Building back better from the ravages of COVID-19 is a familiar theme, but the latest research by a global organisation points to the need to encourage more female and BAME-led enterprise to fully exploit what is possibly a once-in-a-lifetime opportunity.
When the world began its recovery from the 2008 financial collapse the role of small and medium-sized enterprises (SMEs) in that process was a striking theme. It was credited as the key driver in the economic recovery, creating most of the new jobs.
Now, the post-COVID recovery process offers the same opportunities.
In fact, a recent report outlines how the conditions are perfect for an economic recovery by harnessing the entrepreneurial spirit among the female and BAME communities.
The Global Entrepreneurship Monitor (GEM) was first published in 1999, looking at entrepreneurship and its networks around the world.
Its latest findings for 2019-20 indicate how a shift towards enterprise can form the basis of a more diverse and widespread recovery.
It claims that, historically, entrepreneurship has only appealed to certain parts of society, for example, sole traders desperate for employment opportunities or to supplement family incomes in times of economic hardship.
But the latest GEM findings point to more societies embracing the social benefits of entrepreneurship, and reorganising their communities to drive improvements in overall welfare, as well as helping to generate and support a successful and sustainable post-COVID recovery.
While male levels of enterprise continue to exceed that of females, GEM found three countries – Saudi Arabia, Qatar and Madagascar – had higher levels of entrepreneurial activity among women than men.
The UK needs to emulate this as it currently sits in the bottom third of global economies for early-stage entrepreneurial activity, ie just before and after the start of a new business, among women.
On average, in the UK there are six female early-stage entrepreneurs to every 10 men at the same stage, indicating the UK has some way to go to close this gap of 40% less women than men starting or running their own businesses.
The GEM research found that in economies with higher levels of early-stage entrepreneurial activity, such as Madagascar, Saudi Arabia, Qatar, Mexico, Brazil, Spain, and the USA, females are nine-tenths as active as men in terms of starting their own businesses and, importantly, these higher rates of female participation boost the overall level of entrepreneurial activity for the general economy.
Increasing female participation in enterprise, therefore, needs to become a much more important policy objective in the UK to boost the national economy by adopting policies to support women, creating women-focused entrepreneurship initiatives, and creating gender-based policies.
Given the devastating impact COVID-19 is having on SMEs and the self-employed, the GEM research offers fresh and promising insight into the role of entrepreneurship in driving and supporting the economic and social recovery locally, and nationally, by exploiting the untapped opportunities during a post-COVID recovery and post-Brexit economy for the UK to significantly grow its business base.
Established social enterprise, The Women’s Organisation, which operates across the Liverpool City Region and Greater Manchester, participated in the latest GEM research, and its co-founder and chief executive, Maggie O’Carroll, believes the foundations exist to achieve just that through initiatives such as the Enterprise Hub and Excelerate programmes.
She acknowledges the support for those currently in, or seeking, self-employment, but believes it must be specifically designed to address the lack of diverse representation among SMEs, such as female and BAME-led businesses, which would require focused government policy to create the necessary favourable conditions.
While the growth of self-employment and the creation of micro-businesses was key to the Liverpool City Region’s recovery from the 2008 recession, she says the path in 2020 must be the nurturing of diversity.
Only 15% of SME employers are women-led, and only five per cent of SMEs have at least 50/50 representation of people from BAME groups on their senior management teams.
In Liverpool, for example, there are organisations well equipped to address these anomalies.
Maggie said: “Nia Black Business Hub and Writers Bloc are both prime examples of investment opportunities for Liverpool City Region to grow and support the self-employed and micro-business sector.
“The Nia Black Business Hub will focus on supporting and driving the growth of BAME entrepreneurship and BAME enterprise creation across the region.
“It will enable BAME-led businesses to harness their economic potential by providing specifically-designed provisions which address the challenges of enterprise creation among the BAME community and support BAME businesses to move out of residential homes into business premises in the city.
“Also, Writers Bloc will provide an Arts Business Development Centre in the heart of the city, offering business support and physical business space specifically designed for arts organisations across the region.
“Both would sit within the Enterprise Hub collaborative.”
She added: “Liverpool City Region must continue to invest in, and expand, the effective and coordinated business and entrepreneurship support in order to drive the growth of the region’s business ecosystem and ensure self-employment provides good quality, sustainable jobs for all.”
This way, the issues of funding support and the lack of diverse representation in SMEs can be addressed to accelerate the region’s growth and multiplication of micro-businesses.
“Investing in Enterprise Hub, for example, which provides pre-start, start-up, and early phase business support to would-be and early stage entrepreneurs, will facilitate small business creation, growth and sustainability, and deliver large scale economic and social dividends,” said Maggie.
Mark Hart, Professor of Small Business and Entrepreneurship at Aston Business School, who leads the UK GEM study said: “On the eve of the pandemic, entrepreneurship in Britain was continuing to rise despite the wider economy showing only modest growth. But that progress is now in serious jeopardy because of deliberate policy choices.”
The UK must support its enterprise economy, which is vital for creating new jobs, providing social benefits, and increasing economic growth.