Discussions
Are you using furlough to plan your own business? You should be.
If you are reading this, there is a chance that you are one of the ten million people in the UK currently on furlough. But have you thought about what is really going to happen when the furlough scheme comes to an end?
Whilst we commonly refer to it as furlough, under the Coronavirus Jobs Retention Scheme, workers placed on leave have been able to receive 80% of their pay, up to a maximum of £2,500 a month. But the furlough scheme is set to end in October and that could mean a winter of discontent for many households across Britain.
So the question those on furlough should be asking is, should I be using this opportunity to start my own business? We look at five reasons why you should be using the downtime whilst furloughed to plan your own startup business.
1. Your job is not guaranteed after furlough ends
There is no getting away from this. When the Coronavirus Jobs Retention Scheme comes to an end, there will be millions of redundancies. It is estimated that 1 in 10 on furlough will be hit with redundancy at the end of the furlough period. How safe is your job? In fact, how safe is the company you work for?. Most industries in the UK have taken a huge hit and in many, the furlough scheme is simply postponing the inevitable. You need to look no further than the tourism industry or your local high street. The end of furlough and effects of Brexit could be devastating for big business.
2. There is no better time to follow your dreams
You have the time and if you are reading this, your mind is already half way there. Many of you would have dreamt of running our own business but life has gotten in the way. As of August 2, 2020, approximately 9.6 million jobs, from 1.2 million different employers are currently on the furlough scheme. That is a lot of downtime and the perfect time to follow your dreams. Why would you not utilise this moment in time to do what you really want to do?
3. Startup costs are at an all-time low
Starting up your first business in the middle of a downturn and on furlough might sound crazy but there are plenty opportunities that you can use to your advantage. Many of the services and products that startups will often use such as website hosting, CRM and marketing automation tools have extended trials and sign-up discounts. You will also find negotiating prices and terms with suppliers easier. Read our guide to ‘looking for opportunities during the UK’s shutdown‘.
4. Being on furlough doesn’t stop the hustle
You should already know that you can work somewhere else whilst on furlough. This is dependent on if your contract with your current employer lets you. Getting a new job won’t affect your furlough pay. The same applies for starting a new business whilst on furlough. We recommend checking your individual contract but there are currently no laws or stipulations that stop you from putting on your entrepreneurial hat whilst on furlough.
5. You owe it to yourself and your future
More than anything, you owe it to yourself to try and launch your own business if you have not tried before. You’ll have more freedom and independence working for yourself after the furlough period has come to an end. Just remember, many business icons started with an idea and opportunity that has changed the world. From Disney to Zuckerberg, and Bezos to Gates, all of them had ideas they built an empire around. You are full of ideas. Now get them out of your head.
Economic Impact
Community Pride and Representation
Black-owned businesses also help build community pride by providing goods and services that cater specifically to people from similar backgrounds or offer products that reflect their culture and heritage. For example, a black owned restaurant might serve dishes inspired by traditional foods from the Caribbean or a hair salon might specialise in natural hairstyles popular among West Africans. These types of services give people from similar backgrounds an opportunity to connect with one another while also celebrating their culture and identity in meaningful ways.
Cultural Preservation
Social Empowerment
The best way to create social change is through grassroots action —and supporting black-owned businesses is a great way to get involved in this type of advocacy. By investing your money into local businesses owned by people of color, you are sending a powerful message that you believe in their potential and value them as an integral part of our society. This kind of social empowerment can create ripple effects throughout entire communities, inspiring others to follow suit and invest in these businesses as well.
Job Creation in the Black Community
When small businesses succeed, they create jobs in their local communities —which is especially important when those communities have traditionally been left out or underserved by larger corporations or institutions. Investing in black-owned businesses helps ensure that more job opportunities are made available within these communities, helping residents find meaningful employment and giving them the opportunity to build financial stability and security for themselves and their families over time.
The Value of Black-Owned Businesses in the Black Community
Every workplace should be a safe and inclusive environment, free of discrimination and prejudice. Unfortunately, that isn’t always the case. Workplace racism is still an issue in the UK, and it has a significant effect on businesses. Let’s take a look at how workplace racism affects the UK economy and what employers can do to combat it.
The economic effects of workplace racism
Workplace racism can have far-reaching economic effects both for companies and for individuals. A study conducted by the Equality and Human Rights Commission (EHRC) found that workplace racism costs British businesses up to £24 billion each year, due largely to higher staff turnover rates, lower productivity, and under-utilization of talent. It also costs individuals—people who experience racial discrimination are more likely to suffer from stress or depression, leading to decreased job satisfaction and increased absences from work. This in turn leads to reduced productivity, which affects both businesses and employees alike.
What impact does racism have on black entrepreneurship
For many black entrepreneurs, this systemic racism has been a major driving force behind their decision to pursue entrepreneurship as an alternative to regular employment. Let’s take a look at how racism in the UK workplace is pushing black entrepreneurs to create their own opportunities.
In 2018, a report by the Equality and Human Rights Commission found that more than three-quarters of black employees had experienced or witnessed racial discrimination in their workplaces. This statistic should come as no surprise to anyone familiar with the history of institutionalized racism in Britain, however it does demonstrate the need for change.
These statistics certainly serve as motivation for many black entrepreneurs who feel that there are limited options for them within traditional employment structures. Not only are they more likely to experience racism, but they are also less likely to be hired or promoted due to unconscious bias and other forms of discrimination. As a result, many have turned to entrepreneurship as an alternative where they can be their own boss and create their own opportunities.
In the UK, minority communities are underrepresented in the business world. According to research conducted by the Institute for Fiscal Studies, only one percent of all businesses in the UK are owned by people from black and ethnic minorities – meaning that black-owned businesses are at a distinct disadvantage when it comes to competing against larger enterprises and gaining access to resources they need.
Mentorship is an essential tool that can help empower these minority business owners and provide them with the guidance they need to succeed in their respective fields. Here are some of the benefits of mentorship for black-owned businesses:
Access to Insights – By having a mentor who has already been through the process of establishing a successful business, entrepreneurs can gain valuable insight into best practices and strategies as well as having someone to talk with and lean on during challenging times. Mentors can also provide advice on navigating difficult legal or financial challenges and offer constructive feedback on ideas being pursued before they’re put into action.
Supportive Networks – A good mentor will introduce you to other influential contacts within your industry, creating opportunities for collaboration, additional funding, or even job placements or internships in which you could benefit from their extensive knowledge base. Networking with peers brings unique challenges but mentors often provide invaluable advice on how to approach it effectively.
Improved Confidence – It’s not uncommon for owners of small business or startups to feel overwhelmed by fear or self-doubt; this type of anxiety becomes more pronounced when navigating an industry heavily dominated by white/male professionals which is why many feel like having someone offering support can be extremely reassuring during this period – giving reassurance that everything is progressing as expected and providing encouragement when needed!
Mentorship provides much needed guidance, resources, connections and confidence that aspiring entrepreneurs need when starting out – especially those belonging to minority groups who are often kept at a disadvantage due to historical discrimination. Finding a mentor who has gone through similar milestones can be incredibly beneficial in helping navigate any obstacles encountered along the way!
The year 2023 is quickly approaching, and with it comes the looming prospect of a recession. For black business owners, this could mean that the progress made in recent years may be hampered or even reversed. As such, it’s important for black business owners to understand what this could mean for their businesses and how they can prepare for it.
What Does Recession Mean for Black Businesses?
Preparing Your Business for the 2023 Recession
How will a recession in 2023 impact black businesses?
The United Kingdom is home to a thriving black business community. In recent years, there has been a surge in the number of black-owned businesses in the UK, with many entrepreneurs taking advantage of the opportunities available to them. From fashion and beauty to food and drink, there are now more black-owned businesses than ever before.
In 2020, NatWest launched its Black Business Directory, which features over 100 UK-based black-owned businesses across a range of industries. This directory was created by George Oduro, Head of Commercial Partnerships at NatWest, as part of their commitment to supporting and promoting black entrepreneurship in the UK. The directory includes businesses such as Candour Beauty, Liha Beauty and SoulVisionary Jewellery – all of which have seen tremendous success since their launch.
Black business thrived during pandemic
The pandemic has had an impact on many small businesses in the UK but it has also provided an opportunity for some entrepreneurs to take advantage of new trends and technologies. For example, many black-owned businesses have embraced ecommerce platforms such as Shopify or WooCommerce to reach new customers online. This has enabled them to expand their customer base beyond their local area and tap into new markets around the world.
In addition to this, there are now several organisations dedicated to supporting black business owners in the UK. These include Black2Business UK – a definitive online source for all product and service providers from the African/Caribbean diaspora within the UK – and 5 Organisations Supporting Black Businesses in the UK – an initiative that provides resources and support for small business owners in need.
Finally, HSBC & UK Black Business Show recently released a list of 25 top black entrepreneurs to watch out for in 2022. This list includes Abubakar Salim MBE (founder of Afrocks), Andy Ayim MBE (founder of Nala’s Baby) and Andy Akinwolere (founder of Elephant & Bamboo). These entrepreneurs are leading the way when it comes to innovation and creativity within their respective industries – something that we should all be celebrating!
It’s clear that there is no shortage of inspiring stories coming out of the UK’s black business community right now – something that we should all be proud of! With more support from government initiatives such as NatWest’s Black Business Directory, we can only expect more success stories from these talented entrepreneurs in 2022 and beyond!
For a while, there has been a general misconception that black owned means cheap or free. As the black pound gets stronger and number of UK black owned businesses grow, we need to move away from the myth that black owned means cheap.
Pricing is a highly complex area for most black owned businesses. When a business owner gets it right, sales and profit flow, When a business owner gets it wrong, sales may continue to flow but profit can be lost and cash flow depleted. In the worse case scenario, it could cost you your business. The problem is more acute for startups and SMEs.
So how does a new or small black owned business get it right? What are the methods that can be deployed to help increase the likelihood of success?
Setting your pricing strategy: The important questions
When considering price planning, it’s important for black owned business to think more broadly than price. Let’s consider the questions which are important to consider before you decide on the right pricing strategy:
- Are you creating a new sector? Will you have a captive audience all to yourself?
- Who are your target audience? Are they price sensitive based on the their collective circumstances?
- Which products do they currently use or might they compare your offering with?
- What advantages/benefits do you offer over your rivals?
- Do consumers value those advantages and see them as worth changing for?
- Where will they be able to purchase the product or service?
- Who are your competitors?
- What price do they charge?
- What differences do you offer in comparison with the competition?
- Is the market growing or is it a well-established static market?
- Is purchase likely to be repeat or a one off?
BLACK BUSINESSES ARE NOT OVERPRICED. YOU ARE JUST CHEAP.
As an entrepreneur and supporter of black startup businesses, there is nothing more frustrating than seeing individuals complain about pricing. If you are one of these people, your thought process needs adjusting as you fall into one of the following:-
You don’t understand economies of scale
Most Black business in their first few years of trading do not get to benefit from economies of scale. Whilst this is not an excuse for ridiculous profiteering, it is important to remember if a black business is selling products exclusively to a black audience, they are selling to a market that makes up less than 3% of the population. If the product is aimed at black women for example, that percentage halves to 1.5% of the population. Simple maths.
You have never setup your own business
A business owner can easily spot someone who has never run a business. There are five pricing models a business/business owner needs to use depending on market conditions. These pricing models include:-
- Competition-based pricing
- Cost-plus pricing
- Dynamic pricing
- Penetration pricing
- Price skimming.
Without prior knowledge, labelling a black business as too expensive is damaging to say the least. What needs to be said is you cannot afford the services or the product. It is beyond your means. Your budget is limited. Set your expectations accordingly.
You are being stereotypical for the sake of it
Any form of sweeping statement that pools all black businesses together is a stereotypical comment. What’s worse is when it comes from our own community. It is best to hold them thoughts in before airing them. The year is 2021 and any talks of ‘crabs in a barrel’ or ‘black people are their worst enemies’ needs to die a painful death. This leads on to my next point…
You have been conditioned well
Most people who have been conditioned into a negative way of thinking don’t realise they are being negative. That is the beauty of the conditioning. Read some positive mindset books. Then read some more. Then a little more and hopefully the of conditioning might wear off.
Spending in a Blown (black owned) business helps support the local community.
You are simply a fool
Name calling is the last resort when logic can’t be applied in this situation. If you still maintain your position and deny the four points above, you are a fool. It is as simple as that. If you want to play the role of a fool, I was taught, ‘never argue with a fool… because people from a distance can’t tell who is who‘.
Take your pick. As harsh as this seems, if you hold the view that supporting black businesses is a problem, keep your money in your pocket. Chances are you will not buy again and will only complain about the product/service. This presents the unknowing business owner with a double whammy of an unhappy and vocal complainer. You will surely put off future clients/customers because of your ignorance.
Black businesses are not overpriced. You are just cheap.
In conclusion, inexperience of running a business may have lead some to this belief and you may choose to double down but it is worthwhile remembering, you may want to start a business some day and you will come up against the same hurdles. The last thing you will want is someone with a budget for a Ford Fiesta complaining about the cost of your Ferrari.