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Why don’t more people from ethnic minority backgrounds start businesses?

May 27, 2014 by Mark Williams

Why don’t more people from ethnic minority backgrounds start businesses?/ Young African Businessman{{}}The recent publication of A Portrait of Modern Britain had some commentators questioning the motivation of its publishers – right-wing think tank Policy Exchange, which was founded by current Tory ministers Michael Gove, Nick Boles and Francis Maude.

Policy Exchange called for all political parties to better understand and recognise the “clear and striking differences” between ethnic minorities and stop “lumping them together” or risk appealing to none.

One of the study’s headline claims was that the five largest “distinct Black and Minority Ethnic (BME) communities” (ie Indians, Pakistanis, Bangladeshis, Black Africans and Black Caribbeans) will double in size from 14% of the UK population (eight million people) to 20-30% by 2050.

Low start-up rate

According to A Portrait of Modern Britain: “Ethnic minority businesses [ie where at least half the management team is from an ethnic minority group – about 7% of UK SMEs] are already highly successful and contribute £25bn to the UK economy. There are higher aspirations to start-up amongst ethnic minority groups, especially Black African (35%) and Black Caribbean (18%) groups (compared with 10% for White British), but ‘conversion’ remains very low.”

So what do we know about UK BME businesses? According to Black Women Mean Business

  • 8% of SMEs that employ staff are owned/led by people from a BME background.
  • London accounts for 46% of all BME-led small businesses.
  • Retail is the sector in which most (35%) BME-led businesses operate.
  • BME businesses tend to be younger; 3% of BME-led SMEs are less than a year old (compared to 1% of all SMEs); just 24% of BME-led SMEs are more than 20 years old (compared to 40% of all SMEs).
  • BME businesses are likely to have a lower turnover than other SMEs.
  • More than half (58%) of BME SME employers are family-led businesses (compared to 62% of all SMEs).

Access to finance

So, why is the UK BME start-up rate so low? Last year, The Ethnic Minority Businesses and Access to Finance report, which was commissioned by Deputy Prime Minister Nick Clegg, concluded that “although the banking industry was working hard to ensure ethnic minority businesses have access to finance, there is more to be done to help under-represented groups”.

Clegg said that while there was no evidence that the challenges ethnic minority businesses face are due to racial discrimination, they still encounter problems accessing loans. “We know that 35% of individuals from Black African origin say they want to start a business, but only 6% actually do. Are they having problems accessing loans?” questioned Clegg. His friend, the Prime Minister, certainly seems to think so. Or at least he did in 2010 when he said black entrepreneurs were “four-times more likely to be denied a bank loan than white entrepreneurs”.

Unfair treatment

Race equality think tank Runnymede Trust welcomed the government’s review of access to finance for BME entrepreneurs and the UK banks agreeing to fund independent research into the experiences of BME businesses when seeking finance.

Dr Omar Khan, Runnymede Trust Head of Policy Research, commented: “Black and Asian businesses have long felt that they’re not treated fairly by lenders. We hope that government also engages in further initiatives to better understand why racial inequalities persist, not only to improve the lives of ethnic minorities, but also to grow the UK economy.”

Writing for The Voice in October last year, in an article called Want To Beat Racism? Start A Business, journalist Nels Abbey pondered possible reasons why more black people in the UK aren’t starting up. “In each of the home countries that black Britain’s lineage comes from, entrepreneurship is the norm,” he observed. “[Yet] for some strange reason, when black people arrive on these shores we seem to lose that entrepreneurial zeal and ingenuity. Not all of us. Just most of us.”

Black power

He puts this down to (perhaps) “a lack of confidence in our abilities in the face of more established business people”, as well as “actual and perceived racism maybe” and the “legacy of colonial structures”. Other possible reasons were “lack of resources, red tape, comfort, laziness even. Or maybe just a desire not to challenge the social order”.

Abbey concluded: “A single successful black business is worth more than any number of anti-racism demonstrations. A successful and respected business is a symbol of power and self-determination. You have to respect it, regardless of who runs it. Everyone loves a winner, no matter their colour.”

Blog written by Mark Williams, editor of the Start Up Donut.

Further reading 

Why it has to be service first

May 21, 2014 by Guest Blogger

Why it has to be service first{{}}Small businesses have many advantages and great opportunities to stand out from the crowd. Free from the shackles of over-administration and red tape you can adapt your processes quickly and easily so are well placed to deliver outstanding service.

It may be surprising then that according to a survey by Oracle only 29% of the UK’s small businesses believe that customer service is a key differentiator in today’s competitive marketplaces as compared to 88% in Spain and 77% in Italy.

With research elsewhere showing that 81% of customers would be willing to pay more in order to receive superior customer service, we need to go that extra mile to make sure we are giving it to them. So if we know that service is key, how do we deliver it? Here are just a few brief tips:

  • Take a step out and experience your business as a customer. Be critical as well as constructive in your analysis and this will formulate the basis of your service plan. To succeed in business today we all need to consider every single point at which we touch our customers. If we don’t delight at EVERY touch point then we fail.
  • Listen, never guess, never assume. Ask your customers what they honestly think – informally as well as formally.  Chat to them, engage with them, ask for feedback. Whatever your business, personal service is key as people will always like buying from people they know and trust and happy customers are far more likely to stay with you.
  • Keep the jargon in your office. Communicate in your customers’ language.
  • Always remember that a happy workplace = happy workers = happy customers. It’s a simple formula, but it works. Keeping staff motivated is key: think about all your staff, not just those you see all the time.
  • It’s about the little things. The small details that show you are walking in your customers’ shoes to make life that bit easier, more successful and more comfortable for them.
  • Keep service at the heart of your business. Lead by example to instil this in all your staff.
  • Be proud of your strengths and acknowledge your weaknesses. Don’t be afraid to employ people who can do a job better than you.
  • Go the extra mile. Leave your customers content and feeling they have received something extra that perhaps they didn’t expect.
  • Finally – as a small business you can create, react, evolve and adapt very quickly. All vital in nurturing your growing venture. 

Blog by Stephanie Vaughan Jones, Channel Manager at Penelope, the virtual phone system from Moneypenny for start up and emerging businesses. Stephanie is presenting on this subject at ‘Get Growing’, The Great British Business Roadshow. For information or to book a place at any of this year's events visit: www.britishbusinessroadshow.co.uk

New research on SME and microbusiness ethical behaviour

May 20, 2014 by Fiona Prior

I like to think that I am an ethical consumer. Wherever possible I shop locally (on foot or by public transport too), I purchase Fairtrade goods and my mortgage and savings are with an ethical bank. And I am not alone. Research has shown that demand for ethical goods and services grew 12% during the recent economic crisis against mainstream growth of just 0.2%.

The recent furore surrounding the tax shenanigans of high profile businesses and celebrities only serves to back this up with widespread condemnation and boycotts by consumers and commentators alike.

So, as a member of the Donut team and a supporter off all things small business, this AAT infographic got me thinking. It shows how few small and microbusinesses incorporate ethical thinking into their business strategy. As well as the bigger moral picture, companies are also potentially missing a trick by not attracting employees and customers who really care about ethical practices.

New research on SME and microbusiness ethical behaviour/Infographic{{}}

Electronic payment acceptance options for small firms

May 19, 2014 by Guest Blogger

In recent years, electronic payments have grown in popularity along with the demise of the cheque and fewer consumers carrying cash in their wallet or purse. Card payments have become the preferred method for payments, with shoppers expecting small businesses to accept debit and credit card transactions in a physical (ie offline) environment. The need for secure online payments has also grown Electronic payment acceptance options for small firms/Stack of credit cards{{}}as more merchants look to ecommerce services in a bid to drive sales.

E-commerce is becoming more accessible and affordable for even the smallest businesses, and complete end-to-end solutions for web design, shopping carts, online security and even virtual terminals are available in this increasingly sophisticated marketplace.

Fixed or mobile chip and PIN acceptance is ideal for physical trading environments, such as retail, hairdressing, accounting, hospitality and other business that processes transactions. For tradesmen on the move there is a whole host of new innovative mobile related payment technologies that are rivalling cash.

Methods range from devices that attach to a mobile phone and are capable of accepting card payments, to the digital mobile wallet and a portable chip and PIN device that runs off GPRS. All of which allow companies and sole traders to receive payment for goods and services on the spot.

When selecting a payments provider, merchants should consider options other than their bank. An independent supplier is more likely to offer a cost effective solution, along with support and benefits. What businesses need to consider is what method would best suit their customer base. And what methods is their customer base familiar with and happy to use.

Innovative digital payment options are great when it comes to the younger tech savvy customer, but merchants must also consider more mature shoppers. Overall security and industry requirements are a top priority and must be thought about when deciding on a digital payment method.

When selecting a payment option, SMEs should work with a third party that can provide not only the technology – online or physical – but guidance and a transparency of capital costs and fees, both monthly and annual. What many small business may not realise is that there are other options available to merchants that are more beneficial than simply using their personal bank.

Whichever payment method is selected, if an SME trades in both a physical and online environment, by joining up their payment offering they can gain an overall picture of transactions and the customer, which provides valuable insight for business decisions and strategy planning.

Blog supplied by Gareth Poppleton, managing director at Retail Merchant Services.

Further reading

Four common characteristics successful businesses share

May 13, 2014 by Guest Blogger

Four common characteristics successful businesses share/ 3D metal number 4{{}}If you’re a fledgling entrepreneur, starting your own business will be one of the most daunting things you’ll ever do. Whether it’s burning ambition, necessity or the fact that entrepreneurship is hardwired into your DNA, being one of the brave that takes this leap will be life-changing. 

Being a new kid on the block can be overwhelming and you will meet people who will want to give you their advice. Picking your way through what’s good and what’s not is no mean feat, so Phil Sharpe, mentor at the University of Southampton Science Park Catalyst Centre, has identified four common characteristics successful businesses share.

1 Team

In a new business, it all comes down to the people and particularly the leader. To run a successful team, a leader needs to be creative, logical, passionate and able to be compelling and articulate. However, you also need to recognise that you can’t do everything on your own, so you must get the right people around you.

2 Diligence

Make sure you’ve looked at your business from every angle and worked out what your strengths and weaknesses are. It’s good to ask others and take on board their criticisms. A lot of people who are naturally passionate about their start-up seem to take criticism too personally, but actually it can be really powerful stuff. Just by recognising that somebody else has a different angle on your business – an angle you could never have because you haven’t got the same experience of life – could be vital. It’s important to turn negative criticism around and use it to your advantage.

3 Luck

You can make your own luck – and there’s a risk that you fail to spot it when it presents itself. So, being aware of opportunities worth taking is certainly part of starting out. Randy Komisar [venture capitalist and lecturer on entrepreneurship at Stanford University] has written a great book on being a successful start-up. He talks about how the basics of business have been written 100 times – the business plan, the value proposition, etc – but he thinks that all this is only about 30% of business. The other 70% is luck.

4 Perseverance

If you think you can put something off until tomorrow that can be done today – don’t even think about starting a business. To run a thriving start up, you must be able to persevere against adversity, because you’re going to get a lot of that. According to Alex Rovira and Fernando Trias de Bes, authors of Good Luck: Create the Conditions for Success in Life & Business: “Creators of good luck don’t give up or postpone. When a problem or situation arises, they act immediately to either solve it without delay, delegate or forget about it.”

Further reading

Posted in Set up a business | Tagged Advice | 0 comments

Seven key steps from freelancer to business owner

May 06, 2014 by Guest Blogger

Seven key steps from freelancer to business owner/ 3D golden number 7{{}}The transition from being an independent freelancer to a business owner is a process of shifting responsibilities and needs. For me, moving from freelance copywriter to founder and MD of my own copywriting agency has been one of moving from one set of challenges to the next – and developing processes or recruiting people to meet those challenges.

As the business has grown we’ve increasingly moved from being reactive to proactive, and that has been crucial in ensuring the continuing success of the agency. I’d like to share with you seven proactive steps you need to take to move your business to the next level. Many of these are true not just for freelance copywriters moving into agency territory, but anyone making the shift from self-employed individual to business owner and boss.

1 Stop marketing yourself – market your business instead

To give clients the sense they’re dealing with a bona fide business rather than an individual, you need to market your business as such. Outline the core values of your business and shift from using ‘I’ in your promotional copy to ‘we’. Consciously create a brand image that leverages the strengths of your agency and sets it apart from the rest.

2 Start delegating

Once you’ve got staff, use them. There are only so many hours in the day, so to grow your business and focus on areas such as marketing, entrust certain activities to others. Once I’d taken on other copywriters, I found I spent most of my time being an editor. Later, I went on to recruit one of my senior writers to work full time as an editor, freeing me up work on expanding the business and developing processes to increase efficiency.

3 Get your cashflow in order

As a lone freelance writer you can weather the lulls and cut back on the groceries till that big client finally pays up. But if you’re employing other people (or even sub-contracting to other freelancers) you must have a much better handle on your cashflow. Nobody works just for praise and promises, and if you can’t afford to pay them, you may find that your business suddenly contracts again.

4 Invest more in marketing

Continued business growth requires an investment of time and money in marketing. You also need to develop a cohesive marketing strategy that will exploit your business strengths and conform to current market conditions. If you fail to market sufficiently or effectively, you may find you’ve got an excess of manpower and a shortage of work.

5 Set up and refine processes

To produce a consistent product, you need to have processes that ensure quality. This extends to everything from gauging client requirements and expectations to briefing writers, invoicing clients and dealing with problems that arise. Remember, delegating will give you the time to develop these processes.

6 Consider expanding into different areas

One of the key transitions from freelancer to business owner is to redefine your offering. Where once we focussed solely on providing writing and editing services, now we offer PR, consultation and training. The larger your business grows, the greater the possibilities.

7 Develop recruitment and training policies

As a freelancer you are in direct control of the quality of your output. As a business owner your staff now play a crucial role in maintaining that quality. Effective recruitment and training policies will go a long way keeping standards high. Your staff are now one of you key assets. Look after them!

Blog supplied by Derryck Strachan, MD of content marketing and copywriting agency Big Star Copywriting.

Further reading

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