Minority Entrepreneurs and International strategy selection

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The purpose of this essay is to shed light on the level of entrepreneurship among the minorities living in a country and the international strategy they have to develop for their businesses. Large multinational corporations spend millions of dollars and years of researchers before taking their ventures abroad however, these cash strapped minorities are forced to start their business in a market that is not native to them. This puts them at a disadvantage that they do not completely understand the market and have to base their strategies on the limited data that they have. This means that these minorities have to plan an international strategy for their businesses in their nascent stages. The strategy needs to be planned effectively because the ability of the business to take risks and endure failure is very low and the owner may not be able to recover after a loss. Planning an international strategy for such a small and highly constrained business is extremely difficult and requires caution. Because of the cultural differences, minority entrepreneurs have a different style of management and therefore adopt different strategies that make them different from local entrepreneurs. The advantage of this distinctiveness is that they are better able to reach communities and generate referrals along with community support. The disadvantage is that this different style makes these entrepreneurs lesser at ease as compared to the local entrepreneurs. Minority entrepreneurs face a multitude of problems which decrease their chances of success. It is therefore imperative that structures are set up that provide support to and encourage this important segment of the society. The problems of such businesses are unique and therefore require a unique solution as well.


Entrepreneurs are the life blood of any economy as they operate at the grass root level and penetrate markets that the larger enterprises are unable to reach. Each year, thousands of immigrants leave their homelands and settle in other countries in pursuit of better economic and social conditions. Most of the influx also occurs in the western countries or the developed world where the economies are able to support these incomers and the markets are well developed to allow these small businesses to flourish at such a small scale. Contradictory to common understanding, entrepreneurship does not necessarily involve developing an innovative product, it has various definitions. For such entrepreneurs, it is equivalent to launching their businesses in an international market and requires a well planned strategy.

Entrepreneurship also refers to starting a new business using the existing products and services by an individual and therefore includes small businesses such as mom and pop shops as well. Foreign immigrants gather all their belongings and whatever wealth they possess and bring it into the country with the intention of investing it there. Due to difference in education and societal values and very few people from their native land to liaise with, it may be difficult to for these incomers to find jobs and investment opportunities right away. In such a situation, many of these immigrants start small scales businesses on their own. The result of this entire activity is a blooming entrepreneurial industry. With time, many of these businesses grow and become success stories and the owners may want to expand the operations. In order to succeed, these entrepreneurs have to develop a way in which to leverage the skills they learnt in their native countries in a foreign terrain.

United States is a favorite destination of many minority groups and according to sources, in the United States, minority groups own 15.1% of all U.S. businesses which is equivalent to 3 million firms and 99% of these firms are small businesses and Hispanics own most of these firms (2005). According to SCORE statistics, in the year 2002, Asian owned businesses grew in volume and numbers while generating $326 billion in revenues. Black owned businesses are one of the fastest growing segments and most of these firms are owned by women.  Hispanic owned businesses were mostly concentrated in the states of New York, California, Texas and Florida. American Indian- and Alaska Natives also own businesses that registered revenue of $26.9 billion in the year 2002 (2002). These statistics reveal the magnitude and the importance of these minority entrepreneurs.


It is very important for minority entrepreneurs to develop an effective strategy that is practicable in the international market. Various organizations have been established that are dedicated for the development of business plans for entrepreneurs and minority entrepreneurs can make use of these services as well.

Characteristics and Problems Faced

Since most Minority entrepreneurs operate at a small scale, they share many of the characteristics and problems that are faced by other small firms. Some of the difficulties faced by these minority entrepreneurs include difficulty in raising finances for the startup and a lack or deficiency in certain core management competencies especially in marketing and financial management. In addition to this, internal resource base of these entrepreneurial enterprises is also limited. Another common and prominent feature of these enterprises is that many of these have a combination of ownership and management; the owner is also managing the business.

Since these firms generally rely on informal marketing methods and referrals, these businesses start growing through co-ethnic customers and markets as the major marketing tool used is generating positive word of mouth. Due to this very reason, these enterprises often employ ethnic workforces and rely on a small labor pool. Additional problems faced by these firms include accessing markets, lack of knowledge of regulatory requirements, lack of understating of quality standards, access to technology, language barriers and discrimination. According to a research study done in Canada (2005), minority-owned firms generally obtained their financing through personal savings as well as loans from friends, family and relatives. Although this is a risky strategy, most entrepreneurs are willing to take this risk.

A study that compared non minority businesses with minority owned showed that the findings indicated that minority-owned firms which had not received any assistance from the Minority Business Development Agencies achieved the same performance characteristics as non-minority counterparts. These performance measures studied included profitability, indebtedness, and liquidity. Other than a few exceptions, minority owned firms were not worse off as compared to other firms.

Coming Up with a Powerful Business Idea

According to SCORE's Guide to Coming Up with a Powerful Business Idea, some of the most important things to consider for the entrepreneur while developing this strategy are listed as follows:

Developing the right Attitude

The entrepreneur needs to build and maintain a positive and optimistic attitude so that there is no complacency. The entrepreneur should be willing to observe, accept mistakes, learn, adapt and change so that the business retains the ability to evolve and turn mistakes into learning opportunities.

Putting yourself in the customer's shoes

It is necessary to understand the needs of the consumers in order to deliver what they want. The best way is to put yourself in the shoes of the consumer and critically evaluate your own offering.


Don't just develop strategies, develop feedback loops so that you have the reason to continue with process that have positive outcomes while discontinue or change those processes that have a negative outcome. Instead of just relying on feedback from your family and friends, get objective feedback and consult experts and pay heed to their critique.

Wingwalker's Code

Instead of jumping into an industry that you are not familiar with, it is better to start off with a new business that is related to the entrepreneur's career or skill set in order to reduce the risk of failure due to inexperience.

Well Researched Plan

Before starting the actual business, it is necessary to develop a complete business plan on paper with complete description of the business including its vision, mission, objectives, financial projections and limitations.

Obtaining a Business License

According to Erica Diamond, a major hurdle to overcome while starting a new business for minority entrepreneurs is obtaining a business license from the federal or state governments. In order to get a local business license, the procedure is fairly simple but the entrepreneur needs to keep all the necessary document ready like having the business paperwork in order and employer Identification Number (EIN) etc. the completed application should be filed along with a fee with the appropriate government office of that country. However these licenses may not be for an indefinite period and may require renewal annually. In addition to this the entrepreneur may be required to obtain other permits like sales tax license, health permit, seller's permit and building permit etc.

Obtaining Financing

Some of the various ways that a minority entrepreneur can access finances includes getting help from Angel Investors and Venture Capital who are often willing to lend in situations which banks asses as too risky. Even though banks require debt servicing which may be difficult for a young company, commercial banks can be a good option as well as they do not require the company to turn over equity or company control. SBA loan guarantees help businesses achieve loans where they are falling short. Some less common methods to obtain finances can be through home equity loans, credit cards and leasing equipment [1] .

Selection Strategy

In order to select a strategy, the minority entrepreneur requires the quality of not being impulsive and waiting to opt for the opportunity that suits you and has a long-term economic potential. Entrepreneurs should avoid commodity businesses that thrive on price competition and economies of scales that might be difficult to achieve for the entrepreneur. So to select the right strategy, entrepreneur should make use of elimination process; eliminating the choices that are impracticable or highly ambitious with low potential for success. According to a research study, small businesses also use relational approaches to marketing in order to promote themselves and the strategies they select also depend on their educational backgrounds, target market, and the sector of operations.


From the above discussion, it can be inferred that minority entrepreneurs when combined constitute a significant chunk of all entrepreneurs combining of various ethnicities, women and the disabled. Sine these businesses mostly operate through referral basis and word of mouth advertising, they are generally better known in their own localities and are not as visible as the large corporations. These firms reach out into the communities and have a better penetration and reach however this group of entrepreneurs is a silent minority; not many people are aware of tee contribution these businesses are making.

They silently do their work and are contributing billions of dollars to the economy and increasing employment along with encouraging self employment. These serve as a source of support for the immigrants who instead of being a burden on the economy by being unemployed, find work in these businesses. These firms face a lot of problems; lack of expertise and finances being the top two hurdles. Many of these minority entrepreneurs have to face discrimination when they try to get support for funding their businesses. The need of the hour is to understand and resolve their needs.

There is a need for developing such strategies at the governmental level that coordinate all efforts for supporting minority entrepreneurs. My suggestion for improving the situation for minority entrepreneurs is that governments should offer specific financial support for ethnic minority entrepreneurs so that they do not have to compete with local entrepreneurs. Programs should be designed to assist and guide people from minorities to start up in business and one window operations should be setup to deal with their issues. In addition to this, facilities that provide training, advice, counseling for entrepreneurs should provide easy access to these entrepreneurs.


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