Entrepreneur interviews

I originally wrote this article, “Entrepreneur interviews” in April 2004.

I interviewed two entrepreneurs during Spring 2004. They were both ethnic minorities and owned the same type of business, but one was a female entrepreneur and the other was a male entrepreneur. The interviewees were asked questions regarding (a) entrepreneurial growth, (b) female entrepreneurs, and (c) ethnic entrepreneurs.

The purpose of the interviews was to compare and contrast the two different people and to see how well their characteristics and experiences matched those published in entrepreneurial literature.

Entrepreneurial growth plans for both interviewees contrasted each other. However, both entrepreneurs closely matched the findings of previous researchers. The female entrepreneur demonstrated caution, whereas the male entrepreneur displayed enthusiastic plans for growth; some of which had come to fruition. The male ethnic entrepreneur didn't conform to the literature view that ethnic entrepreneurs are more satisfied with lower wages than non-ethnic entrepreneurs.

The female entrepreneur's approach to risk-taking and experience with support and role conflicts, closely followed the literature view. She had good support from her spouse, was a conservative risk-taker and the satisfaction she received from running her business had a positive impact on her family life. This contrasted with the male entrepreneur receiving support from friends, taking moderate risks and spending only half the week nights with his spouse and family.

The interviewee responses to questions associated with ethnic minority entrepreneurs demonstrated that the passage of time, in a market of non-ethnic customers, erodes the ethnic minority characteristics, e.g. low wage acceptability, internal financing. In a period of within (say) a decade, the ethnic minority entrepreneur may absorb the culture of the host country, if working outside of the ethnic community.

Both interviewees broadly conformed to the views of the entrepreneurial literature regarding ethnic minorities. They both started businesses in the service sector and they both chose a profession that they had prior experience in. However, whilst the literature supports the view that ethnic minority finance for start-up is usually internally sourced, only the female entrepreneur was self-funded.

Introduction

I interviewed two entrepreneurs during April 2004. The topics of discussion were limited to entrepreneurial growth, female entrepreneurs and ethnic entrepreneurs. Both entrepreneurs owned beauty salons and were ethnic minorities. Amy was female and was a hairdresser in Singapore. Cedric was in Malaysia.

Amy was originally from Malaysia, but had settled with her husband in Singapore a few years ago. She had run a small beauty parlour, for almost 2 years, within a condominium block and had a staff of three.

Cedric emigrated from Syria in 1984 and started his business 20 years ago. He had 30 employees and leased 2 retail units to provide his service of hairdressing, massage and spa therapy.

Entrepreneurial growth

The two entrepreneurs were asked the two questions of how they viewed the growth of their business and what their thoughts were on retaining business earnings versus making personal financial withdrawals. Both entrepreneurs had very different attitudes to growth.

Growth plan

Amy leased a small (200 square feet) unit from a condominium owner. She had been in business for almost 2 years. Her immediate goal was to increase the utilization of her current resources of space and labour. She had no immediate plans to grow the business beyond 3 staff, until demand fully consumed the existing resources.

Cedric leased two units (2000 square feet total) from a shopping mall owner. He had been in business for more than 20 years and had 30 staff. His idea was to open more outlets in different geographic locations and to diversify with different services in the same market and different products I services in different markets. For example, he had been interested in designing, manufacturing and marketing automated beauty products and he had recently increased the square footage of his business to expand the services to massage and spa therapy.  Although there were many years difference in the maturity of the two businesses, it could be argued that Amy's firm be classified as a lifestyle-business.  The characteristic that distinguished Cedric's business was that he was thinking strategically, as identified by Burns and Harrison (1996:49), about the direction and scope of the business over the longer term. Cedric was also following the guidance of Kuratko and Hodgetts (2004:549), who state that firms who fail to innovate will die and that Cedric was complementing current offerings with work on new product and service developments. However, Amy appeared to demonstrate more understanding of where her business was today.

Compensation

Amy withdrew fixed monthly compensation from her business, by way of a salary. Although not disclosed, the amount was small at this stage of her business. She expected to withdraw a larger wage when profits increased and to spend a little more on assets for her salon.

Cedric withdrew monthly compensation from his business and supplemented these regular withdrawals with occasional bonuses if he thought that the business was doing particularly well, so that he could reap some of the rewards that he said that he was entitled to, for his hard work.

Amy was Malay and had settled in Singapore. She displayed a characteristic described by Light (1984) where immigrants would be more satisfied than native-born workers with low profits from small businesses because of wage differences between their origin and destination countries. The inverse relationship between small business growth and the entrepreneur's compensation is described by Churchill and Lewis (1992:273) as occurring during the success stage of an enterprise. These authors pose the question of whether the owner "wishes to commit to their time and risk the accumulated equity of the business in order to grow or instead prefer to savour some of the benefits of success?" They recognize that all too often the owner wants both and this appears to be the situation that Cedric found himself in. Cedric is Syrian and emigrated to Malaysia 25 years ago and his approach to compensation, in conflict with Light's findings could, perhaps, be explained by a dilution of his original immigrant values over 25 years in a host country.

Female entrepreneurs

The two salon owners were asked three questions to compare and contrast between female entrepreneur and male entrepreneur experiences with regard to (a) support, (b) role-conflicts and (c) risk-taking. The female entrepreneurial traits published in the literature were supported by the findings.

Support

Amy had many personal friends who visited her salon, whilst she worked 6 days per week and they gave her support. But her greatest supporter was her husband, who also had a financial interest in the business.  Cedric had a network of friends in the same type of business and his greatest support was from his extended family and friends. His wife was a full-time lawyer and had little spare time for interest in the business.  Additionally, Cedric's son, Cecil, had been taken on board and was beginning to be a source of support for his father.  Brockhaus and Horwitz (1986:39) report that Hisrich and O'Brien found that female entrepreneurs had very supportive parents and husbands, which was Amy's situation.  Hisrich and Brush (1986:6), in a survey of ethnic minority entrepreneurs, found that spouses were their biggest supporters, followed by business associates, friends and other relatives. Whilst Amy typifies the findings of Hisrich and Brush, Cedric does not. This could be due to Cedric being male and, although still being a minority, having lost much of his ethnicity. However, Cedric's situation is best described by Hisrich (1986:72), where he states that, "men usually list outside advisors as most important supporters with the spouse being second. Women list their spouses first, close friends second, and business associates third."

Role conflicts

Amy had one child and had taken one month maternity leave from the business during the birth and had a maid to look after the baby girl till kindergarten. She, without fail, took every Tuesday off work to spend time with her daughter, Glenda.

Cedric had three children in their twenties, two of whom still lived at the family home. He spent three nights a week, 120 miles away from home, competing in hairdressing competitions. It was also a second source of income to Cedric.

Kuratko and Hodgetts (2004:680) summarize the findings of two surveys among female entrepreneurs regarding role conflicts. They report that "female entrepreneurship can be the most successful professional outlet for reducing [work/home role] conflict if autonomy and satisfaction are present." Amy's situation was in accordance with their findings and contrasted with Cedric's circumstances.

Risk-taking

Amy described herself as being a low risk taker and this was evidenced by her frugal salon layout and conservative attitude towards growth. She was unwilling to invest more funds into the business until she was 100% sure of it's success.  Cedric said that he was forced to take risks to retain his competitive position. For example, he had taken out a moderate commercial loan to expand his business to include a massage and spa therapy salon, next door to the location of his original business. He said that he hadtaken this action because all of his competition had similar enhanced facilities and that he feared losing business if he didn't expand into these related markets.

The above comments by Amy and Cedric conform to the observation by Hisrich (1986:79) who states that, "in general, women entrepreneurs have a conservative risk taking posture" and that businesses started by women entrepreneurs will not likely grow to a significant size. But Hisrich also asks if size is a measure of success and comments that the realism and caution exhibited by women business owners may actually ensure the success of their business over time.

Ethnic entrepreneurs

The two entrepreneurs were asked three questions regarding the ethnic minority impact of being a Malay in Singapore and a Syrian in Malaysia. The three questions asked about (a) how the type of venture was chosen, (b) what motivated each entrepreneur, and (c) how the start-up finance was obtained. The literature supports much of the entrepreneurs' experiences, although Cedric displayed some distinctive characteristics not generally found in minority entrepreneurs, but found in male entrepreneurs.

Nature of venture

Amy had chosen to open a hairdressing salon because she had previously worked as a hairdresser. She had been employed as a stylist by a couple of employers before she decided to start-up her own business.

Cedric, also, had chosen to open a hairdressing salon because he had previously worked as a hairdresser for the first five years when he emigrated to Malaysia from Syria. He furthermore said that the cost of starting-up a salon was much lower than for other business ideas that he had.

Amy and Cedric's common business choice supported the findings of Hisrich (1986:72), Brockhaus and Horwitz (1986:39), that women are more likely to start a business in a service related area, and that of Aldrich and Waldinger (1990: 112), who state that most ethnic enterprises are found in the service sector. Additionally, both these small enterprises served non-ethic populations, where the opportunities were much greater than if they served an ethnic community's needs. The fact that Amy and Cedric had previous skill in their line of work supported the survey results of Hisrich and Brush (1986:4). These authors found that the majority of the minority entrepreneurs they surveyed had prior experience in their fields of endeavour. This supports previous findings that entrepreneurs tend to start businesses in the fields in which they have worked.

Start-up motivation

Amy had two motivations for starting her own business. Firstly, she had wanted to achieve something in her life, and “being her own boss” was something that she'd always wanted to do. Secondly, she had felt that she could do just as well on her own as working for someone else.

Cedric had also wanted the achievement of self-employment but, as husband and father of three children, he also had the need to raise his income to increase his family's standard of living to that which he and his family desired. In the interim time since arriving in Malaysia, he had been working for Syrian and Indian business owners and had thought that employing people to work for him would be the way to increase his income.

The experiences of Amy and Cedric support the view of Aldrich and Waldinger (1990:125) regarding prior work and, particularly for Cedric, employer type. The authors identify that immigrant workers often begin as temporary workers in small businesses and that the potential owner is an employee in a co-ethnic or family member's business.  

Start-up finance

Amy's start-up capital had been provided by herself and her husband. They had savings Which they had used to establish her venture.

Cedric did not have a great deal of personal capital at the time when he decided to open his salon. Instead, he had taken out a commercial loan from a Malaysian bank, using the family's home as security for the loan. He has since paid off this loan.

Cedric's situation contrasts with that noted by Aldrich and Waldinger (1990:125), whereby the author's state that, “immigrant workers ... seek jobs that provide opportunities to work long hours and accumulate savings." However, Hisrich (1986:69) accurately describes Amy and Cedric's start-up financial situation when he identifies that male and female entrepreneurs differ in the area of start-up financing. He comments that, “while males often list investors, bank loans, or personal loans in addition to personal funds as sources of start-up capital, women in nearly all cases have relied solely on personal assets or savings.

List of references

Aldrich, H. & Waldinger, R. 1990, 'Ethnicity and entrepreneurship', Annual Review of Sociology, No. 16 pp. 111-135.

Brockhaus, R.H. &Horwitz, P.S. 1986, 'The psychology of the entrepreneurs' in Sexton, D.L. & Smilor, R.W. (Eds), The Art and Science of Entrepreneurship, Cambridge, MA: Balinger Publishing pp. 25-48.

Burns, P. & Harrison, J. 1996, 'Growth' in Burns, P. & Dewhurst, J. (Eds) Small Business and Entrepreneurship, 2nd edn, London: Macmillan pp.40-72

Churchill, N.C. & Lewis, V.L. 1992, 'The five s~ages of small business growth' in Sahlman, W.A. & Stevenson, H.H. (Eds), The Entrepreneurial Venture: Readings, Boston, MA: Harvard Business School Publications pp. 263-275.

Hisrich, R. D. 1986, 'The woman entrepreneur: Characteristics, skills, problems, and prescriptions for success', in Sexton,D. & Smilor, R., The Art and Science of Entrepreneurship, Massachusetts: Ballinger, pp. 61-81

Hisrich, R.D. & Brush, C. 1986, 'Characteristics of the minority entrepreneur', Journal of Small Business Management, Vol. 24, October, pp. 1-8.  Kuratko, D.F. & Hodgetts, R.M. 2004, Entrepreneurship: Theory, Process, and Practice, 6th edn. Ohio: South Western

Light, I. 1984, 'Immigrant and ethnic enterprise in North Ameri~Ethnic Racial Stud. 7:195-216