Your money-making expert. Financial journalist, TV and radio personality.
If you’ve ever considered setting up your own ‘social enterprise’, you will be pleased to know that there is more help on offer than ever before.
Social enterprises contribute at least £60 billion each year to the economy and can be a great way to start operating your own business.
But what is a social enterprise?
Social enterprises are basically businesses that are changing the world for the better. Not only can you make money from this type of business, but you can also help society and the planet. The Big Issue, Eden Project, Age UK Enterprises, Plymouth University and the Co-op. These are all social enterprises that you might recognise.
Take a look at our guide to find more:
A social enterprise is a business that trades for commercial purposes, but also offers benefits to society. Many even go beyond this: their social and ethical responsibilities are just as important as the pursuit of profit. With each being intrinsically linked to the other.
Social enterprises have a clear ‘social mission’. This is what makes them different from other companies.
They have a firm emphasis on tackling social problems. Knowing what type of difference they want to make, who they aim to help, and how they plan to do it.
The profits a social enterprise makes are reinvested further into the company’s social mission. This way the positive social impact is as important to its business objective as any financial gain.
Also check out – Top 20 tips for running your own business
Any business can call themselves a social enterprise. However, to be recognised as one officially, then the Social Enterprise Mark of certification is needed. This is the only guaranteed way that a business truly operates and advertise as one. According to www.socialenterprise.org.uk all social enterprises should do the following:
Social enterprises specifically address social or environmental needs in society which makes it a positive business model.
Of course, like other businesses they have to compete in the market to make money. But instead of creating value for shareholders or owners, profit goes towards benefiting the worthy causes that they serve.
Social enterprises make their money from selling goods and services. When they profit, society profits too. This is because they reinvest their profits back into the business in a meaningful and tangible way.
Any business can become a social enterprise, from shops, cinemas, leisure centres, colleges to banks and more. You’ll be likely to find social enterprises in almost every industry because they can encompass a whole range of ideas. The social enterprise sector is huge and it’s growing all the time.
Although social enterprises aim to help good causes, like any business, a social enterprise has to create a regular income in order to survive. Unlike a charity, which relies on donations and is tax exempt, a social enterprise has no such luxury.
If you’re starting the project from scratch you’ll need to think hard about whether there’s a genuine market for the goods or services that you offer. It’s essential that there’s a public demand for your services as well as a social need. The company needs to be profitable in order to survive, like any company.
If you’re an existing company looking to transition into a social enterprise, we advise you to get in touch with an existing enterprise. You can then talk to them about what they do. Then see if this could be applied to your business strategy. Naturally, you’ll want to make sure your mentor isn’t going to be a competitor. Making a social enterprise work takes a lot of time, dedication, passion and commitment. Having an entrepreneurial team behind you will benefit you a great deal.
Thankfully the recent Government budgets make social enterprises a more attractive prospect for potential investors. Previously, investors would have gained more by investing in small private companies thanks to the tax incentives offered by the Enterprise Investment Scheme (EIS).
However, the Government is encouraging investment in social enterprises by providing the social investment tax relief scheme. This gives individuals a tax reduction of at least 30% of their investment, the same as it is for the EIS. This should help level out the playing field and make investing in social enterprises more appealing.
As social enterprises are community based there is also a lot more potential for grants, although it is by no means easy to get one. To begin looking for grants try grantfinder.co.uk and biglotteryfund.co.uk.
The Big Issue Invest, who have invested £20m in more than 160 social enterprises, also offer loans from £50,000 – £1m for social enterprises.
Running one can be a real challenge, especially when your work takes time to have an immediate impact on the community. As with all business models there are ups and downs to social enterprises.
Take a look at some pros and cons below.
Find out how to get funding for starting a business here.
Get weekly ideas, deals & freebies
New data capture form 2023. This is for the popup form to avoid duplicate IDs.
"*" indicates required fields