As experts in supporting BaME and women led businesses, YTKO was interested to see what new research from the Enterprise Research Centre, supported by J P Morgan, reported about building resilience in these under-represented entrepreneurial groups.
Over half our clients in our Outset and GetSet for Growth services are women, and BaME entrepreneurs are over-represented in both programmes, compared with their representation in the local populations. We found that many of the key findings of the report were the same as those that we have identified in our client communities, and we are very pleased to see the recommendations made in the report endorse the approaches that GetSet for Growth and Outset have been delivering to these under-represented groups for over a decade.
The new study, “Building Resilience in under-represented entrepreneurs”, surveyed just under 3000 small business across five European cities, finding that a third have experienced a threat to their survival in the past five years with companies run by women and ethnic minorities experiencing more crises than their counterparts.
The aim of the research was to investigate what makes small businesses resilient and to try to understand whether entrepreneurs from under-represented groups experience specific issues and how they could be addressed to reduce the risk of crisis in the future. The research also identified that companies often overestimated the impact of perceived threats and downplayed factors which actually led to these crises.
The report focused on 600 companies based in London, Paris, Milan, Frankfurt and Madrid with approximately a half of these businesses led by women and a third by ethnic minorities. A key finding of the report was the reluctance to seek external support, instead utilising more informal sources of advice which was attributed to a number of factors including culture, language differences and lack of confidence.
With these findings in mind, we talked to Maria Wishart, a Research Fellow at the Enterprise Research Centre, to find out more about the study and how the work of Getset and Outset programmes could provide beneficial support for these businesses and others across the UK.
Q: Do female and ethnic minority-led companies approach their businesses differently to their male and non-ethnic counterparts?
Maria: All entrepreneurs place importance on keeping their businesses running. However, female and ethnic minority entrepreneurs are more likely to express objectives for their business which relate to environmental and social or community benefits. From the research it is possible to extrapolate that if these businesses are successful and survive, then they are more likely to bring benefits to their community and the environment as a result of these objectives
We found that female and ethnic minority entrepreneurs seek considerably less formal external advice than their counterparts and are more likely to turn to a friend or mentor for informal advice.
Q: Why are female and ethnic minority leaders more likely to consult informal sources of advice?
Maria: Ethnic minority entrepreneurs tend to be younger and therefore less experienced in business with limited knowledge of where to go for advice. They also tend to participate less in networking. Other academic research identifies difficulties which some ethnic minority entrepreneurs have accessing support including unfamiliarity with institutions and services that might offer support, as well as cultural and language issues.
This group tends to be embedded within their own communities, and not participating in networking outside of them, turning to family members for help and support rather than external agencies. Confidence was also an issue for female entrepreneurs in terms of seeking external advice.
Q: What are the main types of advice that UK ethnic minority and female leaders are looking for?
Maria: Financial and legal advice were mentioned most commonly in responses. In London, advice to help grow a business was identified as a key topic for advice.
Q: The report states that ethnic minority led companies are more likely to experience crisis in the preceding 5 years that threatened the survival of their business then the other demographics.
Maria: The research presented a variable picture, but overall, ethnic minority entrepreneurs are more likely to have experienced an existential crisis in their business. In London, the number of ethnic minority entrepreneurs who had experienced a crisis in their business was amplified in low income boroughs.
Q: How do the business risks perceived by female and ethnic minority leaders differ?
Maria: Common to all entrepreneurs was that they worried about different potential risks than were actually the core issues which caused the crisis to their business. They identified these as internal issues such as losing a key member of staff or illness. However, the respondents who had experienced a crisis identified that external issues were the cause including the loss of a major customer, price increases and cash flow problems. This highlighted a mismatch between the perceived risks and actual risks.
This illustrates the fact that these people are very focused on the day to day running of their businesses, as you would expect for small firms employing 3-99 people. These small teams are focused on the issues that they can control and means that they are less likely to be engaged with external threats, primarily as a result of a lack of time to consider them.
When asked how much they plan for crisis in their business, ethnic minorities appear to plan less and females slightly more.
It was interesting to note that when a crisis hit their business, the top responses on how they dealt with it including:
- Access finance to resolve the issue
- Take advice both informal and specialist
- Develop a plan only at the point in time where it is needed
Implementing a prepared crisis plan was rated around sixth or seventh on the list of responses. This reflects the known nature of entrepreneurs, who are resilient in the first place; tend to be reactive rather than pro-active and leave planning to a point in time when they feel will be most effective and potentially successful to deal with the crisis.
Q: Do peer exchange networks help these groups and what advantages do they provide for the business leaders?
Maria: When entrepreneurs who had experienced a crisis in their business were asked what would have helped, the top response was the opportunity to talk to other entrepreneurs who ran similar businesses about how they dealt with issues. This sharing of experience was viewed as key. However, respondents felt that sometimes the advice that they had been given was not directly relevant to their own business and that the advisor did not have the same life experience as they had. They felt that greater value could be found in talking to someone, who has like them and used to running their own similar business.
Q: What was the reaction to the current provision of digital forms of business support?
Maria: Respondents from London were found to be very keen on digital forms of support, using online support and apps to seek support. For SME leaders, time is a constraint and online provision is easier and quicker to access at their convenience which may explain the relatively high usage levels.
Q: Were there recommendations from the report on how support should be tailored to cater for those in low income boroughs?
Maria: The difference in perceived and actual threats to businesses identified by this research demonstrates that there is work still required in order to help leaders of small businesses to provide them with the resources to deal with threats and how to prioritise this work.
The research shows that female and ethnic minority entrepreneurs run their businesses and seek advice for their business in different ways. This requires tailored support for these groups which takes into account their differing needs. Resources need to be delivered to them differently as a result.
These groups need support to identify the most important risks to their business and it is for this reason that a toolkit has been produced to enable support delivery agencies to do this. This Resilience Framework has been designed to be quick to complete and easy to access with three elements:
- A tool which allows them to assess how resilient their business is and to identify the areas where they need to focus
- A risk analysis tool which helps businesses leaders and their team to identify risks which are most potent for their business and to inform their crisis planning
- A set of templates designed to capture critical information about their business in one location to help them create a plan to deal with the risks identified
The findings from the report indicated that it would be appropriate for the toolkit to be delivered in low income boroughs in London in partnership with organisations which are in regular contact with these businesses. These organisations would be well placed to spend time with them to work through the process and help to put support in place. The report also highlighted that there was also a need to make people more aware of the services provided by these programmes.
- End of Interview –
YTKO’s work supports the output and recommendations of this research on building resilience
The key findings of this research mirror what YTKO has experienced working with under-represented groups for almost two decades. Based on our experience of building other sustainable networks and running mentor programmes, we knew that combining these together strongly resonates with under-represented groups, particularly in more disadvantaged areas.
Professional networks and peer communities like our award-winning Enterprising Women network are a powerful mechanism to inspire female would-be entrepreneurs and help them build their confidence and skills, support them through their journey and increase the likelihood that they will be successful. Since 2006, our Enterprising Women programme has built a community of over 25,000 women entrepreneurs across the UK, advancing women’s enterprise, and achieving gender equality in our client-base of start-up and growth businesses.
We deliver our Outset and GetSet support programmes in the heart of the communities that need it, particularly in low income regions. Having delivered support in this way for many years, we have been able to develop trust in these communities, breaking down cultural barriers, and ensuring our services are tailored to the specific needs of our clients. A large proportion of our clients come to us via word of mouth recommendations from like-minded entrepreneurs in their community. We help to build business resilience for future prosperity.
We employ staff who have a similar background to those people they provide advice to, most of whom have previously set up and run their own businesses. In this way we ensure our support is provided by people whom our clients can identify with, having had similar life experiences.
Outset & GetSet provide mentoring services as part of our service provision. We recognise that entrepreneurs gain a great deal of value from being able to speak to entrepreneurs and business owners like themselves. For example, the Outset programme in Waltham Forest provides opportunities for entrepreneurs to talk to similar new entrepreneurs and business start-ups to provide real life advice. Feedback from participants echo the points made in the report around entrepreneurs feeling that they can identify with other leaders as they have faced the same issues in their business.
ERC’s research identified that financial and legal, as well as business growth, were key topics that these entrepreneurs sought advice on. These topics are core to the training already provided by both our GetSet and Outset Programmes. Outset offers a range of support to help individuals start and launch their business, including legal, financial and marketing advice. Get Set brings high quality professional resources to help entrepreneurs grow their business, providing invaluable commercial insights, knowledge, and flexible, practical support, and a wealth of first-hand experience to help grow their bottom line.
Early in our service provision, we realised that time was a constraint for clients, recognising that online provision of training would be more convenient for some, and we therefore invested in online versions of our programmes. Now our clients receive free access to our interactive learning platforms, Outset Online and GrowSmart, created with the time-poor entrepreneur and business owner mind to provide tools and knowledge to help them start-up and to grow their businesses.
From our own experience of working with over 30,000 individuals, 22,000 businesses and enabling the creation of over 10,000 new jobs for the British economy, we concur with the report findings that loss of a major customer, price increases and cash flow problems are potential key catalysts for business failure. This is why we put finance and marketing advice at the heart of our programmes, with identification of risk a key element of our business planning support. We believe that that there is great potential to integrate the toolkit created by ERC into the work of the Outset & GetSet programmes to further embed risk identification and planning in our services.
The Enterprise Research Centre Report: Building Resilience in under-represented entrepreneurs. A European comparative study – is available to view here.