ETHNIC MINORITY BUSINESSES

Ethnic minority-run businesses have an important part to play in the UK’s recovery from Covid-19, and the economy in general. Yet many such fi rms fi nd there are additional obstacles in their way. Penelope Rance reports

Unlocking opportunity

MONG ITS MANY innovate, with 30 per cent undertaking

Aimpacts, the coronavirus recent product or service innovation, outbreak demonstrated compared to 19 per cent of non-EMBs. the importance of small With the UK now in a recession, businesses to British businesses that are agile, flexible and society – supporting local communities, alive to the needs of their customers, keeping supply chains moving, helping and embedded in their communities, the most vulnerable in society and are likely to have the best survival rate. meeting unprecedented challenges with EMBs are well positioned. “The ethnic ingenuity. In the subsequent recession, minority business population is more they will also prove their worth, likely to engage in innovative activities, bolstering the depleted economy. According to a new FSB report, authored by the Centre for £25bn have a propensity to trade and a growth orientation,” says Professor Monder Ram of CREME. “If Research in Ethnic Th e overall impact we’re talking about Minority Entrepreneurship of ethnic minoritypost-Covid recovery strategies, those are (CREME) and run businesses on the things we need to Enterprise Research the UK economy accentuate, the Centre (ERC), one qualities we’ll be segment of the SME looking for in community can make entrepreneurs.” a signifi cant mark in Th ose qualities will the post-Covid-19 landscape. Unlocking also be important to UK plc post-Brexit. Opportunity: Th e Value of Ethnic “While we’re transitioning and leaving Minority Firms to UK Economic Activity the EU, innovation is something the and Enterprise reveals that ethnic Government wants businesses doing,” minority-run businesses (EMBs), of says an FSB spokesperson. “Ethnic which there are around 250,000 in the minority-led businesses are good at UK, contribute £25 billion to the UK’s trade, which the Government should economy. Th ey are more likely to export defi nitely be aware of in light of than non-EMBs, and also more likely to negotiating trade agreements.”

Initiatives to support EMBs

FSB is calling on the Government to target its business policies towards ethnic minority entrepreneurs:

1Ensure the points-based immigration system works for the self-employed and small businesses

2Recognise and promote the social impact of small businesses on their communities

3Embed diversity and social value in the public procurement framework

4Help the self-employed access new skills and training

5Improve access to business support on a national and community level

6Reach out to business owners in the UK’s diverse communities

7Include EMBs in government campaigns to boost exporting

8Introduce export vouchers to help SMEs utilise free trade agreements

9Widen the defi nition of R&D to include small business development

Added to this, the EMB community spokesperson. “But the data on ethnic is extremely diverse, ranging from minority business owners is sparse and established, more traditional businesses poorly collated.” Consequently, – often family-run, and well represented targeted support is lacking. “Th e in hospitality, clothing and private data shows ethnic minorities tend transport – to start-ups established by to lack good access to business support, younger British-born entrepreneurs or which is incredibly important when recent immigrants, in sectors such as you’re starting off on your own.” advanced manufacturing, electronics “When I started my business, I didn’t and pharmaceuticals. Often centred in know what I didn’t know,” recalls Taruna urban areas, their combined economic Chauhan, a business coach who mentors and societal impact is substantial. for the health and social care sector. “I

Unlocking Opportunity shows, had to fi nd my way around everything. It during the last two decades, greater was a learning curve, and that’s why I’m entrepreneurial activity among all main now a business coach, to help businesses ethnic minority groups in the UK than avoid the mistakes I made.” for the population as a whole. In other Th e report shows that, for some ethnic words, a disproportionate number of minority business owners, their network people from ethnic minority backgrounds is limited in comparison to non-ethnic have set up or run a new business. businesses. “Although they do use networks, EMBs tend to use more Recovery process informal ones,” points out Professor Th is ambition needs Ram. “Th at raises to be fostered in the post-Covid economy, but it is also apparent that EMBs have been 30% questions about the extent to which institutions providing business support are hit hardest by the eff ects of the Th e proportion reaching out to this signifi cant part of the pandemic, and of ethnic minoritySME population.” could struggle to recover. EMBs are overrepresented in run businesses undertaking Th at’s something Ms Chauhan can relate to. “When sectors that suff ered recent product or I fi rst started in during lockdown, including retail, taxi service innovation 2012 and went networking, more fi rms and restaurants. often than not I’d be

EMBs face other the only Asian person challenges too, and there, and I thought, while every ethnic minority surely I can’t be the only Asian person business owner’s experience is running a business?” she recalls. diff erent, the report shows consistent “I know I’m not. Where are all issues emerging. Access to business these other Asian businesses?” support can be diffi cult for many Pauline Chambers, founder of SMEs, but seems more elusive for recruitment consultancy Supply Care EMB owners. Solutions, couldn’t fi nd a network that

“When the Government is devising refl ected her background. “Running a policies to help diff erent groups of business can be very lonely, and individuals, they look at the data and see although there are many sector how those individuals are performing groups in the recruitment industry, within the labour market,” says the FSB these are very under-represented by

EMB owners, specifi cally black business owners,” she says. “Other ethnic minority businesses such as Asian, Turkish or Greek fi rms often have networks of friends and family who have run businesses. In the black community, these opportunities are often less available.”

Funding frustration Access to fi nance can also be a hurdle. “If an individual doesn’t have much experience of banking applications, or knowledge about fi nancial products, they may struggle to get external fi nance,” says the FSB spokesperson.

Or it could be lack of understanding on the part of the lenders. Khaleelah Jones runs self-funded digital marketing agency Careful Feet, but when she sought finance to expand, she struggled. “My biggest challenge has been raising funds to grow the technology side of our business: we are a profitable company but it has been very difficult finding funding,” she says. “People recommend turning to friends and family, but I have no rich aunties wanting to leave me several hundred thousand pounds! This is an issue many founders face, but is definitely more prevalent in minority communities.”

Th ree-quarters of EMBs have no employees, and are classed as selfemployed or micro businesses, which can also prove a barrier to accessing support. Ms Chauhan found herself excluded from an SME initiative because she has no staff . “People think in order to grow you have to have employees. I’m growing, but by outsourcing to people who have the right skills.”

Th e Enterprise Research Centre has found that many ethnic minority businesses have less resilience than the business population as a whole, suggesting they require structured support to achieve longevity. “Th e fi rst step is government and big stakeholders having an awareness of what’s

More to be done

Jav Mohammed founded business improvement consultancy Arhine Solutions in 2013. His success is down to his passion for helping professionals develop their skills. “People should be given the opportunity to unlock their potential, and organisations across the globe have not tapped into the hidden talent within their workforce,” he says.

Mr Mohammed is the sole employee of the business, which he fi nanced with savings, and uses an associate model to handle bigger contracts. Despite his success, he feels he lacked appropriate assistance initially. “The biggest challenge was accessing business and fi nancial support which met my needs,” he says. “I was off ered support through the Growth Hub, but did not fi nd it as valuable as joining networking groups, where the people were so helpful and supportive. My networking groups, partnership working and FSB have helped me to keep growing the business.”

Looking forward, he plans to diversify his portfolio of services and expand into new territories. “I would like to tender for government and local authority contracts, but this has proved challenging, as I am only a small company,” he says.

Mr Mohammed doesn’t feel his background raised barriers, but believes more can be done to assist EMBs. “The support needs to take into account the culture of the business owner and community they serve,” he says. “One size does not fi t all. Sometimes business owners work the way they would in their homeland, which may not fi t UK trading regulations. Don’t penalise them: support and educate them. Build trust and allow their voice to be heard.”

happening among EMBs,” says the FSB spokesperson. Th is should help inform the Government’s small business strategy. Ms Jones also believes that a government-backed fund for ethnic minorities would help more EMBs get off the ground.

Th e onus isn’t all on the Government, however. “Banks and local authorities could do a lot more to help,” the FSB spokesperson says. “Many people, when they’re starting a business, aren’t looking to central government for direct support. Th ey’re looking at what’s available within their local communities. It’s essential local base support is made available.”

Ms Jones agrees that targeted support is essential. “We need more networking events, accelerators and workspaces specifi cally catered to address the issues our community faces, and to show success stories and share experiences.”

Showcase success Hadiza Adeyemi, who runs Blueberry Partners, which helps SMEs with strategy and innovation, wants to see opportunities for young entrepreneurs to experience EMB success stories. “Make available programmes designed for people of ethnic minority backgrounds where mentors take ambitious mentees under their wing, tutoring them, showing them the ropes and encouraging shadowing,” she suggests. “Companies should also create high-quality apprenticeship programmes in conjunction with SME courses in universities, ensuring good representation of students from ethnic minority backgrounds.”

Th is kind of support from universities and corporations is growing. “A lot of the mainstream institutions are interested in the diversity element, banks are engaging with more minority businesses, and entrepreneurial universities are entering this space,” says Professor Ram. “But it’s also really important to ensure that EMBs are made aware that mainstream institutions are open for business for them.”

PENELOPE RANCE is a freelance business journalist