Extended episode on YouTube
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This episode of the csuite podcast was produced in partnership with the British Business Bank and the international management consulting firm Oliver Wyman, with the aim of discussing a new report that they have published called ‘Alone: Together Entrepreneurship and Diversity in the UK’, which looks at the persistent disparities that black business owners and those from Asian and other ethnic minority backgrounds face in business outcomes with systemic disadvantage playing a key role.
Russell Goldsmith was joined by three BAME founders, to discuss the findings of the report and share their own experiences of raising finances to start their businesses, Michaela Alexander, Keshav Bhatt and Flavilla Fongang.
The podcast also features Alice Hu Wagner, Managing Director for Strategy, Economics and Business Development at the British Business Bank, and Shalom Lloyd, Founder of the Naturally Tribal Skincare. They both took part in the British Business Bank’s live online event that launched the report.
According to the Department for Business, Energy and Industrial Strategy, the UK has 5.9m small and medium sized businesses, started and run by many entrepreneurs, from tech start-ups to local restaurants. Together, these SMEs generate over £2.2 trillion of revenue annually. This report is based on the findings of a survey that took place between April and June, 2020 of over 3700 people who are either aspiring entrepreneurs or running a business that they started themselves.
To start, entrepreneur and former investor on BBC’s Dragons Den, Piers Linney, who is also a non-executive director of the British Business Bank, was asked why the British Business Bank commissioned the report and what some of the top their level findings were. He said that if you don’t know much about the bank, it’s the Government Development Bank. It’s become pretty well-known recently, because it’s been behind lots of the coronavirus related support schemes for small businesses. Piers said that one of the key things a bank is, it’s got lots of different objectives, but one is improving access to finance for small businesses and in terms of making policy decisions and designing your programs, you need to understand what the issues are and who has an issue. So British Business Bank are working with Oliver Wyman, an expert consultancy, and have conducted this research, and it’s focused on BAME (Black, Asian and Minority Ethnic people) and it looked at that particular community and said, what are your outcomes in terms of being an entrepreneur and what are the outcomes in business compared to your white counterparts. So, it is seminal, no one’s really done this before and it’s important we have the data so you can have a conversation.
Piers said to imagine you are in a 100-metre race, you’ve done all the same prep as your counterparts, you’re just as good, have all the same gear. You get to the start of the race and you realise you’re starting 20 meters back, because your socioeconomic background makes it a bit more difficult. The distance you need to travel to be successful, however we define that, tends to be longer. You then realise actually you’re running the hurdles race and only some of these hurdles are visible, there are some you are not even aware of yet. That’s the race you’re running, this is not about favouritism. If you’re a woman, it’s even worse, there are more hurdles and you’re potentially starting even further back. He said, what we have to do is try and work out what all those hurdles are, because some of them are invisible, they are a bit intangible. What the research does is show you there’s structural and there is a systemic issue. The good news is black, Asian, minority ethnic entrepreneurs start a number of businesses. However, they’re not succeeding. And why is that? That’s what we need to work out.
According to the report, 28% of black business owners fail to make a profit compared to just 16% of white business owners. We then asked Piers, why he thinks there’s such a difference in these findings. He said, if you look at it generically, profit’s a measure of success. So, one of the things the research found was that BAME entrepreneurs don’t seem to fulfil their aspirations. Now, they may have different aspirations, a person might aspire to be able to pay the rent, somebody might want a yacht. But the point is, it’s a difficult measure of profit sometimes because in a small business, your cash flow can be taken out for many different reasons, what you invested in, and your salary potentially as well. So, it’s a difficult measure profit, but overall, on mass, over a big sample, that’s a measure of success. Piers said therefore, turnover tends to be lower, profits tend to be lower.
People don’t meet their aspirations; however you define that. So overall, no matter how you measure it, the outcome for black and Asian minority ethnic entrepreneurs is worse than their white counterparts. He said, you’ve got to break it down because BAME’s a real catch all. Piers said his experience is African black, there’s black Caribbean, which is what he is – he said he is I’m half Barbadian, half English. You’ve got women as well, it can be much more difficult if you’re black Caribbean, actually, than it can be if you’re black African or if you’re Asian and across the board, your own socio economic or ethnic group is even harder when you’re a woman.
The report also stated that 37% of black female business owners and 36% of female business owners from Asian and other ethnic minority backgrounds report that they’re making no profit last year compared to just 15% of white female business owners.
Piers said that if you’re a woman, being generic, it can be childcare, it can be caring for relatives’ children, so that can have an impact on you as well. The issue is, is that what we need to do the work on now is find what the causes are. He said the research is clear on the fact there’s an issue, but what are the causes. He said the big ones are, access to capital, social capital, and financial capital. Eventually what we really want, this is not a zero-sum game policy making, the pie should be much bigger. We’re leaving tens of billions on the table in terms of the wealth of our nation, which means all of us and tax revenues by not connecting talent and ambition with opportunity.
Michaela, Keshav and Flavilla then introduced their own businesses, and explained what motivated them to start on their own, and they raised their finances at the start.
Michaela Alexander began by introducing her book series, Miles and Mia. She explained that she is the Founder and author of Miles and Mia Children’s Book Series, and her children, Miles and Mia, are her inspiration for creating the book.
Michaela’s background is in creative events. She used to manage nightclubs. She said she used to buy books from abroad that she thought that she was tackling the lack of diversity issue and her children used to laugh at the books. So as a kind of joke, very angrily, she said that she would create a book with black characters that they would love, and she did just that in 2016. Due to the success of the business and customer feedback from book orders and sales, that’s made her want to grow the business and create another book and launch out, the dream is to have a cartoon. Michaela said in terms of finances, she was really fortunate. She knew what she wanted to do with her business, so she created her business plan and spent two years doing the research. She had invested financially as much as she could of her own money, and then she needed funding to do the bigger cost. So, she said she went to The Start-Up Loans, where they have a whole package, including mentoring support. Her requirement was mainly the finance, but she did really benefit from the mentoring. She initially got just under £10,000 from them and that was in 2016. She said it literally just covered her costs to get the books out there.
Keshav then explained that he runs two businesses. One is a social enterprise, called Revolution Hive, that works with disadvantaged young people to equip them for life beyond the classroom by teaching them the personal, social and global topics that you are not taught in curriculum, such as gender equality, sex and relationships, politics, racism, etc., managing your money.
The second business Keshav runs is a coaching business where he creates content for free on YouTube, helping people to develop their routines, habits and get practical self-improvement ideas for free. So, those are two main things that I do currently. Keshav explained initially.
For Revolution Hive, Keshav got a £2,500 loan, which he intended to use on his website, but because of the really great mentorship that he said he got, he was able to clarify a lot of his ideas.
Flavilla Fongang then began to explain her journey. She said that she is a bit of a serial entrepreneur. She was born in Paris, is African and proud. She decided to come to London 18 years ago. She didn’t speak a word of English and was a bit of a study freak. She left university with two degrees and one in international business, She worked for an oil and gas company, got hired and followed her passion for fashion and decided to become a fashion consultant. Flavilla said this naturally led her to create a fashion academy, an online fashion academy to train people to start their own fashion career. She then created a branding and marketing agency – 3 Colours Rule, and from that point, kept evolving. She has a podcast called Tech Brains talk, an online coaching program, and is launching a book, ’99 Strategies to Get Customers’.
When asked how they each promoted their businesses, Flavilla said that she has always used the fact that she was a minority as a strength and wished more people would do that. So, the fact that she is French, the fact she was different, the fact she was a woman, she’s seen this as a power and therefore used that to her advantage. She realised that if she want to stand out as a marketer, she had to develop her own methods and personal brand. That’s also why she also founded TLA – Black Women in Tech. Michaela said that social media has been her main method of promotion. She said when she started, the start-up loan only covered the cost to get the book printed and up and running, but it didn’t leave any marketing whatsoever. She had to really be creative. She didn’t have a big backing and support from a big publisher behind her or an agent. Miles and Mia have been involved in the process from the beginning. So, for example, they do a lot of modelling and she has been able to tie that in. She has a lot of supporters that have seen Mia in a model campaign and have messaged them or taken photos and shared it. Social media is her main source of promotion. However, she said that things are changing with social media now, as you are having to pay for a lot more things. She has also been fortunate to have a lot of celebrity endorsements. When a celebrity buys the book or they tweet about it or they post about it, she normally get lots of engagement and sales that way. One example she gave was the rapper Giggs, who she said has been very supportive of the book all the way through. From when he first got it, to now his daughter reads it independently. However, she added that the biggest rewards, other than celebrities, is the children, children that she doesn’t know, from all over the world, even nonblack, that are loving the book and want to read it over and over again. To this day, some will still say it’s their favourite book.
Keshav described himself as Rogue when it came to promotion. At the beginning, he said he would just go into schools and not care if they paid him – he just wanted to be in a room and speaking to some kids. He said it’s kind of like what Michaela said in terms of sweat equity, but also social proof, because suddenly when you’ve got numbers next to your name, and you’ve got a celebrity endorsement, people really believe in what you do a bit more. Keshav explained that he would go in and create amazing pictures and have all these flyers and do all the stuff to try and put himself in a good stead. He would get paid around £60 for a day’s work, working with hundreds of young people and just tiring himself out. But he knew that the product that he was offering, it’s an experience, he just needed one chance. He used to say, “I don’t care who the young people are, just give me an hour, half an hour, and trust me, by the time that I’m done, you will want us back in”. One of the things that Keshav is really proud of with his team is that They always get called back in. He explained that the work that Revolution Hive does gets classed under PSHE, which is seen as a sideshow, an aside subject, that you do in a form period while you’re busy. Keshav said it should be the main fulcrum of curriculum, character education should be at the centre of our education system, rather than just on the fringes.
Michaela said she could relate to Keshav. She said that she has done so many book readings, where she just wanted to get in and do it for free. She’s limited to what she can do because she’s still got to run the household and pay the bills. So, for her, her dream would be, if she had the investment, that she could literally just go into schools and do it all for free and it would just cover her cost.
Keshav said that he was so willing to do it for free, but then had to realise, you need to put a number next to it, because you then create that customer- buyer relationship and you learn more. When asked her views on the findings that higher percentage of black business owners fail to make a profit compared to white business owners, Flavilla said she wasn’t surprised. She said, it’s always very painful, her journey is different because she came from Paris. People think ‘oh you come from, Paris, you must have everything.’ But she said she was raised in a family with one mother and five children, she had one pair of shoes per year and she only came to the UK because she had a grant that was given by the French government.
Flavilla explained, even when she started her business, she never took the initiative to actually ask for a loan – she realised that she had to do it by herself, and that never came to mind. She said, something needs to change because the less advantage you have, the more support you also require to help you believe in your ideas. We’ve all invested a lot of our time for free, quite often we forget that we also need to get paid for it. At some point, you have to stop and do something about it, but from her point of view, she tries to think about her own journey. The importance of looking outside her circle as well because she didn’t just look at people who were where she wanted to be and figure out how they managed to get there. Everybody has their own journey, it’s important to see what they’ve done to get there and how you can re balance that, that comes from additional support. You can look for grants or loans, which are sometimes required, often required to achieve our business goals, and the reason why a lot of businesses fail is not because they’re not good, it’s because they’ve run out of cash flow, and obviously lack of understanding how to sell and get customers.
Michaela agreed, and said just like Flavilla, she wasn’t surprised, disappointed, but not surprised by the report findings. She said she ticks all of the boxes – single mom, lives in a tough borough, London is very competitive, where she’s a single parent and working, low-income part time, had less money to start up with, prior to launch. So, there’s lots of different factors. She also thinks age as well has an effect on it. She added that it is time that things changed, she wants the respect and a level playing field. Hopefully now things like this report will start in conversation and things will change.
Keshav agreed with what Flavilla and Michaela both said. He said he felt that what Flavilla said about the less advantage you have, the more support you need is really important. He said, the stats don’t surprise him, the one that really stuck with him was around seeing the specific turnover data and the profits, because the social inequality and the structures of inequality are there, but you don’t know in a quantifiable way what the difference is. It made him think, if he was white, middle class, from Suffolk, would he be earning £50k to £80k? Flavilla agreed with Michaela, that being black is difficult, but being a woman is another level of difficulty. You not only have to deal with these invisible barriers, but also the fact that as a woman, you have to deal with things such as the subject of the Me Too movement. Flavilla said, from her point of view as well, generally, black women don’t age, or they look younger. So, a number of times she’s been sitting in a board meeting, full of white men in their fifties and someone will say, is she in the right room? Yes! So, she said she plays with that, She thinks she has always loved people to underestimate her and has used that to her advantage so she can better surprise them. She always finds that very playful. She said the advice she would always give to people is, let them think whatever they want of you, and then use that to your advantage to then surprise them the best. She thinks she’s always let people believe what they wanted, but when she starts talking, you have to take her seriously. Yes, it is difficult, but it’s about how you position and use your differences, either as a strength or as a weakness. She’s used the fact she’s a woman, stilettos on, red suit on, you’re going to see her and you’re going to remember her. That’s what she wanted, she’s just tired of being the exception.
Shalom Lloyd, Founder of the Naturally Tribal Skincare, spoke about the ‘Double Disadvantage’ of having an ethnic minority background, and being a female founder. She said: “that up to £250bn could be added to the UK economy if women started and scaled up their business at the same rate as men. That is staggering. I acknowledge that a lot is being done. Women are rising, although not as fast enough as our male counterparts”. Shalom said, her personal opinion and personal experience here, is the report also says black women are twenty eight percent of the black entrepreneurs in the UK, but they’re also 50% of the entire black working population. She continued: “I think the cultural demands on black women balancing, running the business and cultural expectation, there is a pull and a block. There’s a pull at home, sometimes it’s cultural, patriarchal culture, raising the family and the caring role that the report highlights. There is the block, or the perceived block, being accepted as a black woman in this business world during that critical scale up phase, if we ask, we won’t get, because historically that’s been the case. So, creating a limiting belief that my voice has not been heard in those financial institutions at that much needed scale up phase. The entrepreneur gene is there, women in general, and in this case, black women are fantastic entrepreneurs and businesswomen, but there is fear. Fear that I have personally experienced when entering into the business world as well. I think for me, my success in the two businesses I have today has been because I’ve become used to breaking barriers and breaking boundaries to the point where I don’t see them anymore. So, we need to work with female entrepreneurs, black women, to actually support, to get everyone to that point where they get used to breaking boundaries and barriers to the point where we all stop seeing them.”
Listening to what Shalom said, Michaela said that’s the kind of support she is looking for. She said that Shalom is wise, knowledgeable, not scared. Michaela said that she needs someone like her that understands and supports her vision and where she wants to go with the business. Mentoring ,as much as financial, those are two areas of what she is looking for and that Shalom is the kind of person who really is fighting and rooting for women led businesses like hers.
Flavilla then explained more about Tech London Advocates, and what her particular role there. She said it is a large group, with a lot of subgroups in tech focus and so forth. There was no group specifically for black women. There was a group for women and a group for black, but not black women. She said the reason why she created the group is, because she’s not scared of being in a room and saying what she thinks and changing the way things are. She knew there were so many amazing black women out there who were just scattered, sometimes what we need is being able to be together so we can uplift one another. She came from Paris and on TV there was no black people, when she arrived in London, she I was shocked when she first watched EastEnders, and thought, wow, anybody can be successful. That changed her perception in terms of what she believed she could achieve, that’s when she realised the more presentation of black women we see, the more they can uplift one another and the more they can achieve.
Another barrier that the report highlighted, was if you are starting your own business journey from a low-income household. Alice Hu Wagner, Managing Director for Strategy and Economics and Business and Development at the British Business Bank, spoke about this topic at the live online event. She said, a lot of things are co-linear, one thing causes another. So, money really makes a difference, regardless of what colour you are. If your household income is less than £20,000 a year, then spending £5,000 in terms of getting your business started is a much bigger percentage of your disposable income than if you have a household income of over £75,000 a year. Of course, that kind of access to resources, or the ability, for example, to fail multiple times, to spend £5,000 on an idea that doesn’t work out. If you’re from a richer household and you can keep on going, you can fail and fail again until you succeed, but for those who have fewer economic resources, that’s just not possible. You have one shot and that’s pretty much it, particularly if it affects your credit rating. We know that minority communities on average tend to have lower household incomes, women tend to have lower household incomes and assets. So, these are factors that conflate with each other and make things worse.
Keshav said that definitely makes a lot of sense. He said a lot of businesses fail because they just don’t have enough cash flow to keep them going. Keshav then linked back to Michaela’s story of having £10,000 to buy the initial set of books so she could get herself out there. He said, that’s not a problem with her marketing strategy, with the product or the way she’s doing anything. It’s just literally, she needed a certain amount of cash to get her to the point where she can break even and make a profit. He added that if you face a multitude especially of disadvantages, it’s going to be a lot harder. Keshav then agreed with Piers’ analogy about running 100metre race, but you’re starting 20 blocks behind and it’s a hurdle race and you didn’t even know that. He said, sometimes he thinks there’s a toxic positivity out there in the entrepreneurship world of, it’s all about hustle, it’s all about hard work and if you didn’t work hard enough, then it’s your own fault and that’s why you didn’t succeed. He said that actually, even him working hard vs. Michaela working hard as a single, black female entrepreneur, it’s different. He said he has different advantages and disadvantages, it’s really important to acknowledge that, otherwise we can’t level that playing field and we know the structural inequalities exist. Unless we address the causes and we have policies that redress that balance, you’ll continue to see that. Keshav then explained an example he came across two years ago. He said, he was talking to an entrepreneur that he met at a networking event, she was white from a very upper middle-class background, and she runs a coffee shop in the thick of central London. He thought, she’s younger than him and he didn’t get the sense that she had that business acumen, so he was curious, ‘how do you launch a coffee shop in central London and just afford the rent?’ He just wanted to learn, maybe he was missing something. So, she explained, she was at dinner and her dad had a friend over, he was a very wealthy property investor who was coming to the end of his career. He felt really guilty that he’d never given back to society, so he decided, ‘I’ve got this property and it’s just sitting there in central London in Aldgate’. He wanted to invest it into a young person, so he gave her the cash and paid for it. Keshav then said it literally blew his mind, walking home her remembered calling his family and friends and saying, could you just imagine, if you were born in a different set of circumstances, you could have been the one on that table. Any one of us could have been. We would have had a door opened, a shortcut that it might take your entire lifetime of working as hard as you can to put your children at that step. Just by proxy and household income, and the people you know, it gives you so many benefits. Another key issue highlighted in the report was social capital. Shalom Lloyd explained exactly what social capital is, she said, “your social capital is basically your network. So, if you limit yourself to a community where you feel safe, your network becomes limited, your social capital becomes limited. And if it’s limited, there will be no diverse thinking to draw on. Being on this panel, for example, I suddenly expand my social capital. So it’s about tapping into and putting yourself in a position where you’re able to tap into different experience and different expertise that will help you grow your business and obtain mentors, for example, role models in the process”.
Flavilla began to explain how she expanded her social capital, when moving to England from France. She said, she didn’t know social capital was actually a thing, she just understood from the start that if she wanted to make it and thrive in this new environment that she’s not familiar with, she had to do things differently. The first thing she did, is what most people do when they travel or go to another country, they stay among people who look like them or speak the same language. So, what she did then was to actually avoid any French people, because if she was speaking among French people, she would never improve her English. She therefore put herself in the very uncomfortable situation where she would say stupid things such as “I’m a great cooker”, instead of “I’m a great cook” and people would laugh. But that’s how she was learning every day, she realised that the more she did that, the more she was expanding her social circle, her social capital. She still uses exactly the same technique, when she went from being an employee to starting her own business, the first thing she did was went and registered at the London Chamber of Commerce so she could meet a network of different people. Again, when she started working in a tech place, she registered in the tech environment, Tech UK, because she understood the importance of having people who come from extended network from where she is. The mantra of TLA – Black Women in Tech is, “get comfortable getting uncomfortable”. If you always do the same thing, always hang out around the same people, you will never expand opportunities. The more you do that, you will see that you achieve a lot of great things. Flavilla continued that people as her how she gets to work with clients such as Facebook or Deloitte, and she said it’s because of her network – she doesn’t think she is better than any other marketers out there, it’s just because of who she knows, that’s why it takes her to great places.
Keshav shared a story about when he received a scholarship of some positive discrimination, if you will. He went on a week-long training for social activists and campaigners where they were taught by people from Chang.org and Greenpeace, big organisations who are doing really well, and are big campaigners. His place was funded by the Shami Chakrabarti scholarship. He said that he didn’t really know who she was at the time, he just applied and got in under this BME bracket. On the last day he remembered those who had received the scholarship being taken to another room, and they got to sit and have a coffee with her and ask any questions. He said that she gave them a little pep talk to say, “you know, you can do this, and why it’s important the work that we were doing”. He remembered at the time that he felt really guilty that, what did he do to earn the right to be in that room, he was so used to this idea that he has in his culture, that everything has to be earned through hard work. That is important, but you also have to acknowledge disadvantage, but he didn’t think of himself as a disadvantaged person, even though he fitted some of the stats and reports. So he said this to her about just feeling really uncomfortable sitting there and that he didn’t understand why only they were getting to talk to her, why can’t she talk to everyone?. All his friends were back in that other room, they were all white, but he had made lifelong friends and just didn’t get why. She then said to him, “what you’ve got to understand is, that’s true and that’s fair and it’s very noble of you, but this is not about you. There’s going to be some opportunities that you are applicable for, they’re not for you, they’re for the people that you represent, because you are from a background and from a culture that is underrepresented and you bring ideas and thoughts and new ways of looking at things”.
When asked what advice they would give to any aspiring entrepreneurs, Flavilla began by saying, feel the fear and do it anyway. She said, the first time you do something that you’ve never done before, you’ll be scared, but it will be super exciting and you realise that your mind is really good at making it worse than it actually is. Embrace it – every journey of an entrepreneur is full of hurdles, you have to understand that you either win, or you would learn your best lessons. Think about all the most successful entrepreneurs around the world, they made loads of big, expensive mistakes. If you don’t make any mistakes, it means that you’re not trying hard enough. So, go out there and try your best, try to delegate when you can and understand the importance of having a great team, because you can’t do everything by yourself.
Michaela said it would be to do your market research and don’t stop researching. Believe in yourself because there’ll be so many people saying don’t do it this way or change your idea. You need to really believe in your business model and never give up. Her advice to non-black people generally, is to listen and educate yourself.
Keshav said that his biggest piece of advice is stop looking at your business as your baby and see yourself as its baby. He said, every business exists to serve its customers and the needs of its customers. That was of something that was really important for him to learn, as the founder, often actually you can get in the way of the growth and development of your own business. You have to continually evolve and adapt your skill set to what the business needs. Five years down the road from when he first started, what was required of him is a CEO of a small team is very different to what was required at the beginning. He always sees himself as the janitor, but also, the person in the executive boardroom. He knows that if he needs to learn how to write funding bids, he’ll do that and adapt his skill set. He fundamentally appreciates that even if you’re good at baking cakes, running a cake business is very different, and you need a different skill set.