Urgent support needed for UK's underserved entrepreneurs
Research published today by Sage Foundation reveals that underserved entrepreneurs in the UK face three key challenges to starting and growing a business: lack of financial capital, lack of mentorship, and limited opportunities for training.
Sage Foundation, which acts on Sage’s mission to knock down barriers for underserved communities, researched the obstacles to successful entrepreneurship across seven key groups in the United Kingdom, United States and South Africa: women; Black, Asian and Minority Ethnic (BAME) people; young people; people with disabilities; LGBTQIA+ people; migrants; and refugees.
The data aims to understand the experiences of founders within these communities, who have historically faced inequities in accessing credit, capital, and other resources needed to thrive. Against the backdrop of multiple global crises affecting small- and mid-sized businesses (SMBs) – including supply chain issues, fluctuating consumer spending, a cost-of-living crisis and a labour shortage -- the insights from this study are critical to understanding how to level the playing field for all entrepreneurs.
Specifically, the research found that under-represented founders in the UK are met with the following challenges:
Young people face considerable barriers to entering entrepreneurship due to a lack of clarity on funding options available to them, and a reluctance to borrow money. They are also likely to be held back by a lack of confidence and role models, and there is a gap between their ambitions and their actions: 53% of 18 to 30-year-olds in the UK dream of setting up their own business, but only 7.8% of them are self-employed.
BAME people still face systemic disadvantages when setting up a business, including low levels of education, a lack of confidence and discrimination and bias. Despite high levels of entrepreneurial activity, many ethnic minority businesses are concentrated at the bottom of the value chain and located in some of the most deprived areas of the UK.
People with a disability are held back by a lack of awareness about their conditions among the public, and a lack of accessibility when it comes to entrepreneurial support -- even though they are more likely than non-disabled people to start their own business.
The LGBTQIA+ community continues to face discrimination and unconscious bias: 36% of LGBTQIA+ founders believe that investors do not take them seriously. They also face barriers such as a lack of mentorship and support from family and community.
Migrants demonstrate high levels of motivation and confidence to set up their own businesses – but they often lack the language skills, regulatory understanding and local context needed to succeed. Their financial instability means they have limited access to capital.
Cadence Willis, Vice President of Sage Foundation, said: “The barriers in the report are obstacles to both inclusive business and economic growth. The silver lining is that the solutions are interconnected -- as an example, linking entrepreneurs with mentors also increases their access to funding. Businesses and government must unite to empower underserved entrepreneurs through digital training, mentorship, and financial resources.”
Since 2015, Sage Foundation has been providing financial support and mentorship to under-served communities, often in partnership with organisations like Kiva and Ashoka, which share its goal of addressing inequities across communities globally. This new research gives the Foundation a roadmap of where its resources may best be used in the future to help create a level playing field for current and future SMB founders, regardless of their background.
The report is based on aggregated insights from over 40 publications by academics, social scientists, think tanks and non-profit organisations.
