Family Business Insights: Immigrant-Owned Family Businesses - Issue #15

Introduction

The recent riots have not only disrupted daily life but have also posed challenges to the economy and social cohesion. Property damage is one of the most immediate and visible consequences, leading to the destruction of businesses and public infrastructure, with substantial costs for repairs and rebuilding. Business interruptions are another significant economic consequence, as many businesses are forced to close during periods of unrest, leading to loss of revenue. This disruption can be particularly devastating for small businesses, which may not have the financial resilience to withstand prolonged closures.

More importantly, riots disrupt the social fabric by weakening the networks of trust and cooperation that hold communities together. Rebuilding these networks takes significant time and effort, and public trust in authorities and institutions may erode if the response to unrest is perceived as inadequate or biased. Effective communication and transparent actions are crucial in restoring confidence and social cohesion.

This article explores this unrest with a particular focus on family-owned businesses, challenging the notion that the impact of immigrants on the economy justifies such behaviour. As someone who immigrated as a child and grew up in a family-owned business, I find it unsettling that immigrant families still feel compelled to justify their presence based solely on economic contributions. Instead, the discussion should centre on the intrinsic human value and the diverse cultural and social benefits immigrants bring to our communities. Shifting the focus from economic metrics to human dignity and the enrichment of society highlights the broader, more profound contributions of immigrants beyond mere economic terms.

Nevertheless, the economic contributions of immigrants are significant. Family-owned businesses, in particular, play a vital role in the economy, fostering innovation, job creation, and community development. In the following sections, we discuss the impact of immigration on family-owned businesses, illustrating how these enterprises contribute to the economic and social fabric of the UK.

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The Economic Impact of Immigrant-Owned Family Businesses in the UK

The UK has experienced significant violent turmoil over the last few days, ostensibly under the cover of concerns about immigration. These are often fuelled by fears about job competition and economic impacts.

However, the data tells a different story—one of substantial contributions by people coming to the UK's economy is in the arena of family-owned businesses.

This article aims to shed light on the reality of these contributions, particularly focusing on family-owned businesses with founders born abroad.

Driving Economic Growth

Family-owned businesses are a cornerstone of the UK economy, and many of these businesses are founded by immigrants. Almost 40% family businesses were started by foreign-born founders, as per the latest data in 2024. The impact of immigration on prosperity is therefore profound. These family businesses are not only growing rapidly but are also key drivers of innovation and job creation in the UK.

You can read more about this phenomenon in the first edition of this newsletter “Lessons from Successful Family Businesses” in which we discuss the path of Ugandan Asians from refugees to establishing some of the most successful businesses in the country.

Local Communities

Immigrant-owned family businesses often become integral parts of their local communities. They provide employment opportunities, contribute to local economies, and foster community ties. These businesses range from small shops and restaurants to larger enterprises, all of which play a vital role in the economic fabric of their neighbourhoods.

One of the prevailing misconceptions is that immigrants "steal" jobs from native-born citizens. However, evidence suggests otherwise. In the first quarter of 2024, 6.8 million foreign-born individuals were employed in the UK, constituting over a fifth of the workforce. Moreover, migrant men were more likely to be employed than UK-born men, though migrant women had slightly lower employment rates.

Interestingly, unemployed migrants were less likely to claim unemployment benefits compared to their UK-born counterparts, indicating a higher level of resilience and self-reliance. Migrants are also overrepresented in sectors such as hospitality, transport, and IT, often taking on roles that are critical yet challenging to fill.

Economic Impact

The latest data from the Office for National Statistics (ONS) highlights that net migration to the UK was higher than previously thought, peaking at 745,000 in 2022. While some see this as a cause for concern, the economic impact is largely positive. Migrants tend to have a higher participation rate in the labour market, are more likely to be of working age, and often fill gaps in both high-skilled and low-skilled occupations.

Projections indicate that net migration will average around 350,000 annually over the next five years, contributing significantly to the UK's labour supply. Scenarios explored by economists suggest that higher levels of migration can boost GDP and potentially raise GDP per person, particularly if migrants continue to participate actively in the labour market.

Conclusion

Immigrant-owned family businesses play a vital role in the UK's economy, driving growth, innovation, and job creation. Despite the misconceptions and challenges, the data underscores the net benefits of immigration. By adopting policies that attract and support talented individuals from around the world, the UK can continue to thrive as a hub of entrepreneurial activity and economic dynamism.

As we move forward, it is crucial to recognise and celebrate the contributions of immigrant family entrepreneurs, ensuring that the narrative around immigration reflects the reality of its positive impact on the nation's prosperity. Family-owned businesses, founded by immigrants, are not only creating jobs but also fostering community cohesion and economic resilience.

Sources

Salter, P. (2023, August 22). Foreign-born founders behind 39% of the UK’s fastest-growing companies. Forbes. Retrieved from https://www.forbes.com/sites/philipsalter/2023/08/22/foreign-born-founders-behind-39-of-the-uks-fastest-growing-companies/

Office for Budget Responsibility. (n.d.). Net migration forecast and its impact on the economy. Retrieved from https://obr.uk/box/net-migration-forecast-and-its-impact-on-the-economy/

The Migration Observatory. (n.d.). Migrants in the UK labour market: An overview. Retrieved from https://migrationobservatory.ox.ac.uk/resources/briefings/migrants-in-the-uk-labour-market-an-overview/

The Social Impact of Immigrant-Owned Family Businesses in the UK

Family businesses, including many immigrant-owned enterprises, are fundamental to the UK's economy and social fabric. They contribute significantly to local communities through various means, creating a positive impact that extends beyond their economic contributions. This expanded discussion draws on multiple sources to highlight the key themes of philanthropy, long-term commitment, economic contributions, community engagement, and challenges faced.

Philanthropy and Social Responsibility

Family businesses are known for their strong sense of social responsibility. They engage in philanthropic activities such as establishing foundations, volunteering, and supporting local education and labour market initiatives. These activities help build stronger, more resilient communities. For instance, the Institute for Family Business (IFB) highlights how family businesses contribute to community well-being through charitable donations and volunteer efforts, enhancing social capital and local infrastructure.

Long-term Commitment

Due to their generational nature, family businesses often demonstrate a long-term commitment to their geographical areas. This deep-rooted presence fosters trust and stability within communities. A study by the Family Business Research Foundation, in collaboration with Oxford Economics, shows that family businesses are more likely to engage in long-term planning and investment in their localities, contributing to sustained community development and cohesion.

Economic Contributions

Family businesses play a crucial role in the UK economy. They represent a significant portion of the private sector, employing millions and generating substantial economic activity. According to Oxford Economics, family-owned firms made up 86.2% of all private sector businesses in 2019, contributing ￡637 billion to the UK GDP and employing over 14.2 million people. These businesses not only create jobs but also pay significant tax revenues, supporting public services and infrastructure.

Community Engagement

Family businesses are deeply embedded in their local communities and actively contribute to their development. They support environmental initiatives, match employee donations, organise community charity days, and participate in local partnerships. This engagement helps to build a sense of solidarity and mutual support within communities. The IFB report also notes that family businesses often undertake actions to improve local labour market access and educational opportunities, thereby fostering community growth and resilience.

Challenges Faced

Despite their significant contributions, family businesses, particularly those owned by immigrants, face several challenges:

• Access to Finance: Many family businesses struggle to secure financing, which can hinder their ability to expand and innovate. This issue is more pronounced for immigrant-owned businesses, which may face additional barriers due to limited credit history or lack of established financial relationships.
• Succession: Ensuring a smooth transition from one generation to the next is a common challenge for family businesses. This issue can be complicated by family dynamics and differing visions for the business's future.
• Competition: Family businesses often compete with larger, well-resourced companies. Maintaining competitive advantage requires continuous innovation and adaptation, which can be resource-intensive.
• Cultural and Regulatory challenges: Immigrant-owned family businesses may face challenges related to cultural factors, and lack of familiarity with regulatory regimes, both within their workforce and in the broader market.

Conclusion

Family businesses, particularly those owned by immigrants, are vital to the UK's economic and social landscape. Their contributions through philanthropy, long-term commitment, economic activity, and community engagement help build stronger, more resilient communities. Recognising and supporting these businesses is crucial for fostering sustainable development and social cohesion across the UK.

Sources

1. House of Commons Library. (n.d.). The Contribution of Family Businesses to Local Communities in the UK. Retrieved from https://commonslibrary.parliament.uk/research-briefings/
2. Oxford Economics. (2021). The State of the Nation: The UK Family Business Sector 2020-21. Retrieved from https://www.oxfordeconomics.com
3. ADR UK. (2022). The State of the Nation: The UK Family Business Sector 2021-22. Retrieved from https://www.adruk.org
4. Institute for Family Business. (2020). Family Business and Community Engagement. Retrieved from https://www.ifb.org.uk

Adversity to Empowerment

The social and economic impact of those choosing to come to the UK to re-start their lives is illustrated by the article "From adversity to empowerment: eight refugee entrepreneurs – in pictures" on Positive News showcasing the inspiring stories of London-based refugees who have turned challenges into entrepreneurial success.

Many of these individuals have founded family businesses that draw on their rich cultural heritage, offering unique products and services to their communities. For example, Akbar Majidova's culinary venture and Oleksii and Oksana Chaiun's craft enterprise highlight how family-run businesses can foster community ties, cultural exchange, and social impact, proving that resilience and innovation can lead to profound contributions to society.

If you have questions on any of the topics discussed in this newsletter, please feel free to contact me.?