Counting on Black business

Black-led employers make up just 0.1% of UK small and medium sized businesses.

Roni Savage is many things to many people: founder of Jomas Associates, an award-winning engineering firm, adviser to the Federation of Small Businesses, a proud mother of three sons, and one of our outstanding graduates from the Goldman Sachs 10,000 Small Businesses programme which we deliver here at Saïd Business School.

Roni started her company in 2009 in Uxbridge in London and today it employs over 25 people with satellite offices across the UK. ‘I have seen my company grow in strength and size’ she says ‘and it is so rewarding to not only see the company succeed but also to see the impact the company has through job creation and development opportunities in the areas we are based in.’

But as a British businesswoman of Nigerian descent, Roni is also one of the very few Black entrepreneurs in the UK and with that comes a number of additional hurdles. She is seen as a role model for Black business owners and has spoken in media interviews about how advocating for those disadvantaged by their race or gender is a joy. However, for Roni standing out by simply looking different is a real challenge. She told us that ‘entrepreneurship can often be a lonely endeavour without a safety net, and having a network of peers is invaluable. When you walk into a room and no-one else looks like you or has similar lived experiences, that makes it even lonelier and creates a bigger hurdle to overcome.’

Indeed, the UK’s small business landscape is overwhelmingly white. According to the latest Government figures, just 6% of small to medium sized enterprises (SMEs) that employ at least one person are led by people of minority ethnic groups (MEG). Of them, only 11% are run by Black entrepreneurs. That’s an estimated 9,321 Black-led employers out of 5.6 million SMEs in total - just 0.167% of the SME population. (See references below)

This is an astonishing figure, one that underscores not only the business but also the moral imperatives surrounding racial inclusion among SMEs. Drawing on the latest research and our experience delivering education programmes supporting diverse communities, we offer three items that should top the policy agendas of small business advocates.

From small businesses to medium sized businesses

First, while micro and small businesses (with 1–9 or 10–49 employees respectively) are undoubtedly important, the UK economy needs more medium sized businesses in general and more Black-led medium sized firms in particular.

BDO, a business advisory company, reports that the UK’s medium sized firms (having 50–249 employees) employed more people in 2019 than small businesses and the FTSE 350 put together (7.6 million people, compared to 1.6 million and 6.9 million respectively). Medium sized companies, then, are truly the beating heart of the British economy. Yet Black entrepreneurs are largely absent from this vital growth sector.

Interpreting the most recent British Government data, we estimate that there are only 200 or so Black-led medium sized firms in the UK. Most Black-led employers are micro enterprises (approximately 7,670 in total) or small businesses (1,390). Gaps in business advice and in access to finance likely contribute to this lack of growth among Black employers. Constrained, they are less able than others to support the UK economy through job creation.

From social aspiration to social impact

Job growth and increasing employment are only one part of the picture. A second item for policymakers involves local communities - communities benefit when Black businesses thrive.

A survey by the British Business Bank finds that Black entrepreneurs are especially motivated by social aspirations, with 20% of Black respondents saying they started their business precisely to help their communities. (Only 7% of white respondents said the same.)

Ideally, Black business owners would have ample resources to meet their business needs alongside their social aspirations. But, as data from the British Business Bank shows, Black entrepreneurs spend the most time and money, out of all ethnic groups, in developing a basic business idea. What’s more, they have the worst business outcomes as measured in median financial turnover (£25,000 per annum compared to £40,000 for Asian and other ethnic minorities) and labour productivity (£13,125 per annum compared to £22,222 for white entrepreneurs). While even the smallest firms can positively impact their local communities, highly motivated and properly resourced companies could do much more.

From business owner to role model

A final policy item is this: we need more Black businesses because society needs more Black business role models. This will assist in dispelling stereotypes.

Speaking to this point, Roni shares this story from earlier in her career with Pride Magazine: 'I've attended a construction meeting where I was the chair and when I walked in someone immediately said: “Black coffee with two sugars, please.” I was wearing a suit and was clearly not there to provide the drinks. My response was “And mine is white, no sugar, and I’m Roni Savage”. The shocked reaction is a result of stereotypical expectations.'

For millennia, societies have recognised the power that role models have upon the human imagination. (Think religious saints, geniuses like Einstein, or a favourite family member.) With them, people see the heights of human possibility. Without them, they lack an important source of inspiration. Given the UK’s virtual lack of Black-led employers (0.167%), the ‘uninspired’ behaviour described in Roni’s story comes as no surprise.

Aiming to expand imaginations, Roni speaks with conviction: ‘I want to give people opportunities so there are no limitations to what they can achieve, and are not disadvantaged by their gender or race. In my children’s generation [I hope] they are not standing around thinking “Why are we the only ones who look like us” in the room.’

Fortunately, Roni is helping lead the way for black and female business owners, and those who count on them. At Oxford Saïd we too are playing our small part to empower and enable SMEs and we hope that they, too, can count on policy makers and small business advocates to support their growth.

Authors

Edward A. David is a postdoctoral research fellow and senior consultant for the Goldman Sachs 10,000 Small Businesses UK programme based at Saïd Business School.

Joel Byman is reading for an MPhil at the University of Oxford and previously studied Economics at Harvard College.