Wealth Bringers
The regional perspective Anil Ruia Board Member, Northwest Regional Development Agency
During this summer there has been considerable focus on minority ethnic groups. It is timely therefore that Sustainability Northwest, together with the Northwest Regional Development Agency, has conducted “Wealth Bringers”, a progressive study into the financial and social contribution that minority ethnic entrepreneurs make in England’s Northwest. People who have close links with ethnic minority businesses have long known that they are key drivers of entrepreneurial activity in the UK, which was backed up by a raft of anecdotal information. But now we have the evidence to support this fact at a regional level. The crucial role that minority ethnic entrepreneurs play in the economic and social transformation that is taking place in our region must be recognised across business support organisations, policy makers, community groups, business funding organisations and investors to name a few.
page one 2
To ensure continued prosperity and quality of life we will need to strive harder to provide the appropriate support for our region’s minority ethnic entrepreneurs. “Wealth Bringers” is an excellent first step at valuing these important stakeholders, with further partnership and innovation we will commence down the road of a truly sustainable society for the Northwest.
The entrepreneur’s view Nighat Awan OBE Chief Executive, Shere Khan Group
I applaud Sustainability Northwest for its vision in profiling the contribution that minority ethnic entrepreneurs make to the region’s wealth and social cohesion and indeed to the Northwest Regional Development Agency for its support and backing. Recent negative press and misinformation about people who come to the UK sadly dominates our headlines above any positive images or news stories. So now, more than ever, we need to recognise and celebrate the contribution that minority ethnic entrepreneurs make to our society.
I sincerely hope that England’s Northwest will take the recommendations from Wealth Bringers forward to nurture and grow the business talent that is so visible within our diverse communities. To do so would allow us to be acknowledged as a region at the vanguard of ethnic entrepreneurship. I look forward in continuing to play a major role in creating a sustainable future for all.
My own cultural background has influenced my business success in every way. However, as this report highlights, significant barriers exist for minority ethnic entrepreneurs. It is important that these are tackled both regionally and nationally to provide the opportunities for these entrepreneurs to realise their potential.
page one 3
Introduction Erik Bichard Chief Executive, Sustainability Northwest
Sustainability Northwest (SNW) was created to show how human survival depends on our ability to balance environmental, economic and social priorities in equal measure, i.e. sustainable development. In England’s Northwest, this principle lies at the heart of the Northwest Regional Development Agency’s (NWDA) Regional Economic Strategy. A sustainable society is one that recognises and values diversity. To do anything other than this would be to invite strife and undermine our productivity. Most of us intuitively know this, but sometimes it is hard to find the evidence to back it up. That is why SNW was determined to explore the contribution that business people who have origins in other countries (assimilated entrepreneurs or minority ethnic entrepreneurs) make to the economy and the social fabric of England’s Northwest. Wealth Bringers shows that, against the average business performance in the Northwest, assimilated entrepreneurs generate more turnover and are more profitable. Far from being insular, they buy goods and services from a wide range of suppliers; they create charities; get involved in the arts; and they help local schools and youth groups. They show that entrepreneurial flair is exciting and lucrative providing role models for youngsters, not just from their own ethnic background, but for anyone interested in creating wealth. page one 4
The next step for Wealth Bringers is to communicate its message to schools, business support agencies and government. We are particularly grateful to Anil Ruia for his guidance and foresight, and to the NWDA and the Ethnic Minority Business Forum (EMBF) for their support. We were very ably assisted by a number of partners including ABF Enterprise for All, Muslim Enterprise Development Service, and ChamberLink (Greater Manchester). Thanks also to all those assimilated entrepreneurs who gave up their time to be interviewed.
What’s it all about?
In the run up to the 2005 election, and particularly since the London terrorist attacks, national attention has focussed on the issue of immigration and above all the perception that immigrants detract from, rather than add to, the UK economy.
the region and analysing commissioned data from the 2004 Global Entrepreneurship Monitor (GEM), Sustainability Northwest has investigated and established the true value of our non-indigenous business community.
This viewpoint has developed despite the establishment and subsequent institutionalisation over many years of ‘immigrant’ businesses such as Reuters, Marks & Spencer, Trust House Forte and Tesco – to name but a small number – each of which has been woven inextricably into the fabric of British commerce.
Covering a broad range of company sizes, types, ages and ethnicity, the sample interviewed has shown that, far from taking away from the wealth of the UK, assimilated entrepreneurs constitute a highly profitable force within the entrepreneurial community.
Wealth Bringers defines and promotes the economic and social contribution made in the Northwest of England by those with origins in other countries. This includes those who have travelled to the region in their own lifetimes and second generation entrepreneurs whose cultural heritage has influenced their business decisions and success. By interviewing over 250 ‘assimilated entrepreneurs’ in
page one 5
What did we find?
Wealth Bringers revealed higher turnovers for the region’s ethnic minority businesses than those of UK entrepreneurs as a whole. In fact, the average annual turnover of assimilated entrepreneur businesses (£744,273) was found to be more than double that of their indigenous counterparts (£333,163). This has implications for taxation, as identified by a recent study by the Institute for Public Policy Research (IPPR). The IPPR study found that, during 2003-4, immigrants contributed an average of £112 per head to the Exchequer, compared to an average of £100 from UK-born citizens. In terms of profit, the Wealth Bringers sample – consisting entirely of businesses operated by assimilated entrepreneurs – again out-performed their contemporaries in England’s Northwest. VAT-registered businesses in the region run by UK-born entrepreneurs contributed an average yearly profit of £213,570 per business, whilst the average annual profit for a Wealth Bringers business was 13% higher at around £245,610. Overall, the total profits for all Northwest assimilated entrepreneurs was estimated at £2,358m.
So, whilst assimilated entrepreneurs only run an estimated 6.3% of Northwest businesses, they generate over 7% of business profits for the region – suggesting that they are significantly more profitable than white British-born entrepreneurs in the region. The figures above, suggest that if assimilated entrepreneur-run business in the Northwest increased by 10%, an additional £235m profit could be generated annually for the region. The findings of the Wealth Bringers study show that with additional support, or increased focus on assimilated entrepreneurs in regional economic policy and strategy, this figure could be higher still.
“...total profits for all Northwest assimilated entrepreneurs was estimated at £2,358m.” page one 6
Economic and social contributions to the region
Seizing business opportunities
• In terms of job creation, assimilated entrepreneurs provide either as many, if not more, employment opportunities than Northwest entrepreneurs. In fact, Wealth Bringers identified that a staggering 103,392 jobs are provided by assimilated entrepreneurs in the Northwest of England.
GEM data analysis commissioned for Wealth Bringers shows that amongst Northwest assimilated entrepreneurs ‘opportunity entrepreneurship’ – those who identify and seize a business opportunity – is significantly higher than ‘necessity entrepreneurship’ – those who choose to run their own businesses because they feel they have little alternative.
• Suppliers too benefit from the assimilated entrepreneurial sector. The businesses surveyed spend an average of around 44% of their annual turnover on their supply chain (£327,480). In total, our results suggest that assimilated entrepreneurs across the Northwest spend some £3,109m on their suppliers each year – a significant contribution. Furthermore, this spend is spread across the wider business community, and not focussed on other ethnic minority-run businesses.
It also reveals that 18% of people within ethnic minorities in the Northwest were considering establishing their own businesses, compared to just 8% among their white British counterparts.
• The results of the study also reveal contributions outside of the economic arena, with many assimilated entrepreneurs contributing significant amounts of both time and money to charities and community groups, as well as working towards the enhancement of our society’s cultural offering.
“...a staggering 103,392 jobs are provided by assimilated entrepreneurs in the Northwest of England.” page one 7
continued... The effect of cultural background on business success
Business support
The majority of interviewees in the Wealth Bringers survey said that their cultural heritage had positively influenced the success of their business. Many cited being brought up with a strong work ethic as a key reason for their success. Others highlighted how their skills had enabled them to fill a niche in the market to provide culturally relevant services to members of the ethnic communities. A further group said that they used their cultural background and skills to offer services to the wider community; this not only proved to be a smart business decision, but also makes a particular contribution to the cultural richness of the Northwest.
Despite the significant contribution made by assimilated entrepreneurs to the Northwest economy, there is a lack of appropriate business support available in the region. Tailored support has been established in some areas, offering services such as networking, ethnic minority women’s business support and assistance in obtaining business funding. However, availability of these services across the region is limited. These services need to be tailored more to the needs of assimilated entrepreneurs, and need to be integrated into the mainstream support structures.
page one 8
Funding sources
Training and education
Funding for assimilated entrepreneurs is clearly problematic. None of the white British interviewees in the GEM study had been refused funding from lending institutions, whilst 11% of assimilated entrepreneurs had. A far higher percentage of assimilated entrepreneurs were also refused unsecured banks loans (16%), compared to just 2% among the white British entrepreneurs. With secured loans such as mortgages, the assimilated entrepreneurs also experienced less success than white British entrepreneurs – with 16% being refused a mortgage, compared to just 1% in the other sample.
Assimilated entrepreneurs make good use of available education and training. According to the GEM survey, 20% of assimilated entrepreneurs took part in business or enterprise training at school, compared with just 10% of the white British sample. Lack of knowledge was more often cited as a barrier to business success by the older generation of ethnic minorities, who are less well educated than their white British equivalents. This trend is reversed, however, in the 16 to 24 age group where members of the Black African, Indian and Chinese communities have more qualiďŹ cations than young people within the white British sample.
page one 9
Real lives Lisa Tse Sweet Mandarin Restaurant, Manchester
Fulfilling a life-long ambition to run their own restaurant, financier Lisa Tse and her sisters, Helen and Janet – a lawyer and engineer respectively – set up Sweet Mandarin in November 2004. They now employ seven people. The sisters also own a thriving property investment company with 100 members. The sisters are the third generation of restaurateurs in the family (their grandmother came to the UK from Hong Kong) and they have received many positive reviews for their modern Chinese cuisine. Lisa also works with Manchester College of Arts and Technology to train junior chefs in the art of Chinese cookery, and she is an active member of the community in the Northern Quarter, where the restaurant is located, hosting ‘Meet My Neighbour’ events to cement the growing community.
“It’s our way to help the Northern Quarter and Manchester City Centre to become a friendlier and safer place.”
page one 10
Israr Sarwar Reach Global, Burnley
An engineer by trade, it was natural that Israr Sarwar, whose family originally comes from Pakistan, would choose a technology-based business. Global Reach, established by Israr in 2001, is a group of companies with a focus on technical innovations – especially search engines, e-commerce, web design and multi-lingual website promotion. After just four years trading, the group has achieved an annual turnover of several million pounds. It counts one of the largest global media agents among its clients although, where possible, it prefers to support smaller community suppliers as opposed to large corporations. Like many assimilated entrepreneurs, Israr is himself the son of a successful entrepreneur and attributes his success to the valuable business management advice and support he received from his father.
“The invaluable support I needed to establish my business came from my ‘wise men’ – my dad and several other experienced business men that I know.”
page one 11
Ming Lee Lee Architects Ltd, Wilmslow
Having grown up as the child of restaurateurs, Ming Lee – whose parents came to the Northwest in the fifties from Hong Kong – knew that working hard was a way of life, and much of his spare time was spent helping in the family business. After qualifying as an architect, Ming took his bosses retirement in 1997 as an opportunity to establish his own business and now works on a wide range of commercial and domestic projects. However, Ming has recently specialised in designing Chinese restaurants, utilising his childhood experiences and language skills as a base for his business.
“As a child, I spoke only Cantonese and that has been important to my business as many clients are more confident speaking in their own language. Also, having grown up in my parents’ business, I also have a good understanding of the needs of Chinese restaurants.”
page one 12
Tariq Mahmood (Arien) Arien Distribution Ltd, Rochdale
Within a year of arriving in the UK as a refugee from Uganda in 1981, Tariq Mahmood and his brother had established their own business selling electrical goods. Their first deal being the purchase of a fridge for £15 which they sold on for a £5 profit. From there, and without the help of any external funding or advice, the two have gone on to build a business with an annual turnover of £2m per year, selling top-of-the-range Italian electrical goods to clients all over the world. The company employs 28 staff and, as well as making a contribution to the region in terms of jobs and wealth, has provided funds for the building of an orphanage and mosque in a Ugandan village.
“We’ve worked hard to make the business a success – frequently starting at 7.00am in the morning and working through until 11.00pm at night.”
page one 13
Mohammad Arshad Arshad & Co, Liverpool
Having worked for an international accountancy firm in Pakistan, Mohammad Arshad moved to the UK in 1968 to train and qualify as an accountant at his company’s London headquarters. After being relocated to Liverpool, Mohammad spotted a gap in the market for the provision of accountancy advice and services to ethnic minority businesses and individuals, and set up his own practice in 1983. Mohammad contributes to the local community as chairman of the Pakistan Centre and is also a trustee of a UK-registered international charity providing free kidney dialysis treatment for those living in poverty.
“I wanted to run my own business and be of service to the ethnic minority community. As well as being able to communicate with my clients in their own language, I also understand their values and culture, which is important.”
14 page one
Fazila Malek K&F Frozen Foods, Bolton
Originally from India, Fazila Malek moved to Northwest England in 1986. Unable to get a job due to a lack of formal qualifications, she decided to exploit a gap in the market for halal food and set up her own retail business five years ago. Seeking help from an ethnic minority business support service, Fazila has since gone on to expand into frozen food retail, using her own cookery skills and those learned from her mother. K&F Frozen Foods now employs 22 staff and has an annual turnover of several hundred thousand pounds annually. The company supports schools and international charities.
“The woman’s business network was particularly useful as I wouldn’t have had the confidence to go to business events with men and the female business advisor has also been very helpful as I was quite shy and nervous. The networking events also helped me to improve my English.” page one 15
Taking it forward Who needs to be involved?
Wealth Bringers demonstrates that, as well as inputting signiďŹ cantly to the cultural richness of the Northwest region, assimilated entrepreneurs also make a considerable economic contribution As such, they are deserving of greater recognition and support. In particular, assimilated entrepreneurs should be a major consideration in decisions by policy makers on economic growth and inward investment in the Northwest.
Sustainability Northwest recommends that to take forward the ďŹ ndings from Wealth Bringers several key regional groups need to be engaged: Current and future assimilated entrepreneurs It is important that assimilated entrepreneurs are aware of their collective contribution and how their cultural background can be a driving force in business success. Wider business community and society Making society and the wider business community more aware of the wealth created by assimilated entrepreneurs in terms of proďŹ t, employment and supplier spend will help to redress negative perceptions of the contributions made by ethnic minority groups. Assimilated entrepreneurs could stand as role models for the white British business community in how to succeed in business.
page 16 one
What needs to be done?
Regional policy makers The public organisations working to promote economic development, social inclusion and cultural diversity should be made aware of the input of assimilated entrepreneurs in order to ensure that strategies and policies further promote and develop their contribution.
Sustainability Northwest recommends that Wealth Bringers enters into a second phase in conjunction with the above groups, to deliver:
Business funding bodies Banks and other funding organisations should be made more aware of the needs and achievements of assimilated entrepreneurs, in order to reduce the financial barriers encountered by this group.
• Improved business support for assimilated entrepreneurs to include assistance in obtaining finance, improved networking and wider support across the region.
Business support organisations Business support organisations are a key route through which assimilated entrepreneurs should be helped to overcome barriers. It is important that mainstream business support organisations are made much more aware of the gaps (including geographical coverage) that exist in support for assimilated entrepreneurs, and how these need to be filled.
• A multi-media marketing campaign to promote the achievements of assimilated entrepreneurs.
• Encouraging organisations to include assimilated entrepreneurs businesses in their supply chains to fulfil both economic and corporate responsibility objectives. • Research for funding organisations that identifies business opportunities for them to invest in assimilated entrepreneur businesses, and the development of alternative finance sources including venture capital trusts and community development funds.
page one 17
To get involved in Wealth Bringers, please contact Ruth Woodall at Sustainability Northwest:
For further information on Wealth Bringers’ partners:
Sustainability Northwest Fourways House 57 Hilton Street Manchester M1 2EJ telephone +44 (0)161 247 7800 facsimile +44 (0)161 247 7870 r.woodall@snw.org.uk www.snw.org.uk
Northwest Regional Development Agency Renaissance House Centre Park, Warrington Cheshire WA1 1XB telephone +44 (0)1925 400100 facsimile +44 (0)1925 400400 information@nwda.co.uk www.nwda.co.uk
Sustainability Northwest (SNW) is an independent company and charity that aims to drive forward the agenda on sustainable regional development in the Northwest of England, through the formation of close partnerships with all sectors in the region and beyond. Our sister company is the not-for-profit consultancy, The National Centre for Business and Sustainability (NCBS). SNW’s work is made possible through the backing of our core sponsors: BNFL plc, The Co-operative Bank, The Environment Agency, the Northwest Regional Development Agency and United Utilities plc.
The Northwest Regional Development Agency (NWDA) is responsible for the sustainable economic development and regeneration of England’s Northwest and has 5 key priorities: Business Development, Regeneration, Skills and Employment, Infrastructure, and Image.
page one 18
Ethnic Minority Business Forum Northwest Suite 4, numberone@thebeehive Shadsworth Business Park Lions Drive Blackburn BB1 2QS telephone +44 (0)845 607 0786
ABF Enterprise for all Suite 4, numberone@thebeehive Shadsworth Business Park Lions Drive Blackburn BB1 2QS telephone +44 (0)845 607 0786 info@enterprise4all.co.uk www.enterprise4all.co.uk
The role of the Ethnic Minority Business Forum (EMBF) Northwest is to provide a single voice to review and develop policy, strategy and operations of economic development, skills and business support to enhance and develop the BME Business sector of the Northwest economy.
ABF is a not-for-proďŹ t organisation supporting minority businesses to maximise enterprise, productivity and skills, by providing access to a range of business support and training solutions. The ABF is the largest organisation of its kind, representing over 1,000 fee-paying members from across the Northwest.
page one 19
Published September 2005 by Sustainability Northwest This report is printed on 100% recycled (75% post-consumer waste) paper, using vegetable based inks Photo on front cover is Tariq Mahmood (Arien)