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Black businesses in London

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2001, Mayor of London Report.

There are over 10,000 black-owned businesses employing one or more staff in London (4 per cent of all London businesses).
• 25 per cent of black business owners are women (compared to 21 per cent for White and 17 per cent of Asian business owners).
• Black-owned businesses are underrepresented compared with the proportion of London’s population which is black. Black-owned business comprise 4 per cent of all businesses, but 12 per cent of London’s population is black.
• Most black-owned businesses are small (61 per cent have one to four employees, compared to 49 per cent for White-owned firms and 47 per cent for London as a whole)
• Black-owned businesses in London have a total turnover of almost £4.5 billion.
• Black-owned businesses provide around 70,000 jobs (3 per cent of total London employee jobs)
• The two biggest industries for black-owned firms (in terms of number of businesses) are Real Estate, Renting and Business Activities (broadly Business Services) and Wholesale & Retail trade.
• Black businesses seem to have shown great resilience during the recent slowdown.
• Black businesses are innovative – they are more than averagely likely to introduce innovations in goods, services or business processes, and significantly more likely than the average to derive substantial benefits from such innovations.The black, African and Caribbean communities in London’s economy

• According to the 2001 Census the black population of London (African, Caribbean and black Other) is over 782,000 or almost 11 per cent of the total population (343,000 Caribbean, 379,000 African and 60,000 black Other) – See Table 1 below. This rises to over 880,000 if you include mixed white and black Caribbean and mixed white and black African.
• Around 66 per cent of the black working age population of London is economically active, slightly lower than the average for all ethnic groups, which is 68 per cent.
• Unemployment rates are high. In 2001 the ILO unemployment rate was Ready for Business: The contribution of black businesses to London’s economy. 16 per cent for black Africans and 12 per cent for black Caribbeans
compared to 6.7 per cent for the total population and 5.3 per cent for the white population. However, unemployment is lower among black women compared to black men. (This is true for most ethnic groups).
• There are over 24,000 self-employed black people in London. However, this is only 8.6 per cent of all black people in employment. The average for all ethnic groups is almost 15 per cent.
• Indian, Pakistani and Chinese people in employment are more likely to be self-employed than the average, while black African and Caribbean people are less likely. (Source: Census data, Crown Copyright)
Black people are underrepresented in the more highly-paid professional and managerial occupations and over-represented in lower paid occupations such as in sales and customer services (see GLA (2003), Black People Pushing Back the Boundaries).
• 10 per cent of African and Caribbean workers are managerial and senior officials compared to 17 per cent for the average across all ethnic groups.
• 8 per cent of African, 9 per cent of Caribbean and 12 per cent of black. Other workers are employed in sales and customer services occupations, compared to 7 per cent for the London average.
• African and Caribbean workers are distributed across industries in approximately the same patterns as the population as a whole.
However, black workers are overrepresented in the health and social work, Public administration and Transport sectors. Interestingly, the same proportion of black African employees is employed in Business Services, as for the population as a whole.Within the broad category of black-owned businesses, around 22 per cent are owned by black Caribbeans (approximately 2,200 businesses), 28 per cent by black Africans (approx. 3,000 businesses) and 21 per cent by black Other (approx. 2,200 businesses). Mixed-white and black Caribbeans own 20 per cent of black businesses (approx. 2,000 businesses) and mixedwhite and black Africans own 9 per cent (approx 900).Black-owned businesses are more likely to have the legal structure of sole proprietorships or partnerships and less likely to be private limited or public limited (quoted on the stock market). This no doubt is at least partly a reflection of business size. Black-owned businesses in London tend to be smaller than averageTurnover
The turnover of black-owned firms in London is estimated by the London Business Survey at around £4.5 billion. Black-owned businesses seem to be disproportionately concentrated in the lower size band (up to £50,000), compared to all businesses. However, roughly the same proportion of black-owned businesses as total businesses are
medium-sized with turnover of £50,000 – £500,000.While Business services is the biggest sector for black-owned businesses (around 25 per cent of all black-owned businesses are in this sector), it is not quite as important for black-owned businesses as for all businesses (40 per cent of all businesses are in Business services). Black-owned businesses are over-represented in industries such as Hotels and Restaurants and
Other Services (including membership organisations, recreational, cultural and sporting activities, and services such as hairdressing). Thus, there is some evidence of sectoral concentrations in different areas than for all businesses. However, it does not seem to be the case that black-owned businesses are as highly concentrated in ‘niche-markets’ as has been
suggested in the literature4. In particular, the propensity of African and Caribbean businesses to be concentrated in the construction industry appears to be less strong now than it was ten years ago.
Nonetheless, black businesses-owners appear to be significantly underrepresented in certain sectors. The industries in which black-owned businesses appear to be the most underrepresented are Business Services and Financial Services. This is important as these two sectors are the two highest productivity sectors and a significant part of London’s economy.
Business services has been the single fastest growing sector in London’s economy over the past two decades. And the London Plan predicts that it will continue to be one of the fastest growing sectors to 2016.6 If blackowned businesses are less concentrated in these sectors than other businesses, then they may be less able to take advantage of projected future growth in these sectors. Financial and Business services account for around 32 per cent of employment in London and around 40 per cent of London GVA.