who had started a microlending program there in Sonoma with the nonprofit. “There’s a business funding gap we have an opportunity to fill. This is the time.”

His goal: raise $35 million in capital in the next three years to lend to upstart Latino enterprises, most of them shut out from traditional commercial bank loans and, therefore, relying on personal savings, family donations or sometimes consumer credit carrying unfavorable financial terms.

“As Latinos, we have to be the architects of our own solutions,” Hernandez said. “We’re focused on closing the wealth gap for Latino entrepreneurs.”

To survive the ongoing pandemic, these business operators have done what others running companies have done: developed or sharpened online commerce to reach more customers and pivoted operations to services or production in greater demand.

Providing critical contacts, planning

Latinos are either pushed or pulled into starting businesses, Hernandez explained to me. Those pushed do it in response to life situations — like Sanchez who could no longer work as caregiver. Those pulled have an enterprising idea and finally move to capitalize on it. That’s Pacheco, who pondered the idea for his tamales venture since 2018, before making it a reality.

Sometimes Latinos nudged into entrepreneurship reach a point with their ventures in which they “get stuck” and can no longer grow, Hernandez said, citing as common reasons lack of education, county business permitting know-how or they can’t speak English.

Orozco, the Stanford economic sociologist, shared a similar perspective, calling it entrepreneurship that’s driven by necessity rather than opportunity.

However, she said, through mentorship, guidance about business planning and licensing and available capital pipelines, necessity-driven Latino business owners can become opportunity-driven.

The key to make that conversion is getting “equipped with resources coupled with a hunger to grow a dynamic business,” said Orozco, who sits on the Creser Capital board.

For example, she noted delving into resources to learn what it takes to secure contracts from the government, always a big spender locally, statewide or nationwide, can be a linchpin for success for many types of companies.

Suarez also told me one of the biggest local hurdles for Latino businesses is gaining access to municipal work contracts to forge lucrative public-private partnerships. Think infrastructure projects, managerial consulting and professional advising on a number of topics and a range of other products and services governments and municipalities contract for or buy from the private business sector.

“That is huge,” he said of government contracts. “Businesses can thrive with them.” The county economic development agency he works for helps companies get certified to have a competitive chance for such local government contracts.

Expanding buying power

Notwithstanding the area’s higher education gap among Latinos (only 11% as of 2019 had earned at least a bachelor’s degree), through hard work and entrepreneurship they are ramping up their buying power locally and nationally. Median Latino household income in this county is $59,000 compared with $76,000 for white households, and $72,000 overall.

The consumption habits of Latinos are “wide and deep,” Orozco told me, noting, for example, they are substantial buyers of smartphones and mobile phone service and will pay to go to movie theaters to see films on the silver screen.

Although they would be categorized as spenders, “there’s some aversion to debt,” she told me, that goes along with “bootstrapping on your own” a company through the pandemic.

Hispanics account for 10.4% of total U.S. buying power, much smaller than their 18.3% share of the population, according to a 2019 report by eMarketer.com. Latino households spent an average of about $51,000 on annual expenditures during the 2017-2018 fiscal year compared with average total U.S. household spending of about $61,000, according to the Department of Labor’s Bureau of Labor Statistics.

Their biggest outlays were for housing, food at home and at restaurants, health care, entertainment, apparel, cars and trucks.

Suarez summed up Latino entrepreneurship and consumer spending trends this way: “Latinos come here with a dream to start a business one day, own a house and make better opportunities for their children.’’

Once here, he said, they typically learn a trade, work five to 15 years, save money, then say “now it’s time for me to open my own business.”

Based on my conversations with Roseland tamale maker Pacheco and artisan retailer Sanchez, I’d add tremendous pride to what helps propel Latinos to nurture their businesses.

Asked if running her own mom-and-pop shop is better than her previous occupation as a caregiver, Sanchez told me without hesitation, “Yes, of course. It’s mine.”

Send your tips and ideas as this column chronicles the local post-pandemic recovery to paul.bomberger@pressdemocrat.com. Call or text 215-237-4448. Or you can message @BiznewsPaulB on Twitter.