By Ephrem Aklilu
In many ways America is a nation of immigrant entrepreneurs. However, only recently have Ethiopians focused their interests in small business entrepreneurship. Being an entrepreneur helps you achieve a level of personal satisfaction you may never have experienced before. It gives you an enormous sense of independence and a feeling of self-confidence. The frustration of working for others is not there. The work of course is hard and endless.
Business provides freedom from being confined to an assembly line type of job. It lets you make your own decisions without having to go through channels and frequently being turned down.
Being an entrepreneur opens the doors of power and influence to you. Owning a business involves you in every aspect of the operation, and correspondingly commands the respect of others. You are now in charge of the whole machine.
In a business of your own, you don’t face the risks of layoffs, mandatory retirement, being fired from a job, and you have a direct and clear voice in assuring your own well being. You create your own security. While working toward profitability, you will experience the gratification of seeing your efforts produce rewards.
Your new venture will be more enjoyable and meaningful. You set your own schedules and forget about previous restraints. As a result, the time clock is no longer a driving force in your life.
There is one limitation on this extraordinary new freedom. No matter how high you rise in business, you will always have an ultimate boss — your customer. Your customer covers your payroll and provides your income and profits. As long as you meet the needs of your customers and give them the best possible service, you really cannot fail in a business of your own.
If your enterprise happens to be a family business, it can provide employment for some of your family members. Aside from the financial advantages, this arrangement provides a business training ground for children and a place to teach and test family a values. What better way to teach cooperation, the value of hard working, honesty and basic job skills?
For most entrepreneurs, their business is an extension of themselves. It provides a way to test and re-test their self-worth and ability to use skills.
Risks
Contrary to popular opinion, statistics show that a large percentage of new businesses fail in their first year of operation. After five years it may reach 50% to 60%. Depending upon the nature of the business, the total failure rate may reach 80% after ten years. However, your business may survive, but not show any profits. Your long-term success depends on its profitability. Even by showing profits, there are no guarantees that they will be sufficient to give you your projected income. You may be frustrated in trying to reach your personal financial goals if your business grows more slowly than you had expected. On the other hand, rapid expansion and uncontrolled growth (such as premature opening of additional location) can present a serious problem, too. It can lead to a shortage of working capital and loss of managerial control over the operation.
Many entrepreneurs are initially thrilled when their business suddenly expands beyond their wildest dreams. But, unless they obtain the right kind of financing and qualified personnel, they can find themselves unable to cope with that growth.
Another factor in a fast-growth situation is that it could put more stress on the entrepreneur affecting his health and family life.
Studies by business research firms tie greater than 90% of business failures to poor management and in experience. An individually owned and operated business is also more sensitive to the economy.
A recession, can devastate small businesses. You will need to carefully plan ahead and do all the research necessary to anticipate trends in order to help insure your venture’s survival and success.
Initially, while the business develops, finances may be strained. Your family will need to set priorities for spending, and understand that sacrifices and belt-tightening may be necessary. They must realize that operating a business means working long hours and little family time. You will need their full support.
This picture may seem rather stark, but it is part of the reality of owning your own business. With careful planning and preparation, problems can be turned to opportunities.
Research and Planning
Spend enough time to research your proposed business. A great deal can be learned by joining trade organizations in your chosen field.
Make a realistic estimate of your start-up and continuing capital requirements and stay within budget limits.
Plan ahead by preparing a formal business plan. Such a plan gives you a useful summary of goals and keeps your business growing within your financial capabilities. By spelling out your objectives in writing, you will gain a better insight of what you want to accomplish now and in the future.
How you manage your time is a critical factor. You have to decide on the areas you can personally impact the most to make your business function best.
Also to set priorities that you and your employees must follow to achieve maximum results. It is the ability to decide who does what and to schedule the sequence of steps that must be taken to accomplish tasks.
Special Challenges for Immigrants Entrepreneurs
In order to succeed you may sometimes have to work harder than other entrepreneurs. One problem can be that of communicating. A good working knowledge of the English language is essential if you expect to deal with English-speaking customers and suppliers. Most community and junior colleges have low-cost (and sometimes free) English language classes that can be helpful.
Financing is another concern. One barrier you may face in obtaining financing is not having a credit rating in the U.S. You must also be a lawful resident of the U.S. with permission to work.
It usually takes a good credit history to borrow. How do you deal with this? One way is to get a cosigner. This person can be a sponsor, a relative or an organization that signs with you for your loan and guarantees payment.
Another way is to offer collateral. Collateral is something you own that can be sold, traded, or given to the lender to cover the amount of your loan if you fail to make your payments.
A third way is to offer a lender matching funds. You will take a loan for the same amount of money as you have on deposit with the lender.
Finally, your credit history is also built on how well you take care of current expenses such as rent, telephone bills, car payments, credit card payments and other obligations. If you are a homeowner, you can borrow against the equity in your home.
You may look into the kinds of financing open to other entrepreneurs, including programs for minority entrepreneurs and financial help from other immigrant business owners. Service Corps of Retired Executive (SCORE) counselors can help you plan for your financing.
Call your local Small Business Administration branch office. It is listed in your telephone book under “United States Government Offices”.
Special Programs for Immigrant Entrepreneurs
We do not know of any special financial programs for immigrant entrepreneurs at this time. If you are in a large city, your local branch of the Small Business Administration (SBA) may have a special Minority Enterprise department. Service Corps Of Retired Executives (SCORE) counselors also work with these departments.
In preparing this article Ephrem Aklilu has talked to several Ethiopian entrepreneurs and used as a reference “Handbook on Building a Profitable Business” by Fred Klein (1990).
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Ato Ephrem is a regular contributor to ER.