A Commentary:
Immigrant and Refugee Entrepreneurs

By Eileen Wolfington
Community Affairs Specialist
Federal Reserve Bank of St. Louis

 

 

  Emina Rahmanovic, owner of Mina’s Beauty Salon in St. Louis, received technical assistance from the International Institute’s Business Links program when she decided to start her business.

The world of entrepreneurship is filled with tragic events and glorious achievements with varying degrees of success and failure. Some people struggle throughout their life toward small business success while others hit a successful venture almost immediately. Immigrants, especially refugees, have much higher success rates than others. Perhaps one of the reasons is their strong will to survive.

Often, employment is out of the question due to language, cultural and religious barriers. Consequently, they enter the world of entrepreneurship, even though they may be unfamiliar with the mechanics of starting a business in mainstream USA. According to a report from the Ewing Marion Kauffman Foundation in Kansas City, Mo., immigrants become entrepreneurs at a rate 30 percent higher than native-born Americans.

 

Profile

Immigrants tend to be risk-takers. They have a strong sense of self-reliance. If an individual decides to start a business, family members usually play a role in the business, either as an employee or as a partner. It is not unusual for them to work 16 hours a day, including weekends.

Most, especially new arrivals or those who have been here less than two years, do not rely on financial institutions or government programs to start their first business. They do not necessarily seek business development advice. If they need financing, they rely on family members and friends who have confidence in their success.

Immigrants have a solid sense of autonomy and confidence. They become very connected to their community. Owners with successful startups become more venturesome, and they may become involved in more business transactions. For example, they may access a formal banking institution to buy new equipment, remodel their building or expand into a new business. Sometimes, they may even consider purchasing commercial property. Unfortunately, there continues to be a disconnect between this population and the assistance programs that are available to them.

 

  
Morees and Luna Alyatim, owners of Page Auto Sales in St. Louis, received technical assistance from the International Institute when they started their business. Through the institute’s Business Links program, they learned about writing a business plan and loan packaging.  

Challenges

Some immigrants and refugees are simply not aware of the services available to them unless they are associated with a refugee resettlement agency or other type of social service agency that offers small business development. And, the service providers need to be aware of the subtle discrimination against certain groups and view it as a challenge for minority entrepreneurs.

While some potential entrepreneurs held professional positions in their home country or perhaps owned their own businesses, it may be difficult for them to join established business associations in this country because of language and cultural barriers. Traditional business and service associations might think of creative ways to forge relationships with immigrant businesses. It takes time, but if an association familiarizes itself with a foreign language and culture, it increases comfort and trust for both groups.

Immigrant entrepreneurs must be seen as fulfilling critical roles in the economic and social lives of the neighborhood. A community can help by working to eliminate change-resistant ways. They can integrate the police force, zone a special district to showcase immigrant businesses and capitalize on the demographic changes.

Additional barriers to using support and credit programs may include a lack of education and overly complex paperwork and documentation. New arrivals start with little
or no resources. Many immigrants work hard to reach financial stability. Their success pays off once they are able to open their own business or invest in real estate.

 

Neighborhood Impact

Immigrant small-scale businesses are often located in low-income, urban neigh-borhoods. So how have
immigrant businesses made an impact in strengthening the sense of community?

These entrepreneurs support the vibrancy of older urban areas through their presence and investment in revitalization projects. Immigrants provide needed goods and services, often for distinct ethnic niches. They strengthen the economic base of the neighborhood by rehabilitating houses and commercial real estate. New Americans also have a positive impact on the city’s population retention and add diversity to the community.

 

A Place for Foreign-Born Business Owners to Find Help

The International Institute of St. Louis created a micro-enterprise development program in 1999. Known today as Business Links, its success is clear, says Matt Schindler, program coordinator.

“Immigrant entrepreneurship has continued at a steady pace,” he says. “Our businesses are providing tax revenue, creating jobs, renovating buildings and energizing communities.”

The majority are service businesses (e.g., cleaning), but there are a “fair amount” of restaurants, bakeries, grocery stores and other retail businesses, he says. Most of the entrepreneurs start out with their business serving their own community and then expand to the greater American market. Clients take advantage of Business Link’s technical assistance, such as help with licensing, permits, business plans, marketing, human resources, legal issues, accounting issues and taxes.

“Most of our clients use self-finance through family and friends, but there is a growing number who seek commercial financing,” Schindler says. “The biggest challenge our clients face is learning the legalities of doing business in the United States.”

Two major challenges are that everything must be in writing and that owners need to understand what they are signing. “In other cultures, the oral word is equivalent to a written document in the United States,” he says.

What effect do cultural issues have on how his clients think about business?

“Our clients do have a ten-dency toward creating family businesses,” Schindler says. “It would be interesting to compare the rate of immigrant family-owned businesses with those that exist in the greater American community.”

To date, the Business Links program has helped:

  • start or expand about 170 businesses
  • create or retain more than 240 jobs
  • create $24 million in client revenue
  • 77 percent of business owners remain successful after three years
  • leverage $289,000 in microloans

For more information, visit www.iistl.org/services/businessLinks.asp.

One person who has found a niche helping immigrants and refugees enter the business world is Carl Trautmann. A business mentor and teacher of entrepreneurship, Trautmann has been a volunteer with the Service Corps of Retired Executives (SCORE) in St. Louis for more than 18 years. He has worked with the International Institute of St. Louis and the Hispanic Chamber of Commerce of St. Louis to reach out to immigrants.

Trautmann says one of his most rewarding experiences was working with a bilingual Hispanic immigrant who teamed up with him to present a lecture course in Spanish called “How to Start and Manage Your Own Small Business.” The early results indicate that three times the percentage of the course’s students actually begins a business compared with other groups.

“So far, high-dollar sales volume for successes are rare, but the number of successes is very good,” Trautmann says.

Those interested in more information can call Trautmann at (636) 256-3331, send him an e-mail at info@stlscore.org or visit www.stlscore.org.

 
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