Financial education in small ethnic minority businesses in the UK

Abstract

Approach:Mixed research methods are used to investigate financial awareness and related education and training needs in a combined matched sample of 110 ethnic minority small businesses (EMSBs) and indigenous small firms. A small exploratory telephone survey was used to inform the questionnaire design and selection of the wider research sample. The emerging data is analysed to evaluate financial awareness and establish the education and training needs of these owner/managers. Results:The central role of financial information is recognised in most of these small businesses. Amongst the EMSBs, financial decisions are informed and supported by an accountant or an expert from the owner/manager"s social network. In indigenous small firms, this important function is carried out by the owner/manager or a competent financial expert. The majority of respondents had no systematic approach or strategy towards the acquisition of financial knowledge, education and training.Implications: It emerges that a shortage of financial education and training has impacted negatively upon the efficiency and profitability of the small businesses in the sample. Typical "one-size-fits-all" policy initiatives have proved insufficient and largely unsuitable for the specific needs of small business owner/managers. Considering prevailing competitive pressures and the rapid globalisation of markets, there is an urgent need to improve the use of financial information and provide relevant education and training for small business owner/managers. Value:The authors make recommendations in relation to the education and training needs of small business owner/managers that could benefit policy makers, support providers, educators and trainers involved in this important sector of the economy.

Accounting curriculum and market needs

“…On the other hand, the lack of sufficient financial knowledge, skills and education is a major problem to entrepreneurial success and growth (Hussain et al, 2008). As a result, many countries have started to apply policy frameworks to promote entrepreneurship education and training in order to develop entrepreneurial activity (Pittaway and Cope, 2007;Cheung, 2008).…”

Is knowledge that powerful? Financial literacy and access to finance

“…However, little is investigated or known about the relationship between financial literacy, its impact on access to finance and firm growth. Responses to financial illiteracy have emanated from a range of sources in the UK (Rosacker and Rosacker, 2016; Adomako et al , 2016; Hussain et al , 2006, 2008). However, there has been limited exploration of the role of financial literacy and its impact on entrepreneurs’ behavior, conduct and the related outcomes.…”

The Determinants of Informal Capital in the Financing of Small Firms at Start-Up: An Ethnic Comparison of Small Firms in Sweden

“…size, legal form, industry affiliation/sector, age) are also considered to play a role in the differences in access to start-up capital among all business owners. Businesses owned by women and immigrants are generally smaller and younger than are male-owned businesses (Devine, 1994;Coleman, 1998;Hussain, Matlay, & Scott, 2008). Blanchflower et al (2003) and Cavalluzzo, Cavalluzzo, and Wolken (2002) showed that firm age, size, turnover, previous bankruptcy and creditworthiness, location, and industry affiliation might all play a role in favouring male and female native-born entrepreneurs over male and female minority entrepreneurs as well as favouring male native-born entrepreneurs against female native-born entrepreneurs.…”