BUSINESSES RUN by entrepreneurs from black and minority ethnic (BAME) backgrounds contribute as much as £25 billion to the UK economy but are still being held back by barriers that hinder their growth a new report has found. 

The report called Unlocking Opportunity from the Federation of Small Businesses (FSB) and Aston University’s Centre for Research in Ethnic Minority Entrepreneurship (CREME) found that in 2018 BAME-led businesses contributed the economic equivalent of Greater Manchester.

Innovative

These businesses were found to be more innovative than non-ethnic minority led firms, with 30% engaging in recent product or service innovation, 11 percentage points higher than their white counterparts.

COVID-19,which has brought structural inequalities in the UK to the fore, saw many BAME business owners, particularly cornershop stores and food companies at the forefront of serving their local communities.

However many BAME entrepreneurs have struggled to access external finance to help their business survive and grow.

The report also found that they are often detached from mainstream business support.

Over a 16-year period, nearly 30 per cent of people on average in the UK’s BAME population were typically involved in thinking about, setting up or operating a business venture, nearly twice the level of the non-ethnic population. 

However only 3 per cent of respondents over that time period have been reported as running a start-up suggesting that a high number of would-be black entrepreneurs do not realise their potential.

The report is calling for a comprehensive national study of ethnic minority entrepreneurship in the UK, so that business support agencies can better assess trends and target business support.

Alongside the economic contribution ethnic minority businesses make, we must also note the vital role they play in contributing to thesocial value in our communities, by creating jobs and wealth, but also enhancing the social fabric in our society, something which is much harder to quantify, but has been demonstrated during the COVID-19 pandemic

Mike Cherry, FSB National Chairman

FSB National Chairman Mike Cherry said: “This new research shines a spotlight on the important contribution made by ethnic minority businesses to the UK economy.

“If we unlock opportunities for ethnic minority entrepreneurs, this will benefit the UK as a whole. We know from this research that ethnic minority businesses are incredibly innovative and the government must harness this by ensuring they are not left out of national strategies and are able to play a vital role as part of a diverse public procurement framework.

Impact

“As we look to the immediate economic impact of the pandemic, we know from research by the Enterprise Research Centre that many ethnic minority businesses have less resilience than the business population as a whole.

“With a high proportion of ethnic minority businesses  operating on the ‘metaphorical frontline’ in their communities, the government should look to target business support, especially as these businesses traditionally have had lower engagement with mainstream support.”

Value

He added: “Alongside the economic contribution ethnic minority businesses make, we must also note the vital role they play in contributing to thesocial value in our communities, by creating jobs and wealth, but also enhancing the social fabric in our society, something which is much harder to quantify, but has been demonstrated during the COVID-19 pandemic.”