Time to break down the barriers holding back ethnic minority entrepreneurs
The past few months have been incredibly challenging for many of us on many levels.
An extended lockdown period has disrupted personal and professional lives, triggering one of the sharpest recessions in history.
One positive we can point to, however, is the opportunity to sort out the structural inequalities that prevent millions from achieving their full potential. And we know that harnessing the full power of the UK’s entrepreneurial talent in particular will be vital to our economic recovery.
Published today, our report, compiled in partnership with Aston University’s Centre for Research in Ethnic Minority Entrepreneurship (CREME), highlights the massive economic contribution made by ethnic minority-owned businesses (EMBs).
But it also brings to the fore challenges many face in starting and running these businesses. Unless these challenges are addressed, our recovery will be at risk.
Many EMBs operate in some of the areas worst-hit by Covid-linked disruption, such as retail, hospitality and transport. But they are more likely to be detached from formal, mainstream networks of business support.
The inspiring stories of the corner shop owners, taxi drivers and takeaways who served their communities throughout the pandemic highlighted how embedded such businesses are in the lifeblood of local life. These community leaders must not be left without help.
EMB owners have told us they find the lack of networks a barrier to accessing funding to grow their businesses. That’s why we’re calling for a new dedicated scheme to help EMBs access external finance.
The benefit to the UK economy could be huge. For example, our research shows that 30 per cent of the black working age population aspire to become entrepreneurs, but that only a very small proportion actually go on to set up a business. This cannot be ignored
We know from our research that EMBs are more likely to be innovative and growth-focused than non-ethnic minority firms, with 30 per cent engaging in recent product or service innovation — 11 percentage points higher than non-EMBs. In a post-Covid world where the trading landscape will be uncertain, such agility and innovation will be vital.
So what can be done to enable EMBs to flourish?
First, the government should further encourage this innovation by introducing digital vouchers for all small businesses, especially EMBs, enabling them to adopt new technologies and enhance their digital offering.
Second, note that the number of ethnic minority entrepreneurs who are self-employed grew by 46 per cent between 2011 and 2018, twice as fast as the total self-employed population. To capitalise on this, the government should facilitate high quality self-employment by increasing training levels and also scale up the New Enterprise Allowance to help more people from long-term unemployment into self-employment.
Better protection for those in self-employment is also a must. Those who work for themselves lack the protection of employees, and nobody has recourse to an employment tribunal if they lose a client because of discrimination.
Too often, we have seen that “one size fits all” approach to policy too often fails the diverse and ever-changing needs of different EMBs. We need to switch focus — because by opening up more opportunities for inclusive growth, it will benefit the country as a whole.
As minds turn to long-term recovery, it is vital that the government tackles these barriers to allow EMBs to flourish. We need to see real change — now.
Main image credit: Getty