An Examination of Ethnic Entrepreneurship in the Mid-West Region of Ireland (2012)
This research aims to provide an analysis of ethnic entrepreneurs in Ireland's Midwest region. The study examines established and aspiring entrepreneurs, highlighting challenges and needs. Recommendations are offered to support agencies and government bodies to enhance services for ethnic entrepreneurs.
This research was commissioned by Doras Luimní with the aim of providing a micro and strategic analysis of ethnic entrepreneurs in the Midwest region of Ireland. A number of objectives were formed in order to answer this aim. The study examined two sets of entrepreneurs: those in the planning phase and those that have been established. Both established entrepreneurs and aspiring entrepreneurs were studied so as to provide a skill set analysis; a needs analysis and the identification of the barriers and/or challenges they faced in planning/establishing and/or operating their business. Furthermore, the study examined what assistance is currently being offered by support agencies/bodies in the region to ethnic entrepreneurs and to highlight any gaps that might exist. Additionally, the study examined support services outside of Ireland to identify ‘best practice’. Finally, the study will provide recommendations that can be used to inform agencies/support services in the region that provide support to entrepreneurs in terms of the needs of ethnic entrepreneurs that are currently not being provided by these agencies/service providers.
The methodology adopted for the study incorporated both primary and secondary research methods. The secondary research utilised key government, both national and international, reports that focused on entrepreneurs and ethnic entrepreneurs in particular. The websites of support agencies on the Island of Ireland were also examined to identify the support that is being offered to the unit of analysis. The primary research adopted was a questionnaire that was devised for three cohorts: ethnic entrepreneurs in the planning phase, ethnic entrepreneurs who have established their business and representatives of support agencies/3rd level institutions/government agencies and training organisations who support entrepreneurs and ethnic entrepreneurs on the Island of Ireland. The questionnaire was administered online, via post and/or in person.
The response rate to the study was as follows: the response rate achieved for the entrepreneurs who were in the pre-planning phase was 57% (n=8). The response rate achieved for the established entrepreneurs was 49% (n=36). In relation to the government support agencies, third level education institutions and private support agencies that were surveyed, the response rate was 15% (n=61).
The key findings from the study are broken down into three sections: service providers; entrepreneurs in the pre-start-up phase and established entrepreneurs. On a European level, European service providers were examined using secondary research methods. The key findings from this analysis indicated that the typical services offered to ethnic entrepreneurs in Europe include the following: information services and advice; assistance in accessing financial supports; the provision of micro-credit; assistance in finding a business location; assistance with marketing; networking assistance and assistance on skills development. The key findings from the service providers on the Island of Ireland are: the majority provide general support to entrepreneurs; however, few provide targeted supports to ethnic entrepreneurs. Networking events are provided by all the service providers either on a formal basis or informal basis. Information is provided to ethnic entrepreneurs but the majority of service providers would not provide the information in the native language of the ethnic entrepreneur. Of the support agencies that do provide services to entrepreneurs, only a third of them have access to financial supports for ethnic entrepreneurs.
The key findings for the entrepreneurs in the planning phase highlighted the fact that they are well educated, have a desire to employ other people in the future; are more likely to provide a service than a product and will be most probably operating within the ‘restaurant/food sector’. Entrepreneurs in the planning phase highlighted more ‘push’ factors than ‘pull’ factors for the reason for considering establishing a business. This is due to the fact that in the majority of cases they have identified that they could not use their skills and/or qualifications elsewhere. Entrepreneurs in the planning phase have indicated a preference for a limited company as their business structure. The majority will apply for government grants and/or bank loans/overdrafts so as to fund their business start-up. The majority of pre-start-up entrepreneurs are confident in their current business skillset however they have highlighted some areas where they have gaps in, such as, branding; how to conduct market research, how to sell online; business planning and in a minority of cases: how to write a cash flow statement. The budding entrepreneurs did highlight their lack of awareness of training programmes offered by other support agencies, government bodies and other training providers. The key barrier and challenge the entrepreneurs in the planning phase stressed were that of a finance nature. ‘Getting access to finance to start-up their businesses’; ‘getting a bank overdraft’ and ‘availing of grants’ are barriers and challenges they believe they will face in the future.
The key findings for established entrepreneurs are: the majority were male, married, from Africa or Asia and resident in Ireland for 9 or more years. Entrepreneurs were educated to University level and this was their first venture ever established. The principle motivation for moving to Ireland was because relatives were already living here. The main reason why they established their business was because they saw an opportunity in the marketplace.
The majority of businesses were established between 2005 and 2010. The typical business structure took the form of a sole trader. The majority work in the business full-time with employees, who typically are not related to them. The majority of businesses were service orientated businesses within the food/restaurant, retail and personal services sector. Service, quality and price are the key differentiation factors entrepreneurs’ use. The key marketing activities they are engaged in are personal selling; advertising, the use of flyers and online marketing.
The sources of finance used to fund the start-up of the business was personal savings primarily with a small minority indicating bank loans and/or loans from family and friends augmenting the personal savings. Few established entrepreneurs at the pre-start-up phase met representatives from government agencies and/or support agencies. Few also attended training programmes at the pre-start-up phase, provided by these bodies. Awareness of these bodies was the key reason why they did not attend.
Established entrepreneurs indicated that they are capable of performing a variety of day-today business functions. However they did indicate that they will need assistance on the following: financial management issues (i.e. writing cash-flow statements; balancing the books]; conducting market research; designing a strategic plan for the business; and knowing how to brand a product/service. Some assistance on identifying potential sources of funding for investment was also highlighted.
Even though the established entrepreneurs were confident they could perform a variety of business tasks/functions they still highlighted the following areas as areas they would like some additional upskilling on: marketing and sales management; market research; computer skills; business planning; financial management and how to control costs. Additionally, the following are areas they foresee the need for training: understand how to sell/promote online; learn how to grow the business; learn how to balance work and life and understand how to write a business plan.
The key challenges and barriers they see for the future were financial and economic related. Pricing, currency fluctuations, getting access to finance and the availability of cash were the key financial challenges. Economic challenges included the recession; the impact of customers purchasing power being depleted and the wave of customers from their own ethnic community leaving the country due to the recession.
The key recommendations for this study are as follows. It is recommended that a review of EU policies on ethnic entrepreneurship and/or generic entrepreneurship policies is conducted on an annual basis by the support agencies so as to be aware of future developments within the area.
In relation to entrepreneurs in the planning phase training programmes on establishing a limited liability company and how to register your business name is recommended. Furthermore, training programmes on employment law (including the law on part-time employees) is also recommended.
Since the majority of entrepreneurs, either in the planning phase or those who have already established a business, are located within the food/restaurant sector, it is recommended that on an annual basis a HACCP, Health and Safety course and a Manual Handling course is offered to them.
Additional training programmes on how to conduct market research, how to brand a product and service and how to promote and sell a product/service online is also recommended.
Funding to start the business and/or operate the business was a key challenge for both sets of entrepreneurs. It is therefore recommended that the support agencies and/or government bodies in the region consider establishing a microcredit scheme. This is already operational in Dublin through the First Step initiative however no entrepreneurs in the Midwest region have availed of this. Support agencies and/or government bodies should review the microcredit schemes identified within the report so as to understand how such schemes are operated.
It is also recommended that a fact sheet or information sheet on the sources of funding that is available should be compiled and given to the entrepreneurs.
Communication between ethnic entrepreneurs and government bodies and/or support agencies is very poor. It is recommended that a concerted, targeted marketing campaign is devised to inform this cohort of entrepreneurs of their services and training initiatives. It is recommended to identify who the business leaders are in the ethnic communities and they should be communicated about such initiatives. It is recommended that mentoring of entrepreneurs should be an integral part of the services offered by support agencies and all entrepreneurs associated with the support agencies and/or government bodies should be encouraged to participate.
Entrepreneurs of an ethnic origin should be encouraged to join local business associations like the Chambers of Commerce or the SMILE organisation. This can be facilitated by the support agencies in the region, through inviting representatives from these organisations to attend seminars being held by the support agencies.