Finding Effective Strategies to Support Social Entrepreneurs
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How Do We Support the Development of Social Entrepreneurship in the UK, Europe and Elsewhere? Despite the real difference in its impact on socienty and often focussing on the social shortcomings of a country or market where the social business focusses on, there are certainly also numerous similarities between a regular start-up and a social enterprise starting up. Both cary a form of risk, both needs a well planned, resourced and commitment rich strategy and team to support it and both needs to identify a viable gap in the market with a clear business and revenue model which can be implemented with resources available to the entrepreneur and be communicated to the community or customers which it serves.
Once someone is inspired and motivated to start a social enterprise they often need support and encouragement to help them develop these ideas. While many social entrepreneurs will succeed in launching a social enterprise without such support, its provision will help many more to succeed.
In saying this different sort of support is then required for social enterprises once they have started trading, and again for those developing and growing. And finally further support is needed to help successful and sustainable social enterprises when growing to other to other regions and countries.
In supporting social entrepreneurs we also need o remember some of the key differences between social and regular entrepreneurs. Social enterprises:
typically have different legal and governance structures from for-profit SMEs
have a primary aim which is social not commercial
often have inseparable social and commercial activities
are often involved in diverse activities, not a single product or service
usually need to balance a mixture of income streams including grants and donations can access different sources of finance and investment compared to for-profit SMEs
often lack commercial expertise.
As a result of these differences mainstream business support services often failed to meet the needs of social enterprises. In response, a range of programmes and organisations delivering specialist support have developed in the UK over the past ten years or so. Some of these have grown from the social enterprise sector itself; some from charities; some from national or local government; and some from the private sector.
In looking at how Social enterprise can best be supported it might also be useful to consider what is happening in other parts of the world where this type of support is allready showing great success. A recent Report from NESTA, outlined the following key findings in a rout focussing on Social entrepreneurship support in India:
In India, the types of incubators working with social ventures - from Government-funded incubators to privately funded social innovation specialists - and support models used are very diverse. Like social ventures, however, Indian incubators are still mainly clustered around hotspots in higher-income states.
Good social incubation programmes are designed around the needs of social entrepreneurs, built from their insights and experiences, deployed, tested and continuously improved.
While good programme design is important, there are other success factors including, for example, the experience of incubator managers and teams, good governance processes, or developing new funding models to achieve sustainable business models.
Incubators operating in challenging contexts need an extra set of competencies like networking and stakeholder management; facilitating, collaborating and connecting; problem-solving and creativity; influencing policy; and regional language skills and cultural sensitivity.
So what are the key areas that we can focus on for quick wins in the UK and Europe? A recently published report from the British Council, outlines the following ideas:
Incubators and pre-start support
In recent years much of the emphasis on social enterprise support has been on the early stages of development – from initial concept through to launch and investment. Often termed incubators these initiatives typically work with individuals who have an idea for a social enterprise and provide a range of support to help them develop it to launch. Some also provide ongoing support for fledgling start-ups.
Since there is an increasing amount of money available for social investment but relatively few social enterprises that can take on substantial investment funding, some incubation programmes specialise in supporting promising social enterprises to become ‘investment ready’.
The incubator model works alongside more traditional business support programmes for social enterprises which typically provide access to a social enterprise business adviser and a ‘signposting’ service providing links to further specialist advice.
While the models of delivery vary, there are a number of key features in the provision of successful pre-start support. These include:
Confidence building and encouragement
While some social entrepreneurs have an unshakable belief in their idea and ability, most doubt whether anyone will really take them seriously. One of the most important features of pre-start support is to give people the confidence to try – even when the idea still needs a lot of work to turn it into anything like a viable social enterprise!
Social enterprises are most different from for- profit businesses when they are just starting up. NESTA produced a report which explores what makes a good support programme for developing new social enterprises. They identify five models of support that have emerged to support early stage ventures:
• co-working spaces
• social enterprise support programmes
• impact accelerators
• social venture prizes and competitions
• impact angel investor networks.
In reality these models often blur, but the examples below help to illustrate different approaches to meeting the needs of start-up social enterprises.
Peer support and access to networks
Much of this growth in confidence comes from being introduced to other early-stage social entrepreneurs. The best motivation in overcoming inevitable setbacks is the encouragement of other people facing similar situations. In some ‘incubator’ models peer networks are fostered through the provision of communal office space. In others they are facilitated through shared workshops or Action Learning Sets. These networks often extend beyond the current cohort of participants to previous cohorts.
Model refinement and business planning
There is a higher survival rate amongst new businesses with a business plan than those without. Furthermore most grant funders and all investors will want to see a business plan before putting any money into a new social enterprise. Most pre-start support will provide guidance in developing a business plan including a clear overview of the business, product or service and sections on governance and staffing, a budget, a cash flow forecast, and a marketing strategy.
Advice about the basics of setting up a social enterprise
There are a huge number of tasks that every new social enterprise has to do. Some incubators offer advice on everything from selecting the right legal structure to opening a bank account, registering for taxes, and selecting an IT system.
Access to a mentor or other source of trusted strategic advice
Support and advice from someone with the right experience can help a new social enterprise develop the right business model, the most effective means of tackling their chosen social problem, and an appropriate plan for development and growth. Often what is needed is someone to ask the right challenging questions as much as someone to provide answers.
Access to investment
Some programmes provide direct investment as part of their core package of support. Bethnal Green Ventures offers investment in exchange or equity, much like a traditional private sector accelerator. In some cases the focus is on supporting participants to get their social enterprises ‘investment ready’. At this point they are introduced to potential funders or investors, for example at a ‘demo day’ event. This is the approach taken by the Young Foundation Accelerator programme.
Social impact measurement
Successful social enterprises deliver a social as well as financial return on an investment. Increasingly investors and funders in the UK expect social enterprises to capture and report on this social impact. Most social enterprise accelerators encourage participants to plan, measure and report their social impact.
As with most things in business, time will eventually tell which support models are best for this sector. We need to ensure in the meantime that the right amount of resources and support are being provided for social entrepreneurs. Through the Baset Social Entrepreneurship project we will also further explore and publish some key ares that we believe can ensure a thriving social economy supported by the the entrepreneurs who want to make a difference while making a living