How to start a social enterprise: 3 simple steps

Got a business idea that will solve a social or environmental issue? Then read our tips on starting a social enterprise...

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A social enterprise is a business that seeks to improve the environment or society. According to the Social Enterprise Survey, there were 70,000 social enterprises recorded in the UK in 2015 that were contributing £24bn to the economy.

Social enterprises operate in many different sectors and are making headway in bringing about social change through a sustainable business; Startups 100 winner bio-bean recycles waste coffee into biofuel and Digital Mums trains mums to be social media managers.

Before you start your social enterprise business you should be able to answer these questions:

  • Does my idea solve a problem?
  • Who will this business benefit?
  • How do you combine profit with purpose to create a thriving social enterprise?

It can take a long time to get your social enterprise off the ground but, once you do, the success of your business can make a real positive change in your life and other people’s lives. As a social entrepreneur, you still need to be committed to business principles but you will also need to deliver a ‘social dividend’, and these will determine your success.

Sound like a useful way to commit your skill and effort? Then read our top tips to get you started on your social mission.

1. Form a social enterprise

Before starting your business, do market research and draw up a business plan with your social mission at the heart of it. Network with entrepreneurs who have started a social enterprise and look into organisations such as UnLtd and Bethnal Green Ventures, who all support social enterprises. The School for Social Entrepreneurs also offers long and short courses about starting/running a social enterprise.

In order to get started, you must choose a legally recognised business structure. A community interest company (CIC) was introduced for social enterprises as it safeguards the social mission, meaning that the bulk of profits will always be channelled into the cause and the businesses assets are protected from being sold privately.

Although many social enterprises are registered as CICs, you could also set up as a sole trader business, form a limited company, a charity/charitable incorporated organisation (CIO), or a mutual organisation owned by its customers and run for their benefit.

2. Source social enterprise funding

If your business is a CIC, you could find it slightly easier to find grants that are usually reserved for charities. There are a wealth of grants available to start-ups and you could start by looking at Funding Central and organisations such as Lloyds Bank and Bank of Scotland Social Entrepreneurs Programme and the Nominet Trust. Alternatively, you can apply for bank loans, private investment and other alternative investment listed here in our piece on funding a social enterprise. Social enterprises are attractive to investors because of the Social Investment Tax Relief (SITR) which means that investors get a 30% tax break, so don’t be afraid to seek other sources of funding.

The key to getting funding is being able to demonstrate a passion and dedication for your social cause and that your business is sustainable. Whenever you are seeking funding you need to be able to show where the investors’ money is going and you need to do your research so you can show them how your business can benefit them. Keep this in mind when you are pitching for finance.

3. Spread the word: Social enterprise marketing

Before you promote your business, you should come up with a marketing plan to ensure that your businesses principles are central to your brand identity. As with any other business, you need to define your target audience and build a relationship with them. Your social mission will be your rallying cry and can help you appeal to your target audience’s values. This will make them feel invested in both your product and your mission.

You are more likely to get media coverage for your business if it has a good story behind it, and if you can make your social mission in line with the values of your customers, this can create a solid base that will help spread the word via social media. You could also consider blogging as a way to communicate your progress with your customers.

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