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Frequently Asked
Question The following are some of the questions we get asked on a regular basis. Am I a Social Try our Structure-o-Matic and find out. The formal definition of a social enterprise adopted by the UK Government is “businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or community, rather than being driven by the need to maximise profit for shareholders and owners”.
This is obviously a fairly broad definition so you really need to ask yourself the following questions:
Is your organization controlled on a “one member-one vote” basis? Do you actively trade rather than just applying for grants? Are profits either reinvested back into the organization or distributed equally amongst the members?
If you can answer yes to all three of the above questions there’s a pretty good chance that you’re what most people would consider to be a social enterprise.
I’m thinking of starting a business, should I become a
social enterprise? Don’t start a social enterprise because you think it’ll be easier than starting a private business.. it won’t. Start a social enterprise because you genuinely feel that you’d like to contribute to the common good.
If I become a Social Pretty unlikely, but anything is possible. In practice most social entrepreneurs can make a good living from their businesses and also gain the respect of their peers. Are Social enterprises a new thing? No, but they have become much more visible in the media in
the last few years due to Governmental support for them. Can I set up a social enterprise on my own? Yes, but if you do you'll find it difficult to access
grant funding. You really need at least one or two other people who aren't
relatives or family members. We're a group looking to set-up a business where we all
have an equal say in how it’s run, what do we do? Sounds like you may be perfectly suited to becoming a
Co-operative. There are various kinds of Co-op, but the one thing that unites
them all is that each member has one vote in how things are done. Have a look
here then call or email us to arrange a meeting. Are Co-operatives social enterprises? Yes. Co-operatives are social enterprises because of the
social nature of their structure. In a Co-operative all the members have
equal control and the Co-operative exists for the mutual benefit. You may
find that some people will argue that smaller Co-ops (such as worker
Co-operatives) aren't social enterprises, but you'll find that large consumer
Co-ops are nearly always accepted as social enterprises. Can I get some grants? Do I need a business plan? No, but it's usually a good idea. A business plan has two
main functions.
You can create a free business plan at www.businessplanningonline.co.uk. Just work through the
steps and when you reach the end you'll have a business plan. It's usually a
good idea to seek some external advice when writing a business plan as well,
a qualified adviser will be able to help you spot any bad assumptions you've made
and so on. I haven't done much market research Do some more.. please. The biggest cause of enterprise
failure in the UK is people starting up enterprises without actually having
sufficient customers to make the business work (I.e. they failed to do proper
market research). If you have an idea get on the phone and start ringing the
people who you think are going to buy it and ask them if they will buy it. Who can help me set-up? Humberside CDA has been assisting social enterprise since 1985.. 23 years and still going strong. Unlike every other support agency in Humberside it’s all we do.. support Social Enterprises. Drop us an email info@humbersidecda.info or call
Jon Clarke on 01482 449877 for a chat. What legal structure do I need to adopt? Try our Structure-o-Matic and find out. Do Social Enterprises need to be “not for profit”? No. I'll clarify this by explaining that the only “for
profit” social enterprises are generally Co-operatives. Co-operatives are
considered to be social enterprises because of their democratic structure
(one member, one vote). If you want to be a Social Enterprise and don't want
to be a Co-operative you'll normally need to be “not for profit” and “common
ownership”. Okay, so what does “not for profit” mean? In order to stay active you need to make a profit. People
in the third sector often use the term “surplus” rather than profit.. but it
means the same thing. Your profits are what cushions you against unexpected
problems. “Not for profit” means that any profits you make are retained in
the organisation, or used to make grants/support other socially beneficial
activities, rather than being taken out by the members and put in their
pockets. And Common Ownership? Common ownership means that the assets of the organisation
(building, cash etc..) don't go the members when the organisation closes
down. Instead, they are given away to other like minded organisations. I've been told that I should set-up as a “CIC” or
“Community Interest Company”, what is it? The CIC is a new legal model created by the labour
government in 2005. CIC's are regulated (in a similar way to charities). They
differ from other companies in two main ways:
A CIC is best thought of as a half-way house between a
private not for profit limited company (the most common legal model in the
third sector) and a charity. Some people would say that it combines the best
of both models, others would say it combines the worst of both. What's in it for me/us? First and foremost social enterprises are about the social
benefit they give back to a community. As a social entrepreneur (someone who
starts up and runs a social enterprise) it's reasonable to look to make a
reasonable living out of the enterprise, but if you're looking to get a big
house in the country and a rolls royce best look elsewhere. The same applies to Co-operatives because any gains made
are shared equally. As a very quick analogy, If a business made one person
wealthy and their employees comfortable the same business run as a
Co-operative would make everyone well-off. How do I register myself as a “social enterprise”? You can't. There is no such thing as a “social enterprise”
legally speaking, they're not like charities. The nearest thing you can do to
“registering” yourself as a social enterprise is to join a relevant
association (such as ASBA) or get on a recognised
registry website (such as www.sehdirectory.co.uk). What do you charge for assistance? Click here to read the CDA’s charging philosophy. The first meeting is obviously free. After that we charge
£60 per hour but please contact us even if you just thought “we can’t
possibly afford that”. We work closely with Business Link who can pay for
such support for many people, if we can’t get their support we may be able to
refer you to someone else with funding and failing that we can probably
provide some limited free assistance ourselves. What is a Co-operative? Click here for a detailed FAQ concerning Co-operatives.
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