Immigrant Self-Employment Outpaces U.S.-born Rate

By Ashley McCausland Biggers
June 4, 2007 9:25 AM

As the smell of leather wafts through displays of belt buckles and Stetson hats at his father's Western wear store, Juan Rivas Jr. stocks black jeans on to a rack. He wears a fitted black T-shirt, black loafers and jeans that are more likely designer than the Wranglers he's shelving. His appearance befits the neat rows of Calvin Klein and Hugo Boss perfumes and colognes secured behind glass at his own shop, Perfumeria Rivas, in West Phoenix.

A few miles away Juan's sister, Eva Rivas-Cruz, ushers one of her saleswomen into the headquarters of her Jafra cosmetics sales office. Eva's crisp black suit rustles as she rummages among sample bottles of lotion for the latest brochure.

Juan Rivas Sr. and four of his six children are entrepreneurs. Besides Juan Jr. and Eva, brothers Jesse and Vidal are co-owners of a stucco business. Starting with the elder Rivas' store, Rivas Boots and Fashion, family members have relied on each other to launch and ensure the survival of their small businesses.

They are among an emerging group of entrepreneurs who, in the face of increasing immigration regulation, have created their own brand of financial independence in the United States.

Immigrants are more likely to start a business than individuals born in the U.S., according to the Index of Entrepreneurial Activity sponsored by the Kauffman Foundation. The index reports that 350 out of every 100,000 immigrants started businesses in 2005, compared with 280 out of every 100,000 native-born individuals.

Dr. Carlos Velez-Ibanez, chair of the Department of Transborder Chicana/o and Latina/o Studies at Arizona State University, says immigrants often start businesses out of necessity since many other economic avenues are closed.

"You don't have to ask permission or have a degree to begin a business, and you can use your local knowledge to begin it," he says.

Latinos may be drawn to entrepreneurship because of their history, Velez-Ibanez says. "Any population in motion -- colonists, immigrants, displaced persons -- always seek ways to use their limited resources to increase their survivability."

Juan Sr. came to the U.S. in the late 1970s without documentation to earn money for his family by working in construction. He crossed the U.S.-Mexico border several times for seasonal work before bringing his family, a few at a time, from their rural home in Colonia Morelas, Zacatecas.

Eva, then 14, was one of the first siblings to "travel north." She walked across the border and rode from Nogales, Ariz., to Phoenix on the floorboard of a station wagon crammed with people. "I didn't really know where we were going, but my father said we could find a better life," she recalls.

Once all the family members arrived in the U.S., the Rivas family petitioned for legal residency status during the amnesty program in 1986. Juan Jr. and Eva have since become citizens.

Immigrants like the Rivas family would be hard pressed to enter the U.S. with a green card or visa to start a business today. The U.S. Citizenship and Immigration Services grants only 10,000 visas per year to entrepreneurs seeking permanent resident status under the EB-5 green cards. Immigrants creating a new business are eligible for these green cards only if they can ensure they have a million dollars in start-up financing and will create 10 or more full-time jobs. Another option is the E-2 visa. It allows immigrants to start and own a business in the U.S. if they can prove they have $200,000 in startup capital. But it doesn't allow holders to petition for permanent residence.

For many immigrants, getting start-up capital is a challenge. They often have no credit history, which makes it difficult to qualify for loans, says Frank Coumides, a senior lender for Sonoran Bank. The result is that immigrants rely on their savings.

Juan Sr. and Jr. used their savings to buy children's clothing to start their business at a swap meet in 1991. The booth cost $10 per day. Any higher cost and they wouldn't have been able to open the business, says Juan Jr.

Gradually, the Rivases upgraded their product line from children's clothing to Western wear and expanded to independent stores. Now they contract with wholesale companies to meet the demands of their customers for name brands and cowboy boots imported from Guadalajara, Mexico.

"We didn't want to go to a bank for a loan because then you'd just be working to pay off your debt," says Juan Jr. "We just started slow and worked our way up."

Although he jokes that they aren't millionaires, all the members of the immediate family own homes. Juan Jr. paid his way through school and earned an associate's degree. He has toured Europe twice.

Juan Jr. uses another tactic to ensure his financial well-being: diversification. He purchased a perfume shop, and its inventory, with $12,000 in savings. When a candy booth next door closed, he purchased that inventory as well. Although he owns the shop, his wife Karina oversees its daily operation.

Like her brother, Eva began her venture as a way to supplement her income. She sold cosmetics on the weekend and conducted English-as-a-Second-Language exams for Phoenix Union High School district during the week.

When her husband's taxi business faltered and the debt piled up, Eva realized the potential of selling Jafra full-time.

"I saw it as an opportunity to grow and do something," she said.

She invested only $65. Now she earns three times the income she once did at the school district.

Her grandfather and father inspired her to excel in business. If you want something, they said, you have to go and get it.

"My father always thought it was better to work for yourself. I guess he told us that enough we started to believe it," she says.

During the 12 years she has sold Jafra, she has risen to the fourth-highest position in the multi-level company.

She now manages more than 600 women employees in six states. Her husband joined her as a business partner three years ago, and she employs one woman as a full-time office assistant. Eva spends most of her time teaching recruits how to excel.

"I enjoy teaching women how to be independent and help their families," she says. "The biggest challenge is getting people to believe in themselves."

Over the past three years, 310 out of every 100,000 immigrant women have started a business, compared with only 220 out of 100,000 of their native-born counterparts, reports the Kauffman Foundation.

It's one feat to open a business and another to keep it open. Nationally, only 44 percent of small businesses survive four years, according to the U.S. Small Business Administration.

The Rivas family is not immune to these difficulties.

Their stores have seen fewer customers in the past years, which they blame on stricter immigration enforcement since the Sept. 11, 2001, terrorist attacks. Ninety-nine percent of the customers for Juan Sr. and Jr.'s stores are immigrants from Mexico. With increased border security, they're less inclined to travel back and forth. This means fewer customers overall and fewer gift purchases for relatives in Mexico.

Despite these challenges, the family's plan is to continue fighting for the dream instilled in them by their father.

"It's my dad's dream to keep going with the business," Juan Jr. says. "So he'll try to keep going, and we'll try to keep going with him."

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Copyright © 2008 Donald W. Reynolds National Center for Business Journalism