WE DO pass on wealth!
Discussions about ‘generational wealth’ are becoming an increasingly popular topic in the Black community across Britain.
There are many complaints that we share little generational wealth but I beg to differ.
Not only are we sharing generational wealth, but we have an opportunity to pass down even more wealth over the coming decades.
More of the first generation born in the UK have benefited from the struggles and sacrifices of our parents’ generation.
This is particularly true in public sector jobs with good pensions, with many starting businesses with assets and increasingly owning property in the UK and abroad.
We all know, one of the best ways to pass on generational wealth is through property.
Sadly, today levels of home ownership in the Black community are very low at 20 per cent and 40 per cent for Black Africans and Black Caribbeans respectively.
In contrast, 68 per cent of white British households owned their own homes and 74 per cent of the Indian community do but these figures are mainly from the 1970s.
Before the 1970s, homeownership levels in the UK were averaging less than 50 per cent.
You may also be surprised that only 17 per cent and 35 per cent of the Arab and Chinese communities respectively, own their own home, even now.
However, many of the Windrush generation bought homes (using things like pardner, credit unions and dances to save money). Many of the first major waves of immigrants from the Caribbean and from Africa have passed away, leaving their property to many of us, their children.
Similarly, many have sold their homes in the UK and returned to invest in property in the Caribbean. This wealth will also be inherited by many of their children, who still live in the UK.
There has been a huge rise in the number of Black people starting businesses in the UK in recent years.
This has, in part, been fuelled by racism — lack of job opportunities and promotion has led to frustration.
Non-white communities, including the African/Caribbean community, earned roughly 20 per cent less than their white counterparts in 2020. Just five years ago, there were around 250,000 firms identified as ‘ethnic minority-led businesses’ (EMBs), the majority of which (185,000) had no employees.
However, what is particularly interesting is that across the UK as a whole in 2018, nearly 25 per cent of the Pakistani and 19 per cent of the Bangladeshi workforce were self-employed, although as a group, the Black/Black British self-employed community had grown the fastest since 2011.
This rise of the self-employed is good in one sense — many new Black-owned businesses are run by sole traders or directors with few to no staff.
However, for a business to become an asset, it would need to be, “a commercially profitable enterprise that works without you” says Brad Sugars, founder of ActionCOACH.
For a business to work without you, it needs to have staff who manage the systems and processes. This is why in franchised businesses, such as Specsavers, Costa Coffee or McDonald’s, you never meet the owners as these businesses can run without them.
For a business to have value (that can be sold or handed down), it needs to be profitable but also be able to continue trading successfully even if the owner is no longer involved.
If we want to use entrepreneurship to be an increasing source of generational wealth, we need to build ‘value’ into our businesses.
The Entrepreneurial Ladder illustrates this well. In the book, E-Myth Revisited, it clearly states that most business people are ‘technicians’ = self-employed. It is only when you develop the business and employ staff to run the business, you can claim to be a ‘business owner’.
When your business earns more than you need to cover your costs and taxes, only then you can invest the surplus into other assets like property, shares or into additional businesses.
When you purchase or own your second profitable business that runs without you, you can describe yourself as an entrepreneur.
Comments Form