news
Social entrepreneurs are the future of business – exploring the numbers
Social entrepreneurs are the future of business – exploring the numbers
Written by
UnLtd employee
UnLtd position
Two new reports out last month reveal much about the state of social enterprise. With this month's Buy Social week coming to an end, our Director of Research & Impact, Hannah Stranger-Jones, delves into the figures.
Last month saw not one, but two reports highlighting the growing influence on the market of businesses with a social mission. The first, a government report, Social Enterprise: Market Trends 2017, was followed by Social Enterprise UK’s (SE UK) The future of business: State of social enterprise survey 2017.
Although the government data are not comparable to previous years’ reports due to the introduction of a new methodology, the findings from both reports indicate a healthy and dynamic population of social ventures.
Growing in number
One good piece of news for consumers this Social Saturday 2017 was the number of social ventures in the UK. The government report estimates there are 471,000 social enterprises in the UK, employing around 1.4 million people. That’s close to 9% of the total UK small business population.
Adding to that, there are more than one in five UK small businesses who identified as socially-orientated (1.21 million enterprises). These mission-led businesses have social or environmental goals, but do not use surplus/profit chiefly to further these goals.
Commercially competitive
Even more encouraging is that social entrepreneurs are outperforming mainstream businesses in growth and innovation. Both reports suggest that social ventures are commercially successful, innovative and ambitious.
Admittedly, the scale of success is disputed – government data shows that 93% of social enterprises made a profit, while SE UK suggests 71% either made a profit or broke even.
However, even the SE UK figures go on to suggest an encouraging trend, nearly half (47%) of social enterprises grew their turnover. A figure higher than the 34% of SMEs that grew theirs.
Added to this, both government and SE UK data demonstrates that they are outperforming the private sector in innovation – a higher proportion of social enterprises introduced new products in the last 12 months than their SME counterparts.
There’s real confidence too among social entrepreneurs. The government report highlights that almost 4 in every 5 (78%) social enterprises are aiming to grow in the next three years. And why not? After all they are beating commercially-minded SMEs at their own game, while changing the lives of the people they work with for the better.
Leading the way on diversity and progressive employment
Through who leads them, who they employ, and how they work social enterprises are demonstrating that another way of doing business is possible - one that is fundamentally inclusive and set up to tackle inequalities.
While the traditional business world is still male-dominated, 41% of social enterprises are led by women, and 9 in 10 social enterprise leadership teams have a female director.
A recent report found that just 2% of FTSE 100 companies were led by a person of minority ethnic background. In stark contrast to social enterprises where 12% are BAME led (the 2011 census stated that people of a non-white background made up 12.9% of the UK population).
This change goes beyond leadership too – 78% of social enterprises pay their employees a living wage, more than two-thirds of social enterprises support individuals from disadvantaged groups, and 44% are employing them.
There’s no doubt that these enterprises, guided by a social purpose, have the potential to drive change in how business is done, while transforming society more broadly.
Struggle to find finance and talent
We know that social entrepreneurs are changing society and the world of business for the better. We know that they are helping millions of people. But what these reports also reinforce are the challenges that social entrepreneurs face.
“We have made great progress in the last ten years, but the challenges we face require us all to be bolder, more ambitious and grow this movement to new heights in the next decade.”
Lord Adebowale, chair of Social Enterprise UK, in the foreword of the SE UK report.
Access to finance, at the right time and in the right form is a significant barrier for social entrepreneurs. More than half of social entrepreneurs struggle to find investment of less than £100,000.
What we are doing about this - “from the fringes to the mainstream”
Social entrepreneurs, all 1.21 million of them, are already changing their communities for the better. But to truly see change at a societal level we need to help social entrepreneurs break down the barriers which hold them back.
We are committed to supporting social entrepreneurs to build sustainable models that enable them to create social impact and earn a living. That’s why we offer the social entrepreneurs we work with workshops and one-to-one support on a range of topics from marketing to bookkeeping.
We want to help social entrepreneurs become suppliers for our public sector and find other sustainable routes to market, to ensure they have access to talent and skills to grow and can access the right sort of capital at the right time. We are tailoring our support, and focusing our research and policy efforts on breaking down these barriers.
“It’s time to take social enterprise from the fringes to a mainstream part of the economy” -
George Freeman MP
We recognise and share that ambition. We want to enable social entrepreneurs to grow and become sustainable, and to be visible and valued for the impact they create. We want to take social entrepreneurship from being perceived as a niche activity into the mainstream.