Britain’s Minority Businesses Punch Above Their Weight But They Need Help

“Minority Businesses” contribute at least £74bn a year to the U.K. economy and comprise eight of the country’s 23 tech unicorn companies.   

And according to a new report from the Open Political Economy Network (OPEN), policymakers, businesses and society as a whole should not only be celebrating the positive impact made by minority businesses but also taking active steps to help entrepreneurs and small company owners from ethnic backgrounds overcome some of the obstacles that still stand in their way.   

OPEN describes itself as an internationally-networked think tank focusing on migration and diversity. As founder, Philippe Legrain explains, the new report—Minority Businesses Matter—was prepared at the request of MSDUK, an organization that—again by its own description—champions diversity in public and private sector supply chains. “They came to us and said they would like to do something to raise the profile of minority businesses,” says Legrain.   

Given the purpose of the report, it’s perhaps not surprising that it both highlights and celebrates the important economic role played by diverse businesses but Legrain—who has written two books making a positive case for immigration—says the research findings surprised even him. “I was astonished by the contribution that minority businesses are making,” he says. 

Big Employers

The report finds that one in six U.K. businesses are minority-owned and employ around 3 million people in total. Equally impressive, 23 out of Britain’s 100 fastest-growing businesses are either founded or co-founded by entrepreneurs from ethnic minorities.

This raises the question of how you define minorities. As Legrain explains, for the purpose of the report, the focus is business people entrepreneurs who are non-white. “So we’re talking about Asian, black, mixed and others,” he says. 

But what exactly constitutes a minority business? Legrain says the definition encompasses sole traders; entities in which at least 50% of shares are owned by people from minorities; businesses in which half the founders are non-white; and in the case of listed businesses, the company must have been 50% owned by minority shareholders at the time of the IPO.

But does it make sense to classify business owners in this way? For instance, the term minority business owner could be applied to a market trader; someone from a deprived background who has nonetheless started a successful trading or import/export company, or an Eton and Oxford-educated computer science graduate leading a cutting-edge cybersecurity startup. In other words, minority entrepreneurs are a heterogeneous bunch, both in terms of culture, background, education, and of course the business paths they choose to pursue. So is it helpful to bunch everyone together? 

Common Struggles

Well, there is a danger of generalization but there are also common struggles. Legrain says the report identifies three hurdles that are common to many—if not necessarily all—minority entrepreneurs, namely: discrimination, disconnection from support networks, and self-confidence.  

The report suggests that society as a whole—and in particular government and the wider business community—should take action to help minority founders overcome these difficulties. 

So what does that mean in practice? There is a slight circle to be squared within the report in that the research, on one hand, provides evidence that minority businesses are punching above their collective weight in terms of economic contribution while on the other, saying that assistance is required to remove barriers standing in the way of success.

But the truth is that the problems associated with discrimination and lack of access to the networks are real and not everyone will be able to deal with them. “Some entrepreneurs see discrimination and it gives them a burning desire to succeed,” says Legrain. “They overcome the obstacles. But other potentially very successful businesses fail.” 

In contributions to the report, a number of successful entrepreneurs echo the view that minority business owners face special challenges. Dr Gordon Sanghera, CEO of biotech business, Oxford Nanopore Technologies said: “Put simply, being a minority business founder is not easy–and while things are improving, we still have a long way to go in creating a more diverse and inclusive community across all sectors, but especially in science and technology.”

Ellenor McIntosh, Cofounder of hygiene product company, Twipes made the case for additional support: “There’s such an abundance of great ideas and budding business founders out there–some already scaling a company and others just starting off–but we need to do better in providing adequate funding and support.”

 The question then is, what can be done? One practical step—recommended by the report—would be a change in procurement policy on the part of large companies and public sector bodies. OPEN points to the role minority businesses are playing in fields, such as cyber-security, bio-tech, A.I. and exports and argues that there is a compelling case for large organizations to rethink procurement policies accordingly in order to access often cutting edge expertise. More generally, chain diversity is, after all, generally considered a good thing. 

However, while attitudes have changed over the years, there is still discrimination that deters buyers from engaging with vendors who don’t look like them or come from a similar background.   

You can’t change such attitudes overnight, but what you can do is takes steps to improve engagement. For instance, Legrain suggests that business trade bodies, such as the Confederation of British Industries, the Institute of Directors, and the Federation of Small Businesses step up existing efforts to attract members of from minorities. 

This will help founders from ethnic backgrounds establish the connections they need to succeed in terms of access to finance, advice, and inspiration from peers—and should also help to build confidence. It’s probably also true to say, that as increasing numbers of minority businesses achieve success, their founders will have an opportunity to put something back through activities such as mentoring.  

Finally, the report believes that schools can play a much greater role in helping to build confidence.  

Of course, you can point out that at least some of the problems faced by those covered in the report apply to others. People from working class backgrounds or migrants from the European Union are less well-networked than those from the middle and upper classes who went to private schools. Working class entrepreneurs cal also face discrimination linked to accent and manners rather than color. Class is, after all, a British obsession.  

But after a divisive Brexit campaign in which a call to nativism was used—at least by some—to get a leave vote over the line, this report provides a timely reminder that minorities will play a huge part in building Britain’s economic future.