BU6019 Social Enterprises (1)

To begin… The United Nations Summit, in 2005, highlighted the importance of safeguarding the following: ECONOMIC, SOCIAL AND ENVIRONMENTAL FACTORS The UN suggests all 3 should be interconnected! Remember: These are often referred to as the 3 pillars of sustainability!

Evaluation and Control As with any other enterprise, a ‘social enterprise’ is subject to risk! Consider: Feedback (from all groups of stakeholders) Evaluation Corrective action Monitoring Tools and techniques such as Action Plans and Benchmarking are very useful!

It’s good to think! What must be done about: Sources of capital/funding? Monitoring of fixed and variable costs? Procedures for controlling financial aspects of the social enterprise? Consider: The importance of planning, effective allocation (and use) of resources, informed decision-making and control of operations! The importance of financial tools such as a Balance Sheet (wht is owned and what is owed) AND Income and Expenditure Accounts, along with Budgets and Cash flow forecasts. These are vital! Costing's of materials, administration and legalities must also be factored in!

Costing in a Social Enterprise Activity: A social Enterprise produces Rocking Horses Working in pairs, identify: The overhead charge per hour The price to charge for one rocking horse Information: Profit margin set at 15% Contingency set at 10% Labour costs 30 hours at £5.60 Rent and Rates at £4,000 Telephone £100 Power £600 Work 50 weeks at 40 hours per week Wood at £200 Paint at £100 Glue at £50 (Number of hours to complete one horse = 30 hours)

So, what really is a Social Enterprise? Think about an enterprise that: Enhances peoples “quality of life” Improves ‘the environment’ in some way Aims to address problems in society Helps to make local communities better places to live Any profits from business activities are re- invested into the enterprise or into local communities!

A Social Enterprise! “… using the power of business to bring about social and environmental change…” - Social Enterprise UK

Setting up a Social Enterprise Think about: Having a clear “environmental mission” Transparency (stakeholders are indeed watching you!) Generating at least 50% of income through trade. (The rest can be funding) Re-investing at least 50% of profits back into the enterprise with the sole purpose of addressing its environmental mission Social enterprises can have shareholders (no more than 49% of shares can be sold-controlling stake held to support the environmental mission) Legal entities can be formed, such as Community Interest Companies (CICs) Prepare a detailed Business Plan

A Social Enterprise Consider: Being in business, whilst doing good things for society or the environment What “good” are you actually trying to do or what problem needs to be addressed? Who is already doing what you are? (competition) Where is capital coming from (Grants?)

What would you start? Interview a colleague and find out what Social Enterprise they would start! (What “good” are they doing for society/the environment/ the community, or what problem are they resolving?) Please Be prepared to share your findings later! Example: Kelvin Cheung, a Masters Degree student in London, created “Food Cycle” a social Enterprise that collects surplus food from supermarkets and food outlets, to supply to people who need it.

UnLtd This body offers support and advice to Social Entrepreneurs operating in the UK UnLtd is of the opinion that the economy and environment needs social enterprises more than ever before! This body assists with supporting social enterprises from “start up” stage, through to networking and further development!

And finally… “It is no longer enough for social enterprises to be doing good in the community. They need to demonstrate that they understand social impact measurement and can use results to create strong propositions when pitching for investment” INSPIRE 2Enterprise Footnote: Do be aware that some organisations have promoted themselves as “Social Enterprises” when in reality they are not … and they are fully aware that they are not!