Ambassadors, nominees and associates of the Social Entrepreneur Index met on 13th March to discuss what barriers are faced by social entrepreneurs when starting and growing a venture, and how can we create an environment in which social entrepreneurs continue to thrive.
Attendees:
Stephen Wilson, Event Host, from UBS Wealth Management (Newcastle Office)
Dan Makaveli, Media Savvy CIC
Daniel Ellis, Jam Jar Cinema
Billie Jenkins, PNE Group
Bethany Ainsley, Nouveau Wellbeing CIC
Jayne Graham MBE, Citizens Advice
Jim Beirne MBE, Live Theatre
Kam Chera, Funky Indian Restaurant
Michael Ganley, Fans Museum
Nicki Clark, CEO, UMi
Bryan Hoare, Commercial Director, UMi.
Chair: Caroline Theobald CBE, Advisory Board at Newcastle Business School & Northumbria University.
Bryan Hoare. Began the debate with some introductory remarks. “We have found over the years, writing about successful entrepreneurs, that social entrepreneurship is clearly growing significantly. We wanted to do something to celebrate social entrepreneurs across the UK but more importantly to give inspiration to others who may be starting out on that entrepreneurial journey. That is what the Social Index is all about and we have had lots of businesses all across the country applying to enter, which is free. Tonight we just going to have a general discussion about some of the barriers social entrepreneurs might face when starting out.’’
Stephen Wilson. “At UBS Wealth Management (Newcastle Office) we are sponsoring the Social Index. We’ve recently seen a growth in social entrepreneurship but UBS Wealth Management (Newcastle Office) has been involved in this space for a very long time on two fronts: one is around community affairs, as we believe we have a lot to offer local communities; and the other side of things is from an impact investment perspective - looking at how clients want to do more with their money than just invest it. We have seen that gathering quite a lot of pace and momentum. It’s really important for us as an organisation to understand how this world is changing. While we can get lots of statistics and look at the data, what we want to understand is how it feels on the ground and what are the barriers? Building up this knowledge base enables us to support you and, through UMi, to put people together.’’
Caroline Theobald. Invited the participants to introduce themselves and their organisations.
Daniel Ellis. “We took over a derelict job centre and converted it into a single screen independent cinema. It took forever. We started the pre-development work in 2011 and opened in 2013. It took three years of slog and nobody getting paid, to get to a point where we were sustainable. We went to a bank and they said no, so we managed to raise finance separately and since then we have just really grown. We just found out today that we got the building next door. One thing I feel strongly about is that the business support element has always been tailored to look for social impact and outcomes and for me there’s a gap in knowledge between what is funding, what is investment and what is generic support.’’
Michael Ganley. Explained how his passion for collecting football memorabilia led to an invitation from Sunderland Council to open a museum in Monkwearmouth Railway Station. “I have never had any funding, I have never applied for it because I did not think anybody was going to take me seriously but now we find ourselves in a beautiful home. We got the keys on 21 December 2017 and we started work on January 8, 2018. There was a great deal of challenges and barriers.’’
Billie Jenkins. “We are a social enterprise set up nearly 40 years ago. We help start-ups, we help businesses to be sustainable and we support entrepreneurship. A couple of years ago we set up the sustainable start-up award where we provide grants to start-ups which are providing a positive social or environmental impact. Through that journey we have met a lot of social entrepreneurs who are positively making an impact in their communities.’’
Bethany Ainsley. Explained how she set up Nouveau Wellbeing just over 10 years ago to reduce health inequalities through dance and fitness programs and which now works with people with various health needs: dementia, Parkinson’s Disease and mental health problems. It works with the Big Lottery Fund, Comic Relief and Sport England and the Department of Health and the NHS. Last year she set up ActivCare Coaching, a digital solution to support healthy ageing, which trains organisations such as care homes and is in talks with the NHS about training staff to get their residents more active through online training and virtual classes. She said: “A third organisation was to set up to look at how we support the social entrepreneurs because we were well aware that they set up their businesses for a certain purpose and not necessarily to earn an income and that leads to certain issues around wellbeing. The biggest barrier is the perception around the third sector. If you are a third sector business and you are trying to get into other big businesses it’s very difficult.’’
Jayne Graham. Said that Citizens Advice Gateshead supports about 12,500 people every year and in Gateshead last year helped people to gain about £7.2m. The charity set up a CIC, to provide legal aid, employment law and tribunal support to individuals at below-market rates. To make it sustainable it provides services for businesses such as payroll function and IT services. “Then we realised that the value we had within the charity is a vast amount of knowledge and we identified that the CIC was a vehicle for releasing this knowledge and we have changed the name of the CIC to Society Matters. And we are now delivering welfare benefits, universal credits training, money advice training to organisations and we are developing that into level I and level II courses where we are helping people to understand how to budget how to manage their money.’’
“For the last 20 years I’ve been involved in some way with social enterprise. When that journey started there was very much an alliance with the community voluntary sector but I think that has changed and now the term social enterprise doesn’t mean anything anymore other, except perhaps to those who are involved in doing it, and that makes communication really difficult.’’
Dan Makaveli. Said that Sunderland-based Media Savvy has been going since 2010, working with a variety of hard-to-reach groups across the region, including people in mental health services, and ex-offenders, the long-term unemployed and teenage parents. It delivers qualifications and some informal job courses in the digital arts and media and health fitness and well-being.
He said: “In recent years we’ve taken on our own premises in Norfolk Street in Sunderland city centre and recently we have taken on the premises next door and the plan I have is to knock through the buildings on the ground floor and make a coffee shop and licensed bar area. The main purpose is to give employment and volunteering opportunities to those people we’ve worked with over the years and who haven’t been able to get into meaningful employment.’’
He added: “Initially the difficulty was funding. In the first two years we probably made £15,000 or £20,000 and myself and the co-founder were taking a few hundred pounds here and there when we could and we were just scraping by. But we had mortgages to pay and we had to live. But fast forward another six years and we had turned over more than £1m, so we’ve moved on and adapted, but I was within two months of having to quit and just get a job.
“My background is in media production and film production and we have professional web designers, illustrators and, animators and everything digital arts media-wise. I have tried over the years to engage with private business in their CSR and offer packages because we can build websites and do design work of better quality and half the cost of some firms in the city centre, but if they commission us to do the work it will go straight back into the business.’’
Jim Beirne. Explained that 50 years ago Live Theatre started as a Marxist cooperative at a time when Newcastle’s Quayside was dirty and dark and dangerous and the buildings were cheap. Gradually the Theatre acquired adjacent buildings to the extent that it now owns the street and part of the Quayside.
“We don’t do that because we are capitalists, we do that so we can raise resources for our mission and a new writing theatre which is famous for making new plays which go all over the world. We’ve won international awards for our work. Our beautiful new spanking new office block pays for our latest literacy program for children. So it’s basically utilising the tools of business in order to get much further in terms of your mission. Perhaps the biggest hurdle we faced was during the first project. The pub the Broad Chare used to be our entrance and with Terry Laybourne, the former Michelin starred chef, we raised the capital to buy the pub. All my staff were asking: why do we need a pub, we have a bar and I said yes but then you have something that can pay for a play every year. It’s that kind of notion of dealing with risk, people don’t really get what attitude to risk really is. Two things contribute to this debate: helping people understand risk and bringing your funders with you and your staff and your board and your local authorities. The other thing is being stealthy and patient because time is an important element in convincing people.’’
Kam Chara. “I own two restaurants in Sunderland. One is Amore an Italian restaurant and the other is the Funky Indian which is a restaurant by night but by day it is training school for children with special needs. We engage with some of the children that go to some of the key special needs schools in Sunderland with Asperger, Downs and Autism and we put them on a 10 week training programme and we teach them how to work as waiters and waitresses. We are very much driven by passion for bringing some form of change and having some form of commercial emphasis that could add leverage. It’s unique having a social enterprise project but at the same time having a business to finance it without any public sector funding. The programme is called Stars on Earth, sponsored by Gentoo. We took 10 students on and in the first week they knew absolutely nothing and they were absolutely terrified, but by the end of week 10 they flawlessly served 40 guests including the Mayor and Mayoress and the Lord Lieutenant and they absolutely proved that concept. We have done four programs in the last four years and have worked with 60 children and we are in the process now of setting up agreements with the council and the college.
“The challenge that we faced is the divide between the private and the social sector and it’s all about perception. We tried to be very savvy, we adopted a very corporate look with a very corporate identity and Stars on Earth has a very corporate brand and people don’t know it’s a social enterprise, they just think this is a company doing special needs training for children. As a social enterprise sector we have to show we’re no different from a private business, it’s what we do with the profits that differentiates us.’’
Nicki Clark. Described how UMi was established in 2007 to help other businesses grow by providing the best information, expertise and finance to help growth. “To the outside world we look quite large and corporate but we are a business that is wholly employee-owned and we have had an incredibly strong social purpose from the moment we started. We became wholly employee-owned about four years ago now, which was a really important milestone for us. It was as a result of thinking really hard about how we expressed in practical terms - as well as from a point of view of marketing - the strength of our social purpose, without being branded a social enterprise, because we felt, after quite a lot of thought and talking to many people who were our customers, that being branded a social enterprise would actively work against us. I’m happy to say that becoming wholly employee-owned was simply the best decision that we ever made and it cemented the culture that was already there in a really practical way and it has allowed us to push on and develop significantly.
“We measure the success of the business in three ways. Firstly, we manage our balance sheet value. Secondly, we manage ourselves based on whether or not we are a workplace where talent can come and thrive and we quite like having square pegs in round holes and building the business around people’s talents and experience. Thirdly, it’s about the impact that we have on society through our corporate activity, but beyond that as individuals in the business.’’
She added that two things she would like to see change with regard to social enterprise are: first, that the “emerging greyness’’ or blurring of the lines between the definitions of social and commercial businesses should continue and grow. “Working across the UK I come across many entrepreneurs who’re incredibly socially minded and are driven. They run limited companies but they’re probably doing as much if not more with reference to social impact. So I say, bring it on, remove the definition and have greyness and ambiguity.’’
Second, she would like to see improved access to investment for social enterprises.
Daniel Ellis. “There’s so much greyness about how different organisations measure impact and I think that until there is a more uniform understanding we will never answer that question. Historically the reason we are measuring outcomes is that we are driven by funders. Certainly to me as a social enterprise. or a business with a social purpose, we should be doing that for its own purpose for the brand and the commercial advantage.’’
Dan Makaveli. I attend a forum for social entrepreneurs in London and a conversation we had in the recent session was about impact measurements, so it’s definitely a UK wide thing and it’s a thing that is frustrating social enterprises big and small throughout the UK. It seems to me to be coming to a head, in that funders and commissioners and all these kind of entities, need to come together and thrash something out to make it a bit more uniform and less grey because it is even more of a burden for those who are in the early stages.’’
Michael Ganley. Said that his enterprise, which now has 52 team members, has had no funding. “I have used my own resources so I’ve not been reliant on anyone other than people’s passion. Everybody uses the word funding, but if you have something inside you, just go and do it. Should it not be ourselves who takes the initiative to use what we have got to try to make it work? Why should we put our hands out all the time? I think there are too many people who think they deserve something because they want to do some good for the community.’’
Bethany Ainsley. “The first contract we got was with the Department of Health and their outcomes and KPIs were really strict and ever since we have worked along the same lines, so although we are funded, the outcomes and the work we have to put in is significant, so it’s justified.’’
Jim Beirne. “There is no easy money.’’
Stephen Wilson. Said there had been a huge shift in recent years as people giving to charity want to know what outcomes have been achieved. Also, social enterprise is becoming increasingly mainstream. “In 10 years’ time, we won’t be talking about a social enterprise because if you have a business and don't consider social impact you may struggle, because people may not buy your product and may not do business with you.’’
Jayne Graham. Argued that 20 years ago social enterprise was closely associated with the charitable and voluntary sector. Now it has expanded in its own right but the term “social enterprise’’ is holding it back. There is also an issue with the CIC designations. She explained: “I know many people who set up a CIC is because they were advised that it was the right thing to do, but actually some of those people have invested their whole life savings and everything in it and didn’t realise this is asset locked and they can never sell it and it’s never going to be their business because it is a CIC. I think these constructs can work against what we are trying to achieve.’’
Nicki Clark. “It will sort itself out. I say bring it on. Because those people who are using it as a bit of marketing spin will stand out because more and more, your business model will be seen as the thing that people want to buy and invest in and they will stop seeing the constructs of CICs and the terminology of social enterprise. They will want to buy your services because not only are they going to get a brilliant service but it will have an impact as well. By encouraging more freedom it will get better quicker.’’
Daniel Ellis. “There isn’t a level playing field. For example, charities get the business rate relief and exemption from corporation tax and gift aid but by going down the defined route of the charity does that stifle entrepreneurialism and does that lead it into a funding culture? By being a social enterprise, we have had difficulties in accessing funding, but if you look at our profit and loss account and our balance sheet we are an incredibly healthy business and we’re a growing business and we would not be having the same difficulty if we were a limited company. The fact that you cannot sell the business should be an asset.’’
Kam Chera. “I think it’s very hard for the private sector to understand social enterprise, yet some of the biggest brands out there such as Body Shop and Ben & Jerry’s are social enterprises. There’s a massive pool of knowledge that we have that the private sector just does not grasp.’’
Jayne Graham. Said that one advantage of grant funding was that it could enable a social enterprise to establish a track record of expertise in a field which where it could go on to secure commissioned work.
Nicki Clark. “It’s no different to providing services under a contract, you have such strict outcomes it’s absolutely no different.’’
Dan Makaveli. “It tends to be you are a bit more grant reliant and that is more your income stream in the early days and then you move more towards sustainability. We have only really used grants for testing new markets. We have always had a social purpose side as close as possible to a limited company and 95% of our income is through trading and fulfilling commercial contracts.’’ However, he added that the business is moving back towards grant funding because rules around whom they can help with commissioned work are often too restrictive.
Jim Beirne. “I love grants but we just knew we weren’t going to get enough to continue to grow, so we’ve doubled our turnover and grant funding has gone from 65% to 25% of our turnover by being more enterprising. It’s just another resource.’’
Nicki Clark. “You shouldn’t let grants dictate or distract you because lots of people do and they start to tailor or shape what they’re doing in order to secure the money.’’
Caroline Theobald. “Are there other barriers that are specific to this sector that somehow need addressing?’’
Stephen Wilson. “Most of you mentioned perception: other people’s perception of you, the perception of social enterprise and how you are perceived when seeking funding. It’s an education thing and, also, how do you want your business to be perceived?"
Daniel Ellis. I think at the early stage class and wealth are big barriers. Either having enough resource to stop yourself, if you don’t have access to finance, or having some sort of track record and I think that’s a disadvantage to the younger person, if you don’t have a track record and an employment history. I think having support systems at the start counts and some of the most interesting projects don’t get going because life takes over in paying the rent. We have a whole swathe of sort of cottage industries that aren’t quite there because it’s a scary business to jump in with both feet. I would be interested to know if there’s any kind of correlation between class, education and wealth in the longevity of a social enterprise and whether that’s true of any business.’’
Nicki Clark. “I don’t think it’s any different for a for-profit business. They’re all scary. I think it’s potentially easier depending on some of those features in your background, but I don’t think it’s different for a social enterprise."
Bryan Hoare. “For me, it’s down to promoting it as a serious career choice.’’
Stephen Wilson. “Dan said he was two months away from giving up. I would say that most people may have already given up. It was the fact that he had a real desire to make an impact on people’s lives that made him give it another two months. Do we think the passion is fundamentally different in a social enterprise compared to any other business?"
Jayne Graham. “It doesn’t matter whether the business has a social purpose fundamentally or whether it’s a social concern, it’s about the passion driving it. There are people who set up the business fundamentally to make money, but they still have to have a passion but the driver is generating income for themselves. But there are others for whom the driver is a social value but they have to have money to do it. I think sometimes people with the passion for the social value, don’t necessarily have the skills to create the funds to actually be able to do it. That to me is the gap where we should be prepared to support. It’s about adding those skills to the passion and the idea to make it happen.’’
Daniel Ellis. “There are a lot of zombie social enterprises around who keep going, but for me it’s about impact. For me, a good social enterprise makes as much money as you can and uses that money for good.’’
Jayne Graham. “You cannot grow a social enterprise if you don’t invest in it. It’s that realisation that you have to invest to gain but you have to have the business skills to understand how to use that investment effectively to generate profit, otherwise it’s just a cost.’’
Jim Byrne. “You don’t have to invest to get on, you have to risk.’’
Nicki Clark. “We transitioned to being employee-owned and now when I think about taking a risk, it’s very different to taking a risk with my own money and I think my risk approach has changed now that I know I’m risking other people’s money.’’
Caroline Theobald. “I’ve spoken to some of the big purchasing authorities and they would love to commission services from social enterprises but they have no idea how to find you.’’
Nicki Clark. “I know there’s a desire and will among procurement officials to purchase services from social enterprises but there are still so many parts of the process or requirements that just act as a brick wall.’’
Jim Byrne. “Patience is important and biding your time and having great plans and always bringing people with you. You’re much better off having a longer-term plan.’’
Kam Chera. “I think social change among the general public is actually driving these changes. Look at veganism which is very much a lifestyle now but with a social conscience. Our vegan menu is 40% now in our restaurants where five years ago it did not exist.’’
Stephen Wilson. “Social Media has changed the way people see companies and how quickly news and trends spread. You have to thrive on these opportunities and embrace them.
Caroline Theobald invited the participants to share the most important lesson that they have taken from their social entrepreneurship journey.
Jim Byrne. “What are you going to be doing in 10 years?’’
Daniel Ellis. “Your biggest asset is your people.’’
Michael Ganley. “Believe in yourself. It’s down to us as individuals to make things happen.’’
Jayne Graham. “The real beneficiaries of your services are unlikely to be your paying customers, so it is recognising that you need two types of customers: the ones who’re going to benefit from the social value that you deliver and the ones who will actually give you the money to do that.’’
Dan Makaveli. “Stay resilient and don’t stray from your mission goals.’’
Bethany Ainsley. “Focus on your mission but be flexible, because over 10 years so much can change.’’
Billie Jenkins. “Keep innovating. Don’t rest on your laurels.’’
Bryan Hoare. “Recognise the fact that you’re just another business. The only differences are that you’re using some of your profit for social good.’’
Stephen Wilson. “Ask for help.’’
Nicki Wilson. “First and foremost, be a great business.’’
Kam Chera. “Create your own destiny and a legacy.’’