Mutuals need to steer clear of relying on one contract for all their business and income – that was the warning from delegates and speakers at the Guardian's Social Enterprise Summit today.
In a Q&A session with the panel in the mutual model discussion, delegate James Wise, director of the Social Business Trust, said: "The big problem is that mutuals and spin outs from the public sector might just have one customer. How can they survive when everything is based on one contract?"
Andrew Laird, director of Mutual Ventures, a social enterprise that seeks to empower frontline public service teams, was quick to agree.
"Contracts need to be more diverse. Business development is essential here. Because your income is screwed if you lose that one contract," said Laird.
For further protection, Laird suggested mutuals should not just have one owner, to guard against privatisation.
He said: "It would be hard to privatise John Lewis, all staff shares are in a trust and no one can sell those shares."
Fellow panellist John Goodman, head of policy and regions at Co-operatives UK, highlighted a number of ownership models, including the popular community shares arrangement.
However, Chris Jones, finance director at Welsh Water, who was also on the panel, said that his business had chosen not go down the customer or staff ownership route.
He said he thought getting funding through private capital markets to buy the company, and the process of becoming a social enterprise, would have been much more difficult with hundreds of people involved.
Jones said: "The fact that we can get rates of interest at 2% I think indicates that we have a pretty unique, strong business model. You have to have the right business model for you."
Continuing the discussion, Goodman said he thought that joint ventures, such as those part owned by investors and part owned by employees could be a good idea. "But any more than 30% ownership through venture capital I would be extremely wary of," he warned.
Goodman commented that employee-ownership should not be equated with employee engagement. "They are exclusive concepts ... but success comes where you have both. In America, employee ownership and engagement together creates success."
He said that while the UK's mutual economy was worth £85m, Britain had only dipped its toes in the water compared with a number of other European countries.
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