What does being a social entrepreneur mean?

Craig Dearden-Phillips explores the role of the social entrepreneur and explains why businesses like his have to do their accounting twice

The American writer Natalie Clifford Barney once said: “Entrepreneurship is the last refuge of the trouble-making individual.” It was a perceptive comment. Entrepreneurs tend to have a rebellious streak, not least because everyone who makes the decision to start and run a business has chosen challenge and uncertainty over the security of a regular wage.

In that respect, I’m no different. Like many of you, I reached a stage where I was prepared to walk out on a steady job and start my own venture. But I’m not an entrepreneur in the conventional sense. I’m part of an ever-expanding army of social entrepreneurs. Believe it or not, there are now 55,000 of us in the UK with a combined turnover of £27bn. Social enterprises account for 5% of all businesses with employees, and contribute £8.4bn a year to the UK economy. Some of them are household names: John Lewis Partnership, the Eden Project, Café Direct, the Co-op, Jamie Oliver’s Fifteen restaurant chain (above). Others, such as Sunlight, Unique and Pure Innovations, are less well known, but definitely the big names of tomorrow.

But what does it mean to be a social entrepreneur and why are increasing numbers of people drawn to it?  

First off, establishing a social enterprise doesn’t mean abandoning business disciplines. Indeed, as a social entrepreneur, I have not one, but two bottom lines. The first, you’ll be familiar with – I have to make a profit, and if I don’t, we can no longer operate. But I also have to deliver a ‘social dividend’. Put simply, this means I have to explain how I have helped to make the world a better place and this is audited in our ‘social accounts’. Failure on this front means our directors will be unhappy and our clients will stop using us. 

But perhaps the biggest difference between social and purely commercial ventures is ownership. As a social enterprise, we benefit from a number of very real financial advantages, including exemption from tax on profits and zero business rates. This is partly a recognition of the social good we do, and the fact that all profits go back into the business and not to the founders. I receive a wage and all the equity is held in a trust that has no connection to the directors. All this is set down in our charter and on exit, all I can expect is a pat on the back. 

Why do entrepreneurs launch a social enterprise? 

So why do it? Well, I can only offer my personal experience. I used to work in the care sector, but hated it. I loathed the way it stopped customers – disabled people – from getting the life they wanted. So I jacked it in and set up Speaking Up, which uses coaching and mentoring to help reduce people’s dependence on social care and put them back in the driving seat of their own life.

It was tough at first. We had no money and were housed in a run-down community centre in Cambridge. Next door, a Samba band would occasionally strike up in the middle of a client meeting. Sometimes our office would be invaded by clients of the mental health project down the corridor, all asking for a light. A couple of big new hires didn’t work out and led to an employment tribunal. We always seemed to be three steps behind ourselves. But we had a great offer which challenged industry norms and, compared to the lumbering giants of the charity sector, we were lean, competitive and highly creative.

Our big break came when we attracted investment in the form of a large grant from two venture capitalists turned philanthropists, Stephen Dawson and Nat Sloane, who had created a new fund called Impetus. As well as putting in cash, the pair also linked me to a range of top-notch people who advised us for free on everything from re-branding to re-structuring.

This was like adding a turbo-charger to a Mini. We took off. Today, Speaking Up has 4,000 clients in the UK, a turnover of £4.3m and 120 staff – many of whom have disabilities. With revenues from local authority and primary care trust contracts, coaching and mentoring services and charitable grants (the latter totalling about a third of the whole), we are growing at the rate of 30% a year. The culture is entrepreneurial and can-do, but the thing that really sets us apart is our focus (social rather than financial), not to mention the equity.

So what does the future hold for social enterprise? I think the signs are that we’re going to be working more and more with mainstream business. Entrepreneurs like Peter Jones, Tim Campbell, Sir Tom Hunter, Sir Ron Cohen of Apax and Damon Buffini of Permira are all doing joint-ventures with social entrepreneurs. They believe that social enterprise is a brilliant way to tackle the challenges of the future.

Should you become a social entrepreneur?

“The big thing to consider is what motivates you,” says Craig Dearden-Phillips (left). “If your primary goal is to sell-up and retire early, this probably isn’t the route for you. And I for one wouldn’t begrudge your yacht in St Tropez! At the end of the day, you’ve taken major risks and are entitled to your reward. But if cashing in and upping sticks to Barbados isn’t for you, social enterprise could be something to consider. 

“One way to do this could be to put some of your own equity, profit or know-how into someone else’s social enterprise. This is exactly what Anita and Gordon Roddick did in the early days of the Body Shop when they got behind social entrepreneur John Bird and the Big Issue magazine.”  

You can find out more about running a social enterprise in Craig Dearden-Phillips’ book Your Chance to Change the World – the No Fibbing Guide to Social Entrepreneurship, and you can download a free chapter from www.craigdeardenphillips.com

For more information on social entrepreneurs in the UK, visit www.socialenterpriseambassadors.org

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