Tips and advice on starting up a social enterprise

Ahead of Social Enterprise Day on 16th November, businesslink.gov.uk has teamed up with the Social Enterprise Training and Support Consortium (SETAS) to provide tips and advice for would-be entrepreneurs thinking about starting up social enterprises.

Social enterprises – defined broadly as businesses with social purposes - now contribute £8.4 billion per annum to the economy. With 55,000 in the UK, they are becoming an increasingly popular way of setting up and running a business.

Jamie Oliver’s Fifteen restaurant, the Big Issue and the Eden Project are just a few high profile examples of social enterprise success stories in recent years.

Jonathan Hollow, Portal Editor at businesslink.gov.uk commented: “The figures show that supporting or making a positive contribution to the community through business is an increasingly popular option. However, it is important for people who are thinking of starting up a social enterprise to balance their passion with the right business sense to ensure that they get the most out of running their enterprise.

"Because there are several types of social enterprise - from trusts to community benefit schemes - it is also important to choose the right legal structure as it will have implications on the way the business is run.”

If you're thinking of starting a social enterprise here are the top tips from businesslink.gov.uk and the Social Enterprise Training and Support Consortium, on what to consider when setting up such a project:

Top Tips on starting up a social enterprise

Clarify your objectives
Think about what you are trying to achieve and be clear about the needs or social and environmental goals you are setting yourself and want to meet. They should be things that you are passionate about and that you really believe in.

Strike the balance
Ensure that you are not blinkered in your approach and don’t let your social objectives blur your business direction. Successfully running a social enterprise will require you to balance your social aims with business sense.

Decide on your business model
Do you want a social enterprise, or an ethical business? Should it be a “not-for-profit” business which uses its surpluses to invest in its aims, or a for-profit business that passes some of its profits into social causes? Once you have decided this, choose the right legal structure to enable you to achieve it.

Research
Look at similar businesses or projects for ideas and inspiration. How have other public, private or social enterprises tackled issues? Have they found innovative solutions or learnt from mistakes you could avoid? Create partnerships where appropriate - building on the experience of others is likely to be the quickest way to achieve your goals.

Carry out a feasibility study and create a business plan
This is an important hurdle many aspiring social entrepreneurs often never get past, because it requires resources which they do not have. But it is essential to have a good understanding of the market for your product or service, the costs you are likely to occur and a realistic understanding of how your income will build.

Start small, gain experience and build a track record
Learn quickly from your successes and also the things that don’t work out, and be prepared to change things. If you are clear about your objectives, you will find it easier to adapt the route you take to get there.

Aim to be independent
There are grants and public funding options available in certain circumstances, however, as far and as soon as possible you should try to be independent of these funding sources to ensure you can mobilise your business in line with its social objectives.

Work out what help you need …and where you can get it from
You will need lots of different skills and energy to succeed, and you can’t do everything yourself, so create a network of business specialists and people who understand your social/environmental objectives each of whom brings something to the organisation.

More Information
businesslink.gov.uk’s online guide to social enterprise, available at www.businesslink.gov.uk/socialenterprise. It provides free advice to anyone who is thinking about starting a social enterprise, including guidance on the various legal structures.

You can also get more information on running a social enterprise from the Social Enterprise Training and Support Consortium website