A LEARNING EXPERIENCE FOR ZIMBABWE COMMUNITY GROUPS IN THE UK
Tuesday, September 8, 2009 at 12:23pm
How to cut it: setting up a hairdressing business in Romania Yusuf
Hamad,Businessman,Bucharest, Romania.Yusuf Hamad considers himself to be a Romanian. He first came to Bucharest, Romania 17 years ago from Turkey. In 1992 he created his first company: ACOMA Beauty, a hairdressing salon. He finally obtained his Romanian citizenship after five years of living in Romania and after taking a “quite difficult exam”, he says almost laughing. He first created his hairdressing salon in a studio flat with just one member of staff. He continually trained his employee in order to keep pace with the increasing modern demands of the styling market. Yusuf says that in 1992 there weren’t so many laws and of course so many taxes – in Romania almost all the national institutions were created in that time or were reorganizing themselves. “There was a very big difference from what is happening now, when we have so many taxes, ones that I can understand, but some others that I really don’t see the rational explanation for”. Yusuf continued his business with only one employee for 3 years and after that he made the decision to hire one more person and because of the customers’ increasingly demands, hired one further person. Yusuf saw that in order to further develop his successful hairdresser’s business, he would need a bank loan to buy equipment, specific furniture and to move to another headquarters. He took two loans, one for a new headquarters and another one for equipment and furniture. “At that time the interest was quite good, but now because of the economic crisis it is very difficult for an entrepreneur to get credit from the bank, as the interest has gone up too high and is unaffordable for the majority of the SMEs [Small and Medium Enterprises]”. With the funds he’d borrowed from the bank, Yusuf bought a very nice apartment, arranged it and employed 15 people. He currently has two hairdressing salons: one in an apartment with 15 people that work on shifts and another salon in a studio with two staff members. He still keeps in touch with his family from Turkey and visits them every year with “my beautiful Romanian wife and my two wonderful children”, says Yousuf smiling.Yusuf Hamad considers himself a very lucky person, as when he first came to Romania, he didn’t know what he was going to do, but with the help of some friends he managed to create his first company. Now he is one of the thousands of successful immigrant entrepreneurs from Romania and he is very satisfied with his professional and personal life feeling like a “Turkish-Romanian” in Romania. Compiled by Emilia Stanescu, Institute for Small and Medium Sized Enterprises, Romania --------------------------------------------------------------------------------
Spotlight on... New migrants & entrepreneurship in Europe All successful business start-ups require energy, innovation and hard work. But for migrant entrepreneurs, many other factors also affect their ability to get enterprises off the ground. The shifting political and financial context, including the expansion of the European Union (EU), the emergence of new migration patterns and the international economic downturn, demand a fresh look at the challenges facing new migrant enterprises. Over the past century, businesses set up by migrant communities have made an increasingly substantial contribution to many national economies across Europe. States with significant ethnic minority populations, such as the UK, Germany and Sweden, record a high level of entrepreneurial activity within these communities and a resulting contribution to national profit. In the UK ethnic minorities are estimated to be 60% more likely to start their own business than the rest of the population (with those of Bangladeshi and Pakistani origin leading the way), and such businesses contribute approximately £15 billion to the British economy every year. Migrant-led businesses can range from community-based initiatives with minimal start-up costs and low economies of scale, to international corporations with high turnover and staff. Many play a significant role in sharpening countries’ competitive edge, shaping industries and creating jobs. New research from the UK-based Work Foundation identifies immigrant entrepreneurs as critical in the development of the international ‘knowledge economy’, sharing expertise, skills and ideas across borders. Many businesses founded by migrants tap into international markets, supporting technological and intellectual developments as a result. The context for migrant-led entrepreneurialism in Europe has changed significantly in recent years as a result of changing geo-political circumstances and diverse migration flows. Following the expansion of the European Union in 2004 and 2007 to a further twelve member states, inter-EU movement and the potential for business development across borders has been boosted. Many Eastern European countries such as Romania and Poland have now become significant ‘sending countries’ for people now able to exercise their right to self-employment across the EU. Numbers of refugees and economic migrants moving from countries within Africa and the Middle East to the European Union have also substantially increased since the early 1990s. The increasing diversity of migrant communities living in Europe means that the business development patterns and support needs of these communities are highly differentiated. In particular, although recent migration flows have already made a significant contribution to national economies, there is still a broad absence of dedicated research into the needs of new migrant communities in starting up businesses.Immigrants are often referred to as natural and ‘self-selecting’ entrepreneurs, demonstrated by their ability to take risks by moving abroad. On the positive side, starting up a business can increase people’s confidence, sense of belonging and self-esteem in a new country. Some migrants choose to start their own enterprise as an alternative to getting past the perceived or actual obstacles to employment in the mainstream job market. But the success of new migrants in the European business world is by no means a given, as substantial barriers can stand in the way of getting an enterprise off the ground. Low levels of knowledge about the local culture and language, for example, can limit migrants’ ability to navigate the business environment and particularly in getting through the ‘red tape’ associated with start-ups. Low self-esteem can also be inhibitive, particularly for refugees likely to have experienced trauma, or those migrants facing the insecurity of short-term immigration status. Being a new arrival can also make it more difficult to secure loans from banks and other lenders. For some minority communities, securing mainstream funding can also be affected by cultural and religious beliefs, for example the banking issues for many Muslims arising from the Islamic prohibition on lending money for interest. Wider migrant communities can be instrumental in shaping new businesses, the sector they are in, and their chances of success. Where community entrepreneurship is already thriving, financial or institutional support may available to boost new initiatives. But immigrant-led businesses can suffer by being overly reliant on existing social networks for financial support and labour. There is a risk that start-ups which are embedded within local communities can become aimed towards a narrow market with little mainstream appeal, and/or dominated by local politics.New immigration policies can also impact on new migrants’ ability and willingness to take the risk of starting up a business – an issue which has been better-researched across the Atlantic. Recent findings from the Venture Capital Association found that more than two-thirds of immigrant entrepreneurs surveyed in the USA felt that immigration policies, making long-term settlement there more difficult, had held them back in starting up their own business. People are unlikely to embark upon the investment needed to build a new enterprise unless they are confident of their future ability to stay in that country. Moves by many European governments to restrict the possibilities for long-term settlement of migrants are likely to increase the barriers for new would-be entrepreneurs.Targeted business support and advice for new arrivals to European countries can play a crucial role in building confidence and skills, and is even more valuable within unstable economic times. In the UK, enterprise consortia such as the Minority Ethnic Enterprise Centre of Excellence (MEECOE) report that there is a particular lack of targeted information and support for business start-ups aimed at diverse migrant communities, despite the government establishment in 2000 of an ‘Ethnic Minority Task Force’. In Ireland, where the ‘Celtic boom’ of the 1990s drew an unprecedented inflow of economic migrants, a number of targeted micro-financing initiatives and training packages for recent migrants have been developed over the past five years.Strategic efforts to target support towards the diverse interests and needs of burgeoning migrant entrepreneurs in Europe will require a much more substantial evidence-base than currently exists. Building and sustaining collaborative relationships between migrant communities, business enterprise support agencies, private companies and local governments will be critical in order to build a better picture of business activity among these communities, and to develop flexible and targeted strategies to meet their needs.EU-IMMINENTproject update... EU-IMMINENT project team, April 2009, Dublin Interested in online resources for business start-ups? The EU-IMMINENT (‘Immigrants into Entrepreneurship’) project is now underway in developing an online training resource for immigrants wishing to start up a business in one of five European Union countries: UK, Ireland, Germany, Poland and Romania. The project was launched in October 2008 and will run for a total of two years, during which the team will devise and compile an online training programme and exercises for potential entrepreneurs. Drawing on materials developed previously by previous EU-funded programmes (EMERGE and Entre-Pass), this project aims to address the particular needs of migrants in getting a new business off the ground. It will directly complement face-to-face classroom training packages, providing additional support in compiling business plans, networking strategies and other skills.The project partnership draws together organisations from the voluntary sector, social economy agencies and national enterprise institutions from the five EU project countries. Launched in October 2008, the project partners have collectively completed a pilot needs analysis among migrant communities in the participating countries through focus groups and questionnaires. Data has been collected from a total of 120 participants through needs analysis questionnaires in the partner countries, giving an indication of areas where particular support may be needed by migrant communities. Needs varied depending on participating countries, but overall the main areas where a need for targeted support was indicated include accessing business finance, preparation of effective business plans, sales and marketing techniques for new businesses and business networking.