There are misconceptions about social or community enterprises, many people wrongly think they are organisation which shouldn’t make a profit or are run by amateurs with little business knowledge. The reality is very different.
A social enterprise is defined by the Department for Trade and Industry as: “A business with primary social objectives whose surpluses are principally reinvested for that purpose in the business or the community, rather than being driven by the need to maximise profit for shareholders and owners”
Social Enterprise London have identified three characteristics, common to all social enterprise businesses which are:
- Enterprise orientated: They seek to be viable trading concerns, making a surplus from trading. Directly involved in the production of goods and the provision of services to a market.
- Social aims: They have explicit social aims such as job creation, training and provision of local services. They have ethical values including commitment to local capacity building. They are accountable to all members and the wider community for their social, environmental and economic impact.
- Social ownership: They are autonomous organisations with a governance and social ownership structure based on participation by stakeholder groups (users or clients, local community groups, etc) or by trustees. Profits are distributed as profit sharing to stakeholders or used for the benefit of the local community.
Social enterprise businesses have a need to be self sufficient as an overriding aim if they are to be successful and develop. Often this is overlooked by the social aims of the owners of the business whether they are the stakeholders, shareholders or the management committee. It is often harder to be high minded and profitable as a social enterprise rather than to be a commercial business with the sole aim of being profitable for the benefit of the owners of the business.
The structure of social enterprise businesses can be very different which reflects the wide range of types of businesses and the reasons they have been set up. Help and guidance is available from your local Enterprise Agency or Community and Voluntary Sector support organisation which will be structured to the specific needs of your organisation.
This may include:
- Advice on legal structures
- Developing business ideas
- Business plan development
- Guidance and support
- Advice on funding applications
- Assistance in finance and marketing
