We have been working to set up social enterprises since the early 1990’s and bring a unique understanding of the charity and commercial issues facing any social enterprise. We use our proven techniques developed in a unique mix of commercial, voluntary and statutory experiences to help create and support social enterprises so that they can be successful.
In our experience the issues that are likely to undermine a social enterprise include:
- Lack of money to fund the start up period until the enterprise is viable
- Too much pressure on too few individuals often volunteers
- Lack of sales and marketing expertise
- Focus on social rather then income generation
- Not building on experience and existing contacts but trying something totally new
- Lack of clarity about the social impact that is being generated
WHAT IS A SOCIAL ENTERPRISE?
Social Enterprises are part of the growing "social economy". The social economy is a thriving collection of organisations that exist between the traditional private sector on the one hand, and the public sector on the other. Sometimes referred to as the "third sector", it includes voluntary and community organisations, foundations and associations of many types.
The social enterprise sector occupies the ground between the purely charitable and the purely private sectors. It is not an easy option, as you need to balance both the social mission and profitability – the double bottom line. Social Enterprises have to have some understanding of both cultures and are often not understood by either. Banks are used to working with the commercial/private sector and they often don’t understand the legal and management structures, they are just interested in the profit. Grant funders often feel that trading, profit and building reserves (i.e. operating in a more business-like manner) has less social value. Approaching advice and support agencies, which traditionally service one or other of the sectors can be very unsatisfactory. This is changing but it still has some way to go.
Social Enterprises stand out from the rest of the social economy as organisations that use trading activities to achieve their goals and financial self-sufficiency. They are businesses that combine the entrepreneurial skills of the private sector with a strong social mission that is characteristic of the social economy as a whole.
The social objectives will normally be one or more of the following:
- Offering social or environmental goods and services (e.g. recycling, childcare)
- Trading to provide social or environmental goods and services (e.g. the trading arm of a charity)
- Using trading processes or trading activities that have a significant social benefit (e.g. training programmes for long-term unemployed individuals, or providing work-based activities for people with disabilities)
It is useful to remember that Social Enterprise refers both to forms of organisation - and to an activity that takes place in a great range of organisations (including many charities, voluntary and community organisations).
Social enterprise business and legal structures
You need a legal structure for your business which is a social enterprise.
If you want to set up a social enterprise business that has social, charitable or community-based objectives, you can set up as a:
Mutuals owned and run by the members such as
Community Interest Companies
- Community interest company (CIC) – a type of limited company that exists to benefit the community rather than private shareholders. A CIC can be any type of company even a community interest plc. It can be limited by guarantee or shares and pay dividends
- To set up you need:
- A ‘community interest statement’, explaining what your business plans to do
- An ‘asset lock’- a legal promise stating that the company’s assets will only be used for its
social objectives, and setting limits to the money it can pay to shareholders
Social Enterprise Launch Plans
We have been helping to create sustainable social enterprises for over 20 years.
The 3rd Sector Organisation Roadmap™ is a proven social enterprise support process developed by inspire2aspire and used with many clients which is designed to ensure you get what you need to help you achieve success in the future.
The Proposal Blueprint™
The Proposal Blueprint© also outlines our ethical standards and methods of working and gives examples of our work and what existing clients think about us.
Once you have our comprehensive proposal you can be confident that you know what you will be getting and that we have understood the issues you face and what you want to achieve.
The Responsibility Charter™
We find that a project works more effectively and efficiently if everyone understands their roles and who will do what. We also seek to understand what specifically will make you feel that the project has been a success when it is completed.
The Inspirational Process™
We have a unique method that we have developed to help Third Sector organisations identify new inspiring opportunities. Together with you we will run a creative session to identify an exciting vision and new ways to change the world for the better.
The Income and Values Balancer©
We work with you to understand how you want to balance income generation, social impact and values and the impact this will have on the organisation.
The Here and Now Diagnostic™
To be successful on a journey we need to understand exactly where we are starting so we undertake a comprehensive market review as well as research within your organisation.
The Priorities Matrix™
Having gathered lots of information we use the parameters agreed to prioritise the best opportunities by bringing together the Inspirational Process™, the Income and Values Balancer™ and the Here and Now Diagnostic™.
The Impact Builder™
We want to capture what makes you unique to motivate everyone who reads about you to want to help you be more successful.
The Success Accelerator™
The final stage is to produce a very detailed report for you including our findings and our analysis of the best solutions for you and how we have reached these conclusions.
The document is clear enough to be a recipe for future action and can be used to explain to funders and the outside world how you will achieve success in the future
Social Enterprise Funding
There are some specialist funds for social enterprises and many general funders such as the Big Lottery will also fund some social enterprise activity. To get social enterprise funding you need to be really clear about what your social impact is and be able to convince the funder that you are a social enterprise not just a business.
Funding is always changing - Funding Central is a free website which includes funds for social enterprise.
Before you apply for social enterprise funding you need to know why you want it and how it will be used. This generally means you need to have a business plan in place. Unlike business plans written purely for commercial success the focus needs to be not only on how you can maximise your financial return but also focus on how you can maximise the impact you make as an organisation. Funders of social enterprises are looking for you being ethical but it does not mean money does not matter.
The types of funds you need will range from:
- Seed corn to develop ideas and undertake feasibility studies
- Revenue to support growth and cash flow particularly if you undertake any Payment by Results contracts
- Capital to develop buildings or pay for equipment
As well as grants many social enterprises now look at Social Investment or traditional sources of finance to get loans. The largest social investor is the Social Investment Business.