Businesses owned by ethnic-minority entrepreneurs contribute at least £74 billion a year to the UK.
But the contributions of minority entrepreneurs are often overlooked by policymakers, the wider business community and the public – according to a new report.
The report by OPEN, commissioned by MSDUK, concluded that the unique challenges encountered by business owners from ethnic minority backgrounds are also frequently disregarded.
Minority businesses make up a sixth of the six million businesses registered in the UK, and they employed almost three million people in 2019–20.
According to the report, eight of the UK’s 23 tech unicorns – private start-ups valued at $1 billion (£740 million) or more – were co-founded by minority entrepreneurs. In addition, 23 of the UK’s top 100 fastest-growing companies in 2019 were co-founded by minority entrepreneurs, including the No1 – Bulb Energy.
The report finds that minority entrepreneurs ‘succeed against the odds, identifying consistent challenges when establishing and scaling up their businesses.’
The challenges include direct and indirect discrimination; disconnection from key financial, business and political networks; and disproportionate levels of doubt.
While these challenges hold many minority businesses back, minority entrepreneurs also have particular strengths, notably their drive to succeed, determination to overcome challenges and diversity of skills, perspectives, experiences and contacts – say the report authors.
As well as spotlighting the disproportionate challenges the UK’s minority entrepreneurs face, the report also states that stronger support for minority entrepreneurs would provide a significant boost to the UK’s economic output.
Mixed-race gym owner Peter Oakden grew up in Cheadle, in Greater
‘It was pretty full on when my brother and I were kids,’ he says. ‘We got physically attacked and verbal abuse on a weekly basis. If I told you everything that went on you would be shocked.’
Peter has since founded CaveFit Gyms in Edinburgh, a natural extension of his lifelong interest in sports.
‘I was playing football at Port Vale with the intention of playing professionally but I got released at 16,’ he recalls. ‘That broke my heart. So I joined the Royal Marines. I just needed to get out of there.’
After leaving the Marines he worked at a gym before moving up to Scotland for work – that was when he had the idea to start out on his own.
‘My father died in 2014 and left me and my two siblings a little bit of money from his house. I got about £30,000 and I decided to just go for it with the gym and grab the bull by the horns.
‘I could have bought a house, but I wanted to do something bigger than that.
‘We’ve now got two locations, 12 employees, and we’re looking at growth over the next three years in Glasgow, Edinburgh and London. So that little amount of money and a lot of hard work has gone a long way.’
The contributions of minority-owned businesses
Minority Businesses Matter identifies six specific contributions made by minority businesses:
- Combating the coronavirus crisis: Minority businesses have developed rapid, accurate, low-cost Covid tests, sourced life-saving personal protective equipment, kept elderly people safe in care homes, enabled the NHS to provide online GP consultations, delivered meals to families during lockdown and developed a virtual events platform.
- Tech progress: Minority-founded businesses in tech include DeepMind, the world’s leading AI company now owned by Alphabet, and other unicorns that are leaders in video games technology, small-business finance, data-privacy compliance and cybersecurity.
- Innovation: Overall, 20.8% of minority-led businesses, and 24.3% of Black-led ones, engaged in process innovation in 2018, compared with 14.8% of white-led ones.
- Exports: Minority businesses can play a crucial role in boosting exports in a post-Brexit environment. Minority businesses in every UK region are more likely to export than others.
- Levelling up: Minority businesses can help the government achieve its top post-Covid priority of ‘levelling-up’ deprived areas outside London, notably because 21 of the 39 Top 100 businesses in England located outside London are based in deprived areas.
- Environmental sustainability: Britain’s leading retail energy supplier that relies exclusively on renewable energy is a minority business, Bulb Energy. Minority start-ups are also helping to provide eco-friendly solutions to issues such as biodegradable wet wipes and waste-water treatment.
Bestway founder Sir Anwar Pervez moved to the UK from Pakistan in 1956 at the age of 21.
‘I had nothing in Pakistan,’ he recalls. ‘My parents didn’t have money to send me to university.’
He began work as a bus conductor and driver in Bradford and saved money to bring his relatives to the UK. Eventually his family accumulated enough savings to open their first convenience store, Kashmir, in 1963 in London’s Earl’s Court.
The Bestway Group is now the largest independent wholesaler in the UK and also owns Well Pharmacy the third-largest retail pharmacy chain, as well as operations in Pakistan. With a turnover of £3.4 billion in 2018–19, it is the UK’s 13th largest privately owned company.
‘You cannot fail to be inspired by the stories in this report,’ says Martyn Fitzgerald, Senior Researcher at OPEN.
‘The paths of these minority entrepreneurs are as varied as the companies they founded, and all are testament to the social and economic enrichment that their businesses have brought to our country.
‘My research for this report revealed to me just how many minority businesses there are and the enormous contribution they make. We would be far less without them.’
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