The world has evolved and changed so much in just a few years, which has polarised and divided society. The war in Ukraine, the long- term impacts of the pandemic, the race to create a Covid-19 vaccine in order to resume everyday life and now, the cost-of-living crisis. Yet there is a contradiction between what we strive to achieve in modern life and that which enmeshes current politics in the history of colonialism and systemic racism; ever-present and yet to be dismantled. No individual can tackle something built by the majority- that is certain. A barrage of economic conflicts in recent years, have left many businesses struggling to stay afloat, which requires strong national leadership to support entrepreneurs as the life-blood of the economy.
Many Black businesses are failing to break beyond the boundary of more than £100k turnover per year. However, there are a percentage that have achieved not only sustenance, but growth, in terms of job creation - taking on up to 50 employees and generating enough turnover to be considered bigger businesses - those considered medium sized in the UK. We want to understand the process of growth from solopreneur to becoming a bigger business and the barriers faced as part of that journey. The success of businesses further on in their operational life is an important part of modelling business success and building an ecosystem that listens and is inclusive.
THE LANDSCAPE FOR BLACK BRITISH ENTREPRENEURS
Our research focuses on Black people living in Britain, actively running a business, or with ambitions to run a business in the future. This year we saw just under 1000 respondents take part, with just over a third (34%) of business owners operating a business without a partner or employees, identified as ‘solopreneurs’, which is in line with other data on SMEs in the UK .
WHO WE SPOKE TO
A BUSINESS COMMUNITY OF SOLOPRENEURS
A considerable proportion of Black business owners were identified as solopreneurs, representing a third of our total sample, with 7 in 10 of them women and just 3 in 10 men. Working independently without co-founders or employees and with minimal access to funding was a burden that resulted in a significant decline in mental health for many respondents.
74% of solopreneurs had overwhelming concerns about equal opportunities compared to non-Black businesses; the burden of running a business compounded with the isolation of lone working, racial discrimination and lack of formal support networks create a picture of heavy responsibility and a position of inaccessibility for this group to grow.
“For a long time, I stayed stagnant. It nearly ruined my business. I’ve had bouts of depression. For a long time, I’ve asked for another person to front the business so that I could grow. This dented my confidence a lot.”
Female, 47, West Midlands, Professional services
Nearly two thirds (62%) of Black solopreneurs raised a nominal £5,000 maximum in funding, compared to 41% of businesses with at least two employees that sought the same amount. 16% of solopreneurs raised between £10,000 to £100,000, paling in comparison to 39% of bigger businesses with two or more employees raising between the same amounts.
There is clearly a link between business owners not accessing funding, for a variety of reasons and the lack of funding available to Black businesses, which can lead to stagnant and even declining business - thus the finding that 18% of our future entrepreneurs had actually tried to set up in business before unsuccessfully. The resulting harm is that many solopreneurs' chances of growing into larger, more sustainable businesses slip away.
Even when managing to stay in business there is a shocking disparity between Black solopreneurs who had a mean turnover of £23,000 and the UK average turnover of £72,000. Our findings show that a massive 61% of Black solopreneurs had an annual turnover of less than £20,000.
SIDE HUSTLERS: MAKING THE LEAP TO ENTREPRENEURSHIP
One in five businesses was operated as a side hustle, meaning Black entrepreneurs were managing the pressures of employment or study and running a business as well. Among solopreneurs, the number of businesses operating as a side hustle was even higher – with 29% having to manage multiple demands.
BARRIERS FOR BIGGER BUSINESSES
We were delighted to see 61% of business owners this year identifying as joint partnerships with two or more founders and employing teams. This group was running micro companies with 2-9 employees and building beyond solo ventures. 14% ran businesses with 10–49 staff, and 13% had 50 employees or more. What was also interesting was that over half (53%) of Black business owners with 50 or more members of staff were aged 26–40, evidence that age doesn’t necessarily play a part in the viability of a business.
In terms of financial turnover, it is important to recognise that there is again a significant gap between the bigger micro-businesses we saw in our survey and the UK national average – indication that something beyond business acumen and funding plays a part in the wealth gap. Despite bigger micro-businesses with 50 or more employees achieving a much higher turnover than that of solopreneurs, 56% still only had an annual turnover of up to £100,000.
The national average turnover in the UK is £156,74920 for businesses of all sizes and £262,458 for small businesses of up to 50 staff, leaving a remarkable void between Black businesses and other businesses in the UK. The reasons for this, as evidenced throughout our findings, are the ceaseless barriers Black business owners continue to face, including mental health deterioration, a lack of access to funding, discrimination and impeded access to equal opportunities.
We have come to understand that there is a hyper-awareness and vigilance that comes with being a Black body in a white space. Black business owners want to be seen without being judged on any preconceptions and want to leave interactions with financial institutions feeling understood, on a level playing field and unharmed by structural violence. This means shifting the thinking of institutions from being right to being responsible and accountable. This must be recognisable in the way institutions communicate with the Black business community – only then can unity in the community prevail.
Table 1: National average turnover vs UK Average Turnover of Black Businesses, Black. British. In Business & Proud 2022
