Social enterprise start-up rates boom in the UK

UK social enterprises are outperforming mainstream businesses on a number of accounts including start-up rates, job creation and in the promotion of diversity in the workforce, finds a new report by Social Enterprise UK (SEUK).

The State of Social Enterprise Survey 2015, which was launched yesterday at The RSA in London, reveals that 49% of all UK social enterprises are five years old or less and that 35% are three years old or less – more than three times the proportion of SME start-ups. 

CEO of SEUK Peter Holbrook CBE said: “The findings of this year’s State of Social Enterprise show that in a time of public sector austerity and globally networked markets, social enterprises are providing real answers to the significant social and environmental problems we all face. They are demonstrating that it is possible to do business differently: creating economic growth and jobs whilst also operating fairly and helping those people and communities most in need.”

Norman Lamb MP and Peter Holbrook CBE. Photo credit: SEUK

The survey is based on 1,159 telephone and online interviews with senior figures in social enterprises. It shows that 31% of social enterprises are working in the top 20% most deprived communities in the UK and that 40% of social enterprises are led by women. The sector also proved to be a clear champion of promoting inclusivity in business with 40% of social enterprises having a director with a disability and 59% employing at least one person who is disadvantaged in the labour market. 

Over the past 12 months 41% of social enterprises have created jobs, in comparison to 22% of SMEs. Robin Foale, managing director of supporters of the survey Santander Business Banking said: “Social enterprises are helping transform the way business is done, and we believe the growth of the movement demonstrated in this report is only set to continue.”

This report doesn’t shy away from the challenges social enterprises face

Among those attending the launch of the 2015 survey in London were Minister for Civil Society Rob Wilson and former Minister for Care and Support Norman Lamb. Wilson said: “This report is proof that social enterprises continue to make a huge difference to thousands of people's lives and reflects the success of a growing, vibrant sector which delivers both on an economic and social level."

The findings of the survey also highlighted some of the key barriers preventing further growth in the sector. Although 27% of social enterprises have the public sector as their main source of income (an increase on 2013 and 2011), 49% of those operating in public sector markets say they are yet to see evidence of the Social Value Act in tender documents. There has been much criticism that the Act “lacks teeth” and the results of this survey provide further evidence that this is the case.

Another key challenge highlighted in the survey was that of funding. 44% of social enterprises sought funding or finance in the last 12 months and 39% believe the lack of availability is a barrier to their sustainability – just 5% of SMEs report access to finance to be a barrier.

Holbrook concludes: “This report doesn’t shy away from the challenges social enterprises face but it does show a sector that is transforming how business can be done: business where everyone profits.”

Header image: Team shot taken from social enterprise and SEUK member 2nd Chance Group's Bristol sports programme

Photo credit: 2nd Chance Group