It’s a good time to be a social enterprise. According to a recent government report, there are around 471,000 social enterprises in the UK, of which 99,000 have employees. They employ roughly 1.44 million people and make up almost a tenth of the country’s small businesses. What’s more, social enterprises are more likely to innovate and generate a surplus or profit than traditional SMEs and to report a positive longer-term outlook, expecting growth over the next three years. So, what’s their secret? Why are these businesses, driven by creating positive social change, as well as profits, thriving in the current climate?
As a society, we’re increasingly aware of the power of custom to change lives, says Mursal Hedayat, founder and director of Chatterbox, an online language school that employs refugees as teachers. “People are realising that purchasing products and services from social enterprises is a relatively simple and enjoyable way to transform society for the better. If you’re in the market for language lessons, why not transform a refugee’s life at the same time?”
Having arrived in the UK as a refugee from Afghanistan, Hedayat was all too aware of the underemployment among the people in her situation, as well as of the former doctors, dentists, lawyers and lecturers trapped in low-skilled work. “I had the idea that teaching – a universally respected profession – could become a rewarding pathway into skilled work for people in these situations,” she says. Chatterbox has helped refugees in the UK, Europe and Canada to reclaim their professional identities.
“Social enterprise can open doors that might otherwise be closed to other businesses,” says Hedayat. “We’ve been able to develop an enviable client list in less than a year since launching, including the universities of SOAS, Edinburgh, Westminster, Leeds and Durham, and organisations like Virgin and the British Red Cross. This might not have been as easy for a startup with only profit in mind.”
The current political climate could be another reason why people are lending their support to these organisations, suggests Madeline Alterman, founder and director of Artbox London, which helps people with learning disabilities and autism to create, exhibit and sell artwork. Artbox was founded in 2011 when many services for these groups were facing cuts and closing or limiting their offer. “There was a clear need to offer engaging and fulfilling activities and prevent them from becoming socially isolated,” Alterman says. “The current government is clearly not doing enough to support everyone in society, but there are enough people who want to help. By buying from social enterprises, they know their money will be used to fill the void, which the public authorities have decided to stop funding.”
This is important given that social enterprises are more likely than SMEs to have the public sector as a customer and are therefore more vulnerable to changes in the public sector, the government’s report found.
Dominic Gates, enterprise and training manager at Rise Bakery, agrees that social enterprises are flourishing in response to social needs. The bakery, part of east London charity Providence Row, combines a trainee scheme for people affected by homelessness with an online chocolate brownie delivery business. “Unfortunately, I think many of the social issues we face are getting worse, including homelessness. Social enterprises are a way for people to rise up and tackle these challenges.”
Along with bakery training, Rise Bakery helps employees develop their IT skills, offers employment advice and support around accessing housing, substance misuse issues and mental health concerns. Gates believes social enterprises will only continue to grow: big businesses are aiming to spend £1bn with them by 2020 as a part of the Buy Social Corporate Challenge. “Social enterprise could start to become the new corporate social responsibility model.”
Another potential factor behind the social enterprise boom is a greater acknowledgment that social inclusion is better for everyone – not just the most vulnerable. Wayfindr was founded to build an open standard for audio-based digital navigation, with the aim of helping visually impaired people to travel independently and spontaneously. “There’s a growing awareness that inclusive design and design-for-all approaches lead to better products and services for all users, not just those with specific needs,” says Florence Orban, Wayfindr’s managing director. “This means organisations are increasingly looking to social enterprises.”
Wayfindr’s system won £1m funding through the Google Impact Challenge Disabilities programme, has been trialled by Transport for London and is now being tested in other cities around the world. “Social enterprises are often established to meet specific challenges and have an insight due to their heritage – for example, Wayfindr is a subsidiary of the Royal Society for Blind Children,” says Orban. This means they often have compelling solutions to challenging problems, based on in-depth user insights and expertise.
Aside from the moral imperative, many social enterprises simply offer quality products and services thanks to the amount they invest in their products and employees. “We’re thriving because of our product rather than because we’re a social enterprise,” says Sorrel Tucker, events and marketing coordinator at Well Kneaded. The mobile sourdough pizza and wedding caterer employs young people in south-west London who have encountered social barriers to employment and education. “In our industry, people need their event or wedding to be exactly as they want it. There isn’t much room to make mistakes, but by investing in and focusing on your team, they become reliable, loyal and hardworking.”
Focusing so much on staff training and development restrict Well Kneaded’s profits, but that’s part and parcel of being a social enterprise. “Our aim is to build up our staff and give them a professional environment in which to learn about the working world and, ultimately, to send them out to reach higher than they may have realised they could before,” Tucker adds. “We have lots of fun in our team and have worked hard to create a positive, safe working environment. We call ourselves the ‘Well Kneaded family.’”
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