Starting a Social Enterprise

Social enterprise comes in all sizes, from small community cafes to really big international organisations.
Setting up a social enterprise – or changing an organisation from a charity, public sector of private business into a successful social enterprise can be daunting, exhilarating and challenging experience.

Get an idea of some of the exciting organisations in the sector at Social Enterprise UK’s membership directory.

Social Enterprise UK has produced a guide to starting your social enterprise. The guide takes you through the essentials from finding investment and funding to deciding on the most suitable legal structure for your social enterprise. Throughout the guide they’ve provided some words of wisdom from social entrepreneurs – what they wish they’d known when they were starting out. 

You may also find it useful to visit gov.uk for the government’s guide to setting up a social enterprise.

Ten Steps to Starting a Social Enterprise

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Form follows function

Don’t get hung up on choosing the right legal structure early. There are half a dozen possible structures for a social enterprise, but if you decide first what you want to do, and how you want to do it, those options are reduced. 

Get the right mix of skills and experience

Business scholar Michael Gerber suggests that there are three broad roles for starting and sustaining a new business – the entrepreneur (who has the vision and ideas), the technician (who does the work) and the manager (who makes it happen). Then there are more specific skills like financial management. Identify your weaknesses and build your team to plug the gaps.

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Clarity of purpose

Be sure you can articulate your vision and purpose clearly and succinctly (in a 60 second pitch?) You should be able to share vision and values with your team and external ‘stakeholders’ so that everyone is pulling in the same direction. 

Know your market

As a social enterprise – meeting the needs of your clients/ customers/ service-users is paramount. Make sure you know what those needs are, and that there is both a ‘gap in the market and a market in the gap’ to give your enterprise the best chance of succeeding.

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Flexibility in a framework

If the early stages you should be clear about what you are trying to do and try to capture the concept in words both verbally (the 60 second pitch above) and in writing (through a draft business plan) Your plan will develop as you go along; putting some thoughts on paper early on will help crystallise them.

Make sure the figures add up

Understand the relationship between cost, price and value to give your new enterprise the best chance of being financially sustainable. Don’t under-estimate costs, don’t under-price your products and services (but it’s OK to have a range of prices that recognises the differing abilities of your customers to pay). 

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Know the environment

Become an information-gatherer – on your competition, and opportunities for collaboration – with other social enterprises and the private sector – to combine your specific expertise.

Passion, persistence, patience

Passion persuades – you can go a long way to get people to help and support your efforts if you can inspire them. But don’t let your heart rule your head – the essential business idea must stand up – financially and socially. Over-night success is unlikely – you must be in it for the long haul.

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Kit yourself out

When starting a business there’s likely to be a lot of blood, sweat and tears. But long hours and low pay are not sustainable and social enterprise is about a better way of doing business, so good working conditions are important.

Plan your journey

Know where you’re going, monitor your progress, and make sure your systems are in place and running smoothly. But don’t overdo it – you can’t drive while reading a map with the bonnet up – sometimes you have to just get on and do it! 

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Are you a charity? How you can diversify as a social enterprise…

Charities can diversify their income streams by looking to social enterprise. 

As charities face a tougher funding environment, this free guide from Social Enterprise UK aims to help those trying to diverisfy their income by becoming a social enterprise.

The guide has been produced by Social Enterprise UK (SEUK) and Pilotlight, a charity that brokers free business coaching to small charities and social enterprises to help them grow and become more sustainable. It also includes expert legal advice from charity specialist solicitors, Bates Wells & Braithwaite.

Find out how social enterprises can help meet many of a local authority’s objectives, and get practical advice about how local authority teams can engage with social enterprises to benefit the communities they serve and in particular relating to social value.