How Social Enterprise is becoming the Hot New Business in the UK

Last Updated: Mar 18, 2021
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According to a recently released report commissioned by Social Enterprise UK, the biennial State of Social Enterprise Survey shows the continued strong growth of the Social Enterprise movement in the UK.

The survey shows that nearly one million people are now employed in the social enterprise sector which aims to use the strength of business enterprise as a force for good rather than simply for creating pure profit. The sector currently has over 70,000 businesses contributing more than £24 billion directly to the UK economy.

Another interesting aspect that the survey has revealed is how the concept of doing business differently is now far outperforming traditional SMEs in areas such as diversity, innovation, start-up rates, as well as pay levels. The report, supported by Santander UK, is nothing to be sniffed at being as it is the most thoroughly researched and representative of its kind. The survey results give an interesting snapshot and great insight into how social enterprise methods are now greatly influencing traditional companies and encouraging them to change they way they do their business.

Chair of Social Enterprise UK, Lord Victor Adebowale, stated, ‘Social enterprises show us what the future of business can look like.

‘These are credible businesses, competing in the open market but set up in a way that addresses some of the biggest issues we face. From homelessness and substance abuse to mental health and social care – social enterprises are working on the front-line creating opportunities and reducing inequalities.

‘They are showing traditional businesses how social impact and profit can go hand in hand. If we’re to meet the challenges and uncertainties of the coming years, we should look to the social enterprise model for inspiration and guidance on how we can create an economy that works for everyone.’

Social Enterprise and Society

Social enterprises can make a very important contribution to society in the way that they can help to strengthen communities at a grass-root level and also strive to create a fairer economy for everyone. Investors are also becoming more attracted to businesses that are creating new jobs and offering more opportunities to people to help build a strong future, not only for the business but also for the people they employ.

In fact, social enterprises are now outperforming many traditional mainstream business both in growth rates and in innovation. Social equality and diversity is a strong aspect of the social enterprise movement. This has resulted in 41% of social enterprises being run with women at the helm.

Improving Figures

Having a strong company ethos that focuses on meeting an environmental or social mission is showing the business world that you can perform profitably whist at the same time managing to outperforming other more traditional SMEs in regard to growth and innovation. The research figures show that 47% of social enterprises grew their annual turnover in the last year compared with only 34% of traditional SMEs. Plus over half had introduced either a new product or service within the last year compared to just 33% of SMEs.

With just 25% of social enterprises being less that three years old, the survey shows that now more than ever, new businesses are being set up specifically with either a social or environmental challenge in mind. Because of the way they work and who they choose to employ, social enterprises are paving the way to show major companies that there are other ways to do business.

Inclusive by Nature

Many social enterprises start out from the beginning to be inclusive by nature. This means that areas such as inequalities within the workplace can be addressed head on at the start without having to drastically change any of their business processes or company structure further down the line.

Mainstream SMEs currently have just 20% of female leadership in comparison to 41% of social enterprises that are being led by women. Workforces are also reflective of this with 51% of social enterprises having a majority female workforce, 36% have a director with a disability, and 34% have British, black, Asian, and minority ethnic (BAME) directors.

69% of social enterprises are supporting people from disadvantaged groups through local charities and four in ten companies are employing them. Surrounding communities are also benefiting with 79% of social enterprise driving growth at a local level for staff recruitment. The pay levels are also set out to be fair and reflective with 78% of companies reporting that they are paying at the higher Living Wage in accordance with the Living Wage foundation. There is also a much smaller pay gap separating high level management and directors from the workforce, which makes pay fairer for all.

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Setting up a Social Enterprise

When you are looking to set up a new social enterprise, you must first choose a suitable business structure under which to operate. For a business that has a charitable, social or community based focus, you can choose to set up as either of the following:

  • limited company

  • a charitable incorporated organisation

  • co-operative

  • community interest company (CIC)

  • business partnership

Your Company Formations can help you with this process. You can see a very good comparison of our company formations packages here that offers you plenty of different options to suit your business needs and purposes. If you are unsure of what company structure you need, you can contact us for some friendly help and guidance. We are here to help you set up your new social enterprise company and can make forming your new company very easy indeed.

Further reading:

When a Limited Liability is a Smart Move

A Guide to a Limited Liability Partnership

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