Entrepreneurs without borders
Unternehmer ohne Grenzen (UoG, Entrepreneurs without borders) operates in the city of Hamburg, Germany's second largest city, which has one of the largest migrant communities in the country. The project is an example of a successful bottom-up initiative: migrant entrepreneurs came up with the idea to found an institution to support other potential entrepreneurs with a migrant background. UoG was started in 2000, and since then the founders have established a wide network of contacts with national, regional and local policy makers.
UoG works by offering counselling services, seminars and briefings, training courses, special services for example for female entrepreneurs or to bring in policy makers, and business networks especially linking to mainstream support structures
The organisation responsible for implementing UoG and guaranteeing effective allocation of resources is the Zentrum fur Existenzgrundungen und Betriebe von Migrantinnen und Migranten (Centre for business start-ups and companies of migrants). The organisation is semi-public and has eight permanent employees and, depending on the work load, four freelance.
Funders and funding
UoG has been in operation since 2000. The Zentrum for Existenzgrundungen und Betriebe von Migrantinnen und Migranten was set up in August 2001 and is funded by the city of Hamburg and the European Social Fund. The annual budget is €280,000. In 2005, UoG also started the project Dienstleistungsagentur fur Migrantenbetriebe (DLA - Service Agency for Immigrant Businesses), which focuses on existing enterprises and is still in its implementation phase.
Migrants in Germany are at least as likely to start their own business as native Germans. Especially in view of the high structural unemployment of the last three decades, setting up one’s own business has become an attractive alternative for persons with a migrant background. The problem for migrants interested in setting up their own business used to be that specific information and counselling services concerning self-employment were hard to find. In countries like Germany with complex labour market regulation, tax system and business regulation, the lack of informaton was a considerable obstacle.
In the context of these barriers to self-employment, already operating ethnic minority entrepreneurs decided to set up a system of mutual assistance. Experienced entrepreneurs would help aspiring entrepreneurs to obtain the necessary knowledge to comply with laws and regulations and gain better insight into business structures and the local market environment. In this sense UoG is mainly service oriented, but it also addresses aspects of awareness raising, policies and institutional strengthening.
The overall aim of the policy measure is to promote economic self-employment by persons with an migrant background. UoG uses several means to achieve this goal. The firs is a system aimed at improving links between ethnic entrepreneurs and existing initiatives. This involves creating networks of information providers and advisory services in several districts of the city of Hamburg. A second tool takes the policy dimension of entrepreneurship into account. Whereas native entrepreneurs and their representatives in chambers of commerce and other institutions are well connected to policymakers, entrepreneurs with a migrant background often lack an adequate network. UoG therefore also acts as a lobby organisation for ethnic entrepreneurs to make up for this.
UoG focuses exclusively on entrepreneurs, both start-ups and existing, of migrant origin. This is beneficial for the target group as it ensures that services and network activities are tailored to the specific needs of ethnic entrepreneurs. The largest group of entrepreneurs who make use of the services of UoG have a Turkish background(1) (53%). The second group are persons who consider themselves German migrants (10.5%): these may be re-settlers from Kazakhstan, Russia, Ukraine or Poland, but also persons born in Germany who consider themselves German, even though they are of Turkish origin. About 10% come from Eastern Europe, 5% from Iran, 5% from Africa and 3.5% from Latin America. The remaining 10% have a German background.
How UoG works
UoG works on the premise that migrants and their descendants have an equal propensity to set up their own business as native Germans, and perhaps even a higher one. However, migrants generally have less knowledge of business regulations and the legal and organisational environment for self-employment. Entrepreneurial activity in Germany is more regulated than elsewhere. An overload of bureaucracy and complex laws and regulations have led business associations to lobby for cutting red tape and simplifying tax and labour laws.
The still relatively strict and highly regulated business environment is a competitive business disadvantage for ethnic entrepreneurs who are less familiar with German legal traditions and administrative routines. The UoG programme aims to overcome this business disadvantage by providing migrant entrepreneurs with tailor-made counselling and networking services that match the specific business environment of Hamburg. However, UoG strives to avoid an image of paternalism and prefers to be seen as an institution that provides ‘self-help’.
UoG offers different services for different purposes. These are briefly described below.
- Counselling services: UoG's counsellors give advice on all aspects of running a business.
- Seminars and briefings: Various seminars and briefings are organised on different business aspects. This applies to legal and fiscal issues such as labour law, income and corporate tax, and social security legislation.
- Training courses: Courses are presented in financing, production, investment and marketing. These courses are particularly relevant for entrepreneurs who survived the first phase of self-employment and consider business expansion. Business planning: In order to get public support and/or bank finance it is often necessary to submit a well-written business plan. UoG assists (potential) ethnic minority entrepreneurs in writing correct and convincing business plans
- Special services: This applies to, for example, the organisation of exchange forums and seminars for female entrepreneurs, a fast growing group of entrepreneurs. UoG has also been successful in organising events bringing together entrepreneurs and other relevant groups, such as policy makers and bank representatives.
- Business networks: UoG established business networks with mainstream business support organisations, local and regional business structures and other relevant institutions. For ethnic minority entrepreneurs having access to these networks can be of high value in solving business problems.
In 2005, UoG started the project Dienstleistungsagentur fur Migrantenbetriebe (DLA Service Agency for Immigrant Businesses). This DLA offers free counselling and services for existing immigrant-run enterprises. DLA's main focus is on consolidating existing enterprises and jobs by professionalisation and qualification measures.
Accessibility to target groups
One important aspect of UoG is that most of its services are provided in the main language of the target group (mainly Turkish, but also Russian, English, Spanish and French). This reduces miscommunication and failure to grasp relevant information due to language problems. For instance, the information sheet Wegweiser fur Existenzgrunder (Guidepost for start-ups) is available in Persian, Polish, Russian, Turkish and German. Most services are free of charge; a participation fee is only requested for special services. This is possible due to the external funding of the City of Hamburg and the European Social Fund.
Actually reaching the target group is a important challenge for any initiative promoting the self-employment of migrants. UoG uses different publicity strategies to increase awareness of the services provided. It advertises in migrant media; the free Hamburg magazine Korrekt distributes flyers and posters; it also produces its own magazine UOG News, and UoG team members appear periodically on the special German-Turkish TV-programme on the channel Hamburg 1. The UoG multicultural team assure a ‘street credibility’ which further reduces existing barriers and reservations.
Table 1 gives an overview of the number of clients that made use of UoG's counselling services over the 2001 - 2005 period. Of the 2,090 immigrants that expressed interest, 1,467 actually made use of UoG's counselling services. The intensity of the different types of counselling services is illustrated in Table 2. This table gives the average amount of hours spent per client for each type of service.
From Tables 1 and 2 one can distill the following results. Of the 1467 clients in counseling, 596 migrants (or 41%) made use of general information or orientation services. The majority of clients (871 migrants, or 59% of the total) made use of the more intensive categories of services such as start-up consultation (546 migrants), business plan creation (178), and follow-up consults (147).
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UoG's counselling services particularly reach out to young, unemployed male migrants. About half of its clients are between 26 and 45 years old. The gender distribution is mostly men (68% of total clients), and most of the assisted clients are unemployed (68% of total clients). As regard to UoG's training services a total of 612 migrants participated in training sessions and seminars during the 2001-2005 period.
UoG undertook a survey to estimate the number of clients that managed to set up a business. To this end a sample of 79 counselling clients was interviewed. More than half of these clients (41 migrants, or 55%) had started a business. The survival rate of these businesses was 73%. Extrapolating these percentages to the total number of 1,467 counselling clients, one may conclude that UoG generated around 800 start-ups (55% of 1467 clients) over the 2001-2005 period. This estimation, however, probably is on the high side(2).
Next to the direct impact in terms of start-ups UoG also raised awareness for ethnic minority entrepreneurship among local authorities and other business training institutions. In Hamburg, for instance, other institutions in the field of business startupos recognise and use UoG's competencies and experiences. UoG has also created an online discussion platform on which migrant entrepreneurs can share their experiences.
Monitoring of supported businesses
The Technical University of Hamburg-Harburg and the [CHECK] Zentrum fur Preisentwicklung of the University of Applied Sciences of Hamburg (lEPRA) conducted evaluations in 2003 and 2006 respectively. The lEPRA evaluation indicated that 90% of UoG's clients were satisfied with the programme's services. Even those clients that did not start up a business were satisfied with UoG's services.
The lEPRA evaluation particularly praised UoG's for its counselling services on business plans, production site analyses, price calculations, marketing and compliance with laws. On the other hand, the evaluation also indicated a need for improvement in fiscal issues, state funding and financing. Even in these fields, however, clients regard UoG's services as useful.
In 2006, UoG's recently started Dienstleistungsagentur (DLA) received the Integration Prize from the Integration Council of the City of Hamburg for their project 'Ethnic economies as stabilising factors in underprivileged neighbourhoods'. In 2006, the DLA and q.net undertook a survey to learn about the qualification requirements of entrepreneurs with an immigrant background. The survey questioned 67 entrepreneurs on their needs in professional training. The survey was undertaken to increase migrants' interest in taking part in relevant training, and to draw up recommendations for service providers(3).
Assessment of UoG
UoG is clearly highly relevant for its target group, as is shown by the large number of 1,467 ethnic minority entrepreneurs that make use of UoG's services. Its relevance is also confirmed by the high level of satisfaction expressed by UoG's clients, as identified in lEPRA's evaluation in 2006. Thanks to its system of mutual assistance, UoG appears to be well aware of the needs of its target groups and can take actions accordingly.
- Effectiveness and efficiency
The existing evaluations reveal that UoG is quite effective in achieving the goal of compensating for the disadvantages experienced ethnic entrepreneurs. The same holds true for the criterion of efficiency. The money spent to set up and maintain UoG is clearly well invested, given that most clients consider the programme useful for the development of their business. In budgetary terms UoG annually manages to assist an estimated number of 150 start-ups on a €280,000 budget(4).
The project can be considered innovative because of: 1 its thorough analysis of the problems ethnic minority entrepreneurs in Germany face 2 the tailor-made design of measures to deal with these problems 3 the networking with local and regional business structures 4 its promotion of activities through the local media.
This is a policy measure that can be replicated in other settings. One should keep in mind, however, that UoG was created 'from below', as an initiative of Hamburg-based ethnic entrepreneurs facing particular Hamburg-specific difficulties. The tools and programmes that UoG developed may not necessarily be relevant in other settings without some adjustment. However, other migrant business communities that wish to start a service of mutual assistance may be able to use a similar approach to develop their own context-specific tools.
UoG does not seem to be exposed to the short cycles of the political process, and the project therefore seems to be sustainable. This is no doubt due to the project's bottom-up character: UoG was set up by entrepreneurs, and is an entrepreneurial rather than a political initiative. Moreover, UoG has successfully integrated well-established, widely respected businessmen into its networks, which has given the given the project a very positive reputation.
UoG gives energetic consideration to the future direction of its activities. For example, it hopes soon to be able to assist migrant entrepreneurs in their quest for start-up capital, and to this end is currently negotiating with a bank and several other institutions. UoG also intends to enhance its current training and awareness activities, and to broaden its scope of services by including social housing projects.
Key learning points
- A strategy of mutual assistance, in which experienced migrants entrepreneurs assist aspiring ones, is a good way to raise awareness and assure the relevance of the types of services offered.
- A good knowledge of local market conditions and a strong network with local business structures are necessary conditions for an effective promotion of ethnic minority entrepreneurship.
- Language is not everything - but without language, nothing comes to anything. It is an obvious insight, but one that is often overlooked in the context of promoting economic integration via self-employment. Without counselling services in the mother tongues of the relevant migrant groups, it is very difficult to reach them.
- The successful set-up of a business is a lengthy process by no means limited to the founding phase. The successful and sustainable promotion of ethnic minority entrepreneurship thus requires the provision of counselling services in all the different phases of business life.
Zentrum fur Existenzgrundungen und Betriebe von Migrantinnen und Migranten Bura St. Pauli Buro Wilhelmsburg Neuer Kamp 30 Veringstr. 65 20357 Hamburg 21107 Hamburg E: email@example.com F: +4940431 90069 T: +4940431 83063 W: http://www.unternehmer-ohne-grenzen.de Contact person: Kazim Abaci
Notes and references
Interviews with: Lyubov Kuchenbecker, Unternehmer ohne Grenzen. Kazim Abaci, secretary at Unternehmer ohne Grenzen.
Websites: Unternehmer ohne Grenzen: http://www.unternehmer-ohne-grenzen.de/ Documents
EP-NOPI. (2007). Bildungschancen in ethnischen Unternehmen. [Formation chances in ethnic enterprises]. http://www.ep-nobLde/upload/pdf/Produkte/ Bildungschancen_ethnische_Unternehmen.pdf Hamburg: EP-NOBI.
Unternehmer ohne Grenzen. (2004). Zentrum fOr ExistenzgrOndungen und Betriebe von Migrantinnen und Migranten. Erfo/ge und Potentia/e. [Centre for start-ups and enterprises of immigrants. Successes and potentials.] http://www.unternehmer-ohnegrenzen.de/projekte/publikat_picsllwischenbericht. pdf. Hamburg: UoG.
Unternehmer ohne Grenzen. (2005). Arbeits/osenge/d /I / Sozia/ge/d. Ein Leitfaden. [A guidebook on unemployment benefits]. http://www.unternehmer-ohnegrenzen.de/projekte/publikat_pics/Broschuere.pdf. Hamburg: UoG.
Unternehmer ohne Grenzen. (2006). Integration durch Se/bststandigkeit. 5 Jahre GrOndungszentrum - Bilanz und Perspektiven. [Integration through independence]. Ham bu rg. http://www.unternehmer-ohne-grenzen.de/projekte/pu bl i kat_picsl 5JahreGruendungszentrum.pdf. Hamburg: UoG.
Unternehmer ohne Grenzen. (n.d.). GrOndungsfahrp/an. [Guide for start-ups]. http://www.unternehmer-ohne-grenzen.de/projekte/pu bl i kat_pi csl Gruendungsfahrplan.pdf. Hamburg: UoG.
Unternehmer ohne Grenzen. (2006). Wegweiser fOr ExistenzgrOnder / innen mit migrantischem Hintergrund in Hamburg. [Directions for starting entrepreneurs with an immigration background]. http://www.unternehmer-ohne-grenzen.de/projekte/ publikat_pics/WW_deutsch.pdf. Hamburg: UoG.
1 Turkish migrant background in this context means either being born in Turkey (irrespective of holding a German or a Turkish passport) or being born in Germany with at least one parent being born in Turkey.
2 The reported sample of 79 migrants only refers to the interviews that have actually taken place. The actual sample size was 144, indicating a non-response of 65 (or 45%). If one assumes that the start-up rate under migrants who did not respond to the survey is lower, one has to conclude that the reported start-up rate of 55% probably overestimates the true impact of UoG. Over the 2001-2003 period for instance, UoG reported 310 start-ups. For reasons of convenience we estimate the number of start-ups due to UoG's services as 150 start-ups per year.
3 This survey is also referred to in the case study on the Q.net project.
4 See the discussion in the Results section for the foundation of this estimation of 150 start-ups per year.