Social enterprise goes mainstream

If ever there was a day I had to post on this blog, it's today, Social Enterprise Day 2008. For the first time it's being celebrated all around the world which is fantastic.

Days like today are vital to get the word out about the benefits of social enterprise. It seems to be working with several of the mainstream press covering the event.

Speaking of mainstream I was delighted to be present at the National Business Awards earlier this week which as well as rewarding corporate and profit driven giants Rolls Royce and Diageo, handed out gongs to individuals who certainly don't have eyes full of pound signs.

Duncan Goose, founder of One Water, a bottled water company which ploughs all its profits into funding pump water system project in Africa took the entrepreneur of the year title and Harriet Lamb, executive director of The Fairtrade Foundation claimed the outstanding woman in business award.

The National Business Awards is a big deal. The likes of the Duke of Wessex and British Airways CEO Willie Walsh don't turn up to any old do but they were at the Grosvenor House Hotel on London's Park Lane on Tuesday night. But for me, mixing with royalty and business giants wasn't the highlight of the evening; it was the fact that socially focused organisations took some of the honours suggesting that at last social enterprise is beginning to be accepted as a legitimate business sector.

Yes, there are plenty of social enterprise-focused awards scheme but I think it makes more of a statement that a 'general' and mainstream initiatives includes them among its list of winners.

That's not to say social entrepreneurs should be complacent and believe there work is done. There's still a long way to go to convince everyone that social enterprise is the way forward.

I've spoken to many people about the sector and most respond 'don't you mean charities?' NO!! They're not charities; they're businesses. The difference is they make the world a better place.
Admittedly though it's not just public perception that needs to changes. Too many social entrepreneurs start up with a charity mindset and as a result spend too much time seeking grants.

Earlier this week, entrepreneur and social activist Robert Ashton sent me his thoughts on social enterprise. I agree with everything he said so I'll leave it to him to make the case for how the sector can go truly mainstream:

"One day all businesses will be social enterprises. But they will not be structured as they are now.

As public awareness of social responsibility grows so to will people's desire to do business with organisations that support the weaker members of our society. They will not compromise on quality, price or service. They will however positively discriminate in favour of the business that uses its resources in a positive and socially constructive way.

It is often easier to add value to your product or service by being supportive of others, rather than by increasing the specification to gain competitive advantage.

Too many of the people currently setting up social enterprises are starting with a charity mindset and background. This means their sole focus is the beneficiary group and they seek grants to subsidise their trading activity.

Tomorrow's social entrepreneur will focus on his or her marketplace, on satisfying existing and emerging market needs, whilst employing or supporting their beneficiary group."

Ethical business at first hand

During my career as a business journalist, I've spoken to hundreds of entrepreneurs about the trials, tribulations and immense benefits of running your own business. But despite all the many articles I've written and words of wisdom I've learnt, I've never been directly involved with a new business - until now that is.

A few months ago, Lindsay Drabwell, a close friend of mine, revealed she was launching a new business and asked whether I could lend a hand. I was delighted to help and even more delighted to learn that Lindsay's isn't just any old business; it's a ethical business with eco-principles the basis of everything it does.

DaisychainBaby.co.uk is its name and it's the UK's newest purveyor of some of the finest ethically sourced, organic and Fairtrade baby products. But that's not where the ethics end.

Lindsay is committed to making an environmental difference and is applying her ethical principles throughout her business processes. DaisychainBaby's packaging is recyled as are the company's business cards. Even her web host is run on 100% renewable energy and Lindsay is also a member of Ethical Junction and 1% For The Planet.

I've been leading DaisychainBaby's PR efforts and despite the business being officially less than two weeks old, the press interest has been huge. Several websites have written about it including the Financial Times.

What my involvement in DaisychainBaby.co.uk has taught me is that not only is everything I've learnt about starting up during the past seven years true but, more importantly, setting up in business doesn't mean you have to compromise on your principles. In fact, it's the complete opposite.

I've always been pretty sure that ethical, social and environmental principles are the future of business but now that I'm involved with such a company I know it for definite.

The ethical 100

I admit I'm a regular reader of the Sunday Times Rich List. Finding out how much Richard Branson has made this year, how near the top the Queen has made it and in what order the millionaire Dragons appear is hard to resist. However while their success cannot be questioned what about what they're doing to benefit society or help the environment?

On that note it's great to see the excellent Striding Out has launched a search for the Future 100, entrepreneurs aged 18-35 who are demonstrating entrepreneurial flair and innovation in progressing a responsible business venture.

I don't think I need to tell you that the people like Striding Out are seeking are the future of business. and for want of sounding cheesy, the future of the world.

A friend of mine, who fits into the Future 100 age range, is just about to embark on her first entrepreneurial adventure. I can't say too much at the moment but not only are her company's products ethical but she's striving to ensure her entire business processes follow the same principles. From renewable energy in her web hosting to recycled business cards, it's all about ethical values.

There's absolutely nothing wrong with making money but why not, like Striding Out say, balanace economic, environmental and social goals to achieve business success? The current economic crisis demonstrates that simply striving to make money no matter what can often end in disaster - or a least a credit crunch.

I can't get no satisfaction

I read with interest the news this week that England's Regional Development Agencies will soon begin measuring the level of "satisfaction" among social entrepreneurs using its Business Link services.

Anyone who reads my website BusinessZone.co.uk will know I'm generally not a fan of Business Link. I've been writing for and about entrepreneurs for eight years and a consistent theme throughout that time has been dissatisfaction with the government's flagship business support network. Admittedly, efforts have been made to improve it but we're still waiting for just how ministers are going to untangle the mess of 3,000 confusing, criss-crossing support schemes into the promised 100.

It's good to see RDAs are recognising that social enterprises need assistance but how and by whom is that assistance being given?

When responsibility for social enterprise passed from the DTI to the Cabinet Office a few years ago, concern was expressed that RDAs might conclude that social enterprise was "always about social inclusion, not about business". Is that still the case? I don't have direct evidence that it isn't but I'm worried that it might be if the criticisms of the "mainstream" Business Link services are anything to go by.

Entrepreneurs consistently complain that Business Link advisors lack business experience and even when they do provide advice it's very much early days, start-up stuff and they lack any expertise to supporting business growth.

Social entrepreneurs aren't different to traditional business owners in many ways - they need finances, they have to invest in marketing and must keep employees engaged. But they are different in that they have the power to change society and overcome its ills. How many advisors have got experience of that? How many social entrepreneurs has Business Link consulted in putting together its social enterprise strategy?

No doubt, the RDAs' first social enterprise 'customer' survey will show massive satisfaction levels - those sort of things always do but that won't convince me that Business Link's problems have been solved. It must engage with social entrepreneurs where they already are, where they meet, network and solve problems amongst themselves.

A survey I'm currently running on UK Business Forums, the other website I look after, shows it's other business owners entrepreneurs turn to first for advice with government services a poor third place in the popularity stakes.

Business Link advisors may be able to tick more boxes on their evaluation forms now they're reaching out to social enterprise but the real question is are they giving social entrepreneurs the real, useful, practical advice they need to succeed?

The Secret Millionaire: Social enterprise in action

As regular readers of my website BusinessZone.co.uk will know I've a big fan of business reality television. So much of a fan in fact that I've started a blog on the subject!

The posts so far have been dominated by Dragons' Den, which I love watching although the amount it teaches entrepreneurs about the realities of business is diminishing by the episode as the desire for Simon Cowell-style entertainment takes over.

But one show which entertains as well as teaches is Channel 4's The Secret Millionaire. For those who don't know, each week the programme features a rich entrepreneur who is sent undercover into a deprived area of the UK where he or see interacts with community projects and local people before handing over financial support.

The show has it critics with many find it uncomfortable viewing. I disagree. It's an hugely inspiring show and it demonstrates just how many social entrepreneurs - although many may not call themselves such - exist in the UK.

This week's episode was a case in point. Marketing millionaire Carl Hopkins was sent into the former thriving mining village of Easington which has been in steady decline since its pits closed in the 1980s leaving thousands unemployed and destroying a way of life which had existed for generations.

During his stay, Hopkins met Jimmy Egan and if Jimmy can't be called a social entrepreneur I don't know who can. The former miner bought a piece of land and developed it into a city farm. Encouraging kids off the streets and onto the land to take responsibility for rearing livestock and tending vegetables, he has transformed the area.

Like the very best social entrepreneurs Jimmy has thought out of the box. When his livelihood disappeared after the mines closed he didn't sit back and feel sorry for himself; he got out and did something. And rather than traditional public sector ways, he has taken a business like approach which has worked wonders.

Carl Hopkins, a man who has made millions getting people to buy stuff they don't really need, recognised his business acumen. "This is a man who knows his audience", he said. Exactly.

The UK is full of people like Jimmy but they just don't receive the plaudits like should. Things like The Secret Millionaire and this blog are aimed at putting that right but it's not enough. Embracing and recognising the people in our community who maybe don't even know they're are social entrepreneurs needs to happen. It will benefit us all.

Social enterprise and the Olympics

Well, the Chinese certainly know how to put on a good show. Today's opening ceremony of the 29th Olympic Games in Beijing was spectular as China pulled out all the stops and staged an impressive event. The attention now moves to the sport and after what will no doubt be a memorable 16 days of achievements, the focus will then be on London which will stage the Olympics in 2012. But what role will social enterprises play?

Organisers keep going on about the Olympic legacy but it is vital that social enterprise is a big part of it. Some work is being done as the government has funded a national social enterprise Olympics partnership for 2012 led by Social Enterprise London.

The group has recognised that London has been handed the perfect opportunity to stage the most socially, environmentally and community beneficial Games ever. But it’s not just about busing in some school children to watch the fencing for free or recycling rubbish left behind behind by spectators; it is so much more than that.

London 2012 mustn’t be seen as big business money-making machines like Atlanta 1996 which was dubbed ‘The Coca-Cola Games’. Organisers have pledged to avoid it but as ever the proof will be in the pudding.

Key to the whole thing is the supplier tendering process. I’ve spoken to a lot of experts about what’s involved in securing a contract and many fear it is unfairly weighted in favour of large corporates which will come out the true winners. But it is vital this doesn't put social entrepreneurs off.

The Games give them the opportunity to take social enterprise into the mainstream. The sector suffers from a common misperception that it’s full of grant dependent charitable tree-huggers. But if hundreds, even thousands, of social enterprises can win Olympic contracts and be seen to not only be highly efficient, value for money business operations but also providing social and environmental benefits, than the sector will be hugely boosted.

So how social enterprises get involved?

When I heard Sir Tom Hunter speak earlier this year he said he was disappointed that more social enterprises don’t come together and form partnerships. Ten voices working towards are a cause are so much better than one and the Olympics provides the perfect opportunity to make Sir Tom happy.

Too often, entrepreneurs – even the social ones – are scared of partnering up with what they perceive as competitors but why? Afterall, we’re all in it for the same reasons so why not group together and pitch for a huge contract which on your own you couldn’t fulfil but together you can?

A report by SEL claims that appetite exists among big corporate businesses to collaborate with social enterprises. These firms have the muscle to win the big Olympic deals so social entrepreneurs should be offering their services. Of course, a major motivator for the big boys for going down such a route is making them look good in the eyes of customers but this shouldn’t stop social firms approaching them.

I’ll be following up with the London organisers to find out how many social enterprises have already won Games tenders and will report back. But whatever happens, let’s ensure social enterprise goes for gold and wins it in 2012.

Social enterprise defined

Ask a group of people to define 'social enterprise' and you're likely to get different answers. I've experienced it myself on several ocassions. There's no one definition with social businesses meaning different things to different people.

The problem with that however means some individuals may set up what they call a social enterprise but might not been seen as so by others. Most importantly, investors may get confused which of course is bad for the sector as a whole, while at the same time entrepreneurs running organisations which actually could be classed as social enterprises may not see themselves as such and fail to attract relevant investment.

With all this in mind, I was pleased to spot an attempt at clarity. A report by Venturesome, the social investment fund established by the Charities Aid Foundation, puts forward what it says are three models for social enterprises:

Model 1: Enterprises operating a profit making trading activity that has no direct social impact, but they give some or all of their profit to a charity. Examples: trading subsidiaries of charities like Save The Children’s Christmas card business and companies which promise to give a percentage of their profits to charitable projects such as Belu water.

Model 2: Enterprises operating trading activities that have a direct social impact but manage a trade-off between producing a financial return and social impact. Examples: fair trade businesses like Cafédirect, microfinance funds, such as The Grameen Bank. Test question: can you increase the social impact of the firm by decreasing financial returns? If the answer is ‘yes’, then the organisation is a model 2 organisation.

Model 3: Enterprises engaging in a trading activity that has a direct social impact but also generates a financial return in direct correlation to the social impact created. Examples: Windfarms, FareShare 1st, farmers’ markets. Test question: Can you increase the social impact of the firm by decreasing the financial returns? If the answer is ‘no’ then the organisation is a model 3.

Venturesome also calls for a rethink about how social investors chose to invest. Many, it says, are beginning to recognise that economic forces can shape social problems such as market forces, misalignment of price incentives etc. As a result, the report claims, they should use a calculation of risk and reward which is different to purely commercial investors.

As Venturesome says the report should be used to provoke a debate in the sector. The issue wasn't so important a few years ago but with new social enterprises being set up every day as new social entrepreneurs enter the market it is important to nail exactly what they are doing and what they want to achieve.

It should also provoke government ministers into better supporting the sector. In particular, in my view, the Community Interest Company initiative needs to be reviewed. The excellent Nigel Kershaw of Big Issue Invest made a renewed plea this week for the kind of tax breaks enjoyed by traditional investors to be made available to those backing social enterprises. I couldn't agree more. At the same time, the dividend cap on CICs needs to be reviewed because, as I've heard from several social entrepreneurs, it is proving a dis-incentive to investors.

Let the debate begin!