Start-ups of the future are more green, diverse, equal and growing, report finds

Social enterprises are out-preforming traditional small businesses, with nearly one million people now employed by start-ups that use enterprise for good

The best businesses of the future will all be green, diverse and equal-paying, that’s according to a new report by commissioned by Social Enterprise UK and supported by Santander UK.

Its biennial State of Social Enterprise Survey has revealed how innovative social enterprises are out-preforming their traditional small business counterparts by using enterprise as a force for social good.

Nearly one million people in the UK are now employed by social enterprises, with over 70,000 businesses contributing more than £24bn to the UK economy.

Proof that social purpose can meet profitability, the report reveals that 47% of social enterprises grew their turnover in the last year compared to just 34% of traditional firms of the same size.

What exactly is a social enterprise?

50% introduced a new product or service in the last twelve months, compared to 33% of small businesses – with 25% of social enterprises under three years old – showing that more than ever businesses are being set up explicitly to meet social or environmental challenges.

Almost inclusive by nature and set up to tackle inequalities, these innovative new start-ups with a social conscience also boast a more diverse workforce than regular firms.

The report reveals that 41% of social enterprises are led by women, with 51% having a majority female workforce – compared to just 20% of small firms who have women in a leadership position.

With regards ethnicity, 34% have BAME directors and 36% have a director with a disability – showing a sector more representative of society at large.

Furthermore, more than two thirds are supporting people from disadvantaged groups (69%) and four in ten are employing them.

Many are also driving growth at a local level with 79% of social enterprises recruiting over half their staff locally.

Pay is also fair too with 78% reporting that they pay higher than the Living Wage as established by the Living Wage foundation, with average pay ratios for the sector standing at 2.7:1 compared to 129:1 at FTSE 100 companies.

Lord Victor Adebowale, chair of Social Enterprise UK, said:

“Social enterprises show us what the future of business can look like.

“These are credible businesses, competing in the open market but set up in a way that addresses some of the biggest issues we face.

“From homelessness and substance abuse to mental health and social care – social enterprises are working on the front-line creating opportunities and reducing inequalities.

“They are showing traditional businesses how social impact and profit can go hand in hand. If we’re to meet the challenges and uncertainties of the coming years, we should look to the social enterprise model for inspiration and guidance on how we can create an economy that works for everyone.”

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