Minority
Businesses
Matter Report

A report by OPEN for MSDUK

Sponsored by

Minority Businesses Matter Report

About this report

This landmark report presents ground-breaking data, fresh analysis and compelling stories on the contribution and challenges of minority businesses in the UK, as well as practical recommendations on how to make more of their huge potential.

Our message is simple. Minority Businesses Matter.

Key findings

Despite the huge challenges they often face, ethnic-minority entrepreneurs and businesses make a huge economic contribution to the UK.

1 million

of the 6 million businesses in the UK are minority owned

£74 Billion

GROSS VALUE ADDED

£3 Million

GROSS VALUE ADDED

8 of 23

UK tech unicorns minority co-founded

£18.5 billion

in foreign sales in 2019-20 by the top 100 Minority businesses

£4.7 billion

£4.7 billion corporation tax payments

Minority businesses produce valuable goods and services, provide jobs, create wealth, pay taxes and support local communities. Yet their contribution and challenges are often overlooked by policymakers, the wider business community and the public.

Our landmark report aims to help change that.

CHALLENGES AND STRENGTHS — SIX Ds

Minority entrepreneurs succeed against the odds, identifying consistent challenges when establishing and scaling up their businesses. 

These 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.

Challenges
  • Discrimination
  • Disconnection
  • Doubt
STRENGTHS
  • Drive
  • Determination
  • Diversity

6

SPECIFIC CONTRIBUTIONS

The report stresses that stronger support for minority entrepreneurs would provide a significant boost to the UK’s economic output and identifies six specific contributions made by minority businesses.

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Combatting 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.

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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.

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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, as are four of the five Scottish businesses in the Top 100 and one of the two Welsh ones.

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Exports

Minority businesses can play a crucial role in boosting exports in a post-Brexit environment. The Top 100 had £18.5 billion in foreign sales in 2019–20, more than UK exports to Japan (£14.7 billion) in 2019 – and much more than exports to Australia (£12 billion) or Canada (£11.5 billion). Minority SMEs in every UK region are more likely to export than others. In 2018, 15% of minority SMEs exported, compared with 13.9% of other SMEs.

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Innovation

Overall, 20.8% of minority-led SMEs – and 24.3% of black-led ones – engaged in process innovation in 2018, compared with 14.8% of white-led ones. Minority SMEs are also much more likely to engage in product or service innovation (30.3%) than others (18.5%).

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Environmental Sustainability

Britain’s leading retail energy supplier that relies exclusively on renewable energy, Bulb Energy, was co-founded by a minority entrepreneur. Minority start-ups are also helping to provide eco-friendly solutions to issues such as biodegradable wet wipes and waste-water treatment.

Combatting 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.

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, as are four of the five Scottish businesses in the Top 100 and one of the two Welsh ones.

Exports

Minority businesses can play a crucial role in boosting exports in a post-Brexit environment. The Top 100 had £18.5 billion in foreign sales in 2019–20, more than UK exports to Japan (£14.7 billion) in 2019 – and much more than exports to Australia (£12 billion) or Canada (£11.5 billion). Minority SMEs in every UK region are more likely to export than others. In 2018, 15% of minority SMEs exported, compared with 13.9% of other SMEs.

Innovation

Overall, 20.8% of minority-led SMEs – and 24.3% of black-led ones – engaged in process innovation in 2018, compared with 14.8% of white-led ones. Minority SMEs are also much more likely to engage in product or service innovation (30.3%) than others (18.5%).

Environmental Sustainability

Britain’s leading retail energy supplier that relies exclusively on renewable energy, Bulb Energy, was co-founded by a minority entrepreneur. Minority start-ups are also helping to provide eco-friendly solutions to issues such as biodegradable wet wipes and waste-water treatment.

The top 100

Minority businesses in the UK 2020

The Top 100 minority businesses in the UK by turnover.

Learn more

Dynamic Clusters

Minority businesses are increasingly diverse. They come in all shapes and sizes, span every sector and cover all parts of the country.

FABULOUS FOOD Minority entrepreneurs play an important role across every aspect of the food sector. They make, process, import, distribute and retail food, as well as serving it in restaurants.
FAST FASHION The generation of minority owners has driven a technological revolution in the fashion industry, such as Boohoo’s Missguided and Missy Empire.
FROM PHARMA TO PHARMACEUTICALS Asian immigrants stand out as owners of chemist shops or chains of retail pharmacies. Some moved into importing, distributing and even manufacturing generic drugs.
FLOURISHING FINANCIAL FIRMS Minority financial businesses play an important role in lending to small businesses and helping them to process payments online. Unicorn OakNorth Bank stands out in this category.
HOTELS AND TRAVEL Immigrant entrepreneurs have succeeded in the capital-intensive hotel trade and some who made their fortune in other industries have subsequently bought hotels as part of their investment portfolios.
TERRIFIC TELECOMS Minority owned brands such as Lycamobile and Lebara stand out but the most successful was MSI and former owner is now a billionaire and philanthropist.
FROM LABOURERS TO CONSTRUCTION BUSINESSES Immigrants have long worked as labourers in the building trade – and some have gone on to run successful businesses, such as: Fortel Construction Group, Lords Group Trading and Stanmore.
MANUFACTURERS, METALS, CHEMICALS, While minority businesses are under-represented in this sector, we have good success stories such as Bulb Energy, State Oil (Prax Group), Liberty Steel and Hinduja Automotive.
MEDIA MOGULS Minority entrepreneurs from all backgrounds are making their mark in this industry, especially black entrepreneurs such as John Lenney Junior who launched Radio Cardiff, and Femi Adeyemi, founder at NTS Radio.

Recommendations

Minority businesses would benefit from the support offer to businesses in general, but the report focuses on laying out recommendations to tackle the three main challenges of discrimination, disconnection and doubt.

Tackling discrimination

Large businesses – starting with FTSE 100 leading companies and multinationals with UK operations – should make public their annual spending on procurement from minority businesses and commit to establishing or enhancing their supplier-diversity programmes. Moreover, government and public-sector bodies should take the lead in integrating supplier diversity into their procurement strategies, including the tender and contracting processes. Additionally, government, businesses and other organisations need to put in place rigorous processes to systematically address discrimination in their recruitment, promotion, procurement, investment and other business decisions.

Creating connections

Mainstream business organisations need to make a bigger effort to attract minority businesses, cater to their specific needs and represent their interests more effectively. Organisations such as MDSUK that connect minority businesses with large corporates need to do more to provide support to minority entrepreneurs and highlight their contribution and challenges to a wider audience, including policymakers. Decision-makers at all levels need to take more account of the interests of minority businesses in framing policy, regulations, funding and support programme and should consult with minority businesses and minority-business organisations such as MSDUK.

From doubt to self-confidence

Schools, universities and other education and training providers need to do more to equip young people from minorities with the self-confidence and skills to succeed. In addition to acting as role models, successful entrepreneurs – especially minority ones – ought to play a bigger role in mentoring the next generation of minority business founders.

Better data

To better evaluation around the performance, problems and policy needs of minority entrepreneurs, corporate officers should be required to provide their ethnicity and country of birth in Companies House filings.