Ethnic minorities lead capital's business boom
Thursday, 13 October 2005
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Most young entrepreneurs starting businesses in London are from ethnic minorities although they account for less than a third of the capital's population.
Research shows that more than half of new businesses in London are launched by young people from other parts of the UK or overseas.
A study for the London Development Agency (LDA) published today underlines the contribution being made by ethnic minorities to the UK economy - small businesses account for half of the wealth and employment in the country. It also shows the important part played by role models such as the fashion designer Ozwald Boateng in encouraging young people from ethnic-minority backgrounds to enter business.
One in 20 of businesses in London is run by people under 30, according to the study. And it suggests that the percentage is growing, with nearly a sixth of enterprises in the capital being started by would-be Sir Richard Bransons.
Of the 60,000 young entrepreneurs in London, 55 per cent are non-white, according to research carried out for the LDA by the University of Glasgow.
This is despite the fact that non-whites make up only 30 per cent of London's population and young people from ethnic minority backgrounds are more likely to encounter problems that threaten a business before it can get off the ground.
Four in 10 white entrepreneurs said that they had experienced difficulty raising finance, finding premises or being taken seriously compared with 62 per cent of non-whites.
The study, the most comprehensive analysis yet of the explosion in London's young entrepreneur culture, suggests that whether budding millionaires are black or white, they are far more likely to be male than female. A third of all women felt their gender made it harder for them to launch a business. Even attending university did little to close this "gender gap", with only 36 per cent of women saying that they would like to own a business compared with 58 per cent of men.
Family, the study suggests, is a major influence on whether young people strike out on their own and how successful they are. Six in 10 entrepreneurs come from a family in which at least one parent runs his or her business. Successful entrepreneurial parents were also relied upon for funding, with 70 per cent of start-ups financed from personal savings but fewer than three in 10 relying on bank loans.
The report also warns of a growing "entrepreneurial gap" between poorer and more affluent parts of London, with pupils in the most deprived wards three times less likely to obtain work experience than students in the least deprived.
Marc Stephens, the LDA's director of business and skills, said that young entrepreneurs faced some "key barriers" as a result of being disadvantaged through their education. These obstacles had to be addressed, he said.
Ken Livingstone, the Mayor of London, added: "It is clear that enterprise opportunities are closed off to a number of young Londoners, with women and young people from deprived areas much less likely to have the skills, confidence and experience to pursue a business idea."
Publication of the research comes in the same week as the CBI released figures showing that businesses were being started in London at twice the rate of other parts of the UK. Since 1997 there has been a 16 per cent increase in the number of new businesses in London compared with 5 per cent in Scotland and just 2 per cent in Wales.
Jordan Kensington, founder of Invincible Media: 'I respect people like Branson'
Jordan Kensington launched Invincible Media, his urban music and lifestyle business, seven years ago with a £5,000 grant from the Prince's Trust in his back pocket and a burning ambition in his heart.
The company employs 12 people and turns over £2.5m a year. What began as a small magazine dedicated to the promotion of British music around the world has spawned a radio station, a television channel and an events company which organises, among other things, the annual Urban Music Awards.
Mr Kensington's entrepreneurial spirit took a knock a year ago when a female bystander was shot in the chest outside the event at the Barbican in London. She survived, and the gunman, Linton Ambursley, was jailed for 12 years last week for wounding with intent.
Sitting in his office in Hackney, Mr Kensington insists the episode had no impact financially but admits it had affected morale. "When things like that happen, you have to move on and become a stronger person," he said.
The gang involved in the attack had no link to the awards and Invincible plays a prominent role in anti-gun campaigns. Nevertheless, Mr Kensington has learnt his lesson. This year's awards, which take place next month, are at a secret location and entry is by invitation only.
If you had to draw a profile of the typical young entrepreneur finding his way in the capital, Mr Kensington would fit it perfectly. He is black, male, university-educated (he has a law degree from London South Bank University) and in his "early 20s".
Like many young entrepreneurs, Mr Kensington eschewed bank loans, financing his business by raising £100,000 from the sale of his first property. "From the very start, I decided it would be my business and would never have a partner," he said. "Hopefully, I will never sell up either. I respect people like Sir Richard Branson because he owns a massive share in his business. His personality makes the business but he is so humble."
