How enterprising are social enterprises?


Alliance magazine


Social Enterprise UK’s State of Social Enterprise Report 2015 presents a pretty cheerful picture.

According to the report, half of the UK’s social enterprises are making a profit (though this has dropped slightly since 2013 when it was 55 per cent) and another quarter are breaking even. The proportion of them that increased their turnover over the past 12 months is 52 per cent, while the corresponding statistic for mainstream SMEs is 40 per cent. They also lead mainstream SMEs in job creation: 41 per cent of social enterprises created jobs in the past 12 months compared to 22 per cent of SMEs.

They also appear to be more innovative, pound for pound, than their mainstream counterparts. The number of social enterprises introducing a new product or service in the last 12 months has increased to 59 per cent, whereas, among SMEs that percentage has fallen to 38 per cent.

Seventy-three per cent of them also earn three-quarters or more of their income from trade and increasingly from export trade. Admittedly, however, the increases here are modest. The proportion of social enterprises that export or license is now 14 per cent and for about a third  of that percentage, international trade accounts for between 11 and 50 per cent of income – in other words, four or five per cent of social enterprises derive some income from international trade.

How social are social enterprises?
Here again, the report paints a picture in bright colours: 31 per cent of social enterprises are working in the top 20 per cent most deprived communities in the UK. Forty per cent of them are led by women; 31 per cent have Black Asian Minority Ethnic directors; 40 per cent have a director with a disability. Fifty-nine per cent employ at least one person who is disadvantaged in the labour market and, for 16 per cent of social enterprises, this group forms at least half the total number of employees.

The ‘buts’…
In a generally positive outlook, there remain a few of these.

Twenty-seven per cent are reliant on public sector, in one way or another, for their income, a proportion which has increased from earlier reports in 2011 and 2013, and 59 per cent of social enterprises do some business with public sector. You can choose to look at this as illustrating their strength in providing public service. You can also see it as a worrying dependence on public sector contracts.

The Social Value Act, introduced in 2012, which requires public bodies to consider choosing providers based on the social value created in an area and not on cost alone, was hailed as a big step forward for social enterprises. However, almost half (49 per cent) of social enterprises operating in public sector markets say they’re yet to see it arrive in tender documents.

Perhaps the greatest cloud on the social enterprise horizon, however, certainly the most cited barrier to the sector’s growth is finance: 39 per cent of the social enterprises surveyed believe its lack of availability is a barrier to their sustainability. Just 5 per cent of SMEs think access to finance is a barrier.

To read or download the report:

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