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Business planning training

for social enterprise

Business
planning
training

Clifford Conway
Entrepreneurship & Enterprise Research Group, Brighton Business School,
University Brighton, Brighton, UK

57

Abstract
Purpose This paper seeks to explain how the course content of a Graduate Certificate in Social
Enterprise was varied to meet the unique business planning training needs for social enterprise.
Design/methodology/approach The research began with a review of the literature covering
generic and social enterprise business planning, the findings of which were applied into the design of
the course.
Findings The paper concludes that although there are a number of similarities in business
planning needs for start-up commercial and social enterprise business plans, the differences are,
however, significant enough to require that course design should take these into account and thus
avoid delivering a generic programme that does not fully meet student needs.
Practical implications Academic and professional deliverers of business planning programmes
are strongly recommended not to offer generic offerings but instead tailor to the needs of the social
enterprise sector.
Originality/value This paper will be of interest to providers of programmes aimed at social
enterprises as well as social enterprise practitioners responsible for staff training. The literature in this
area is still nascent while the development of accredited courses is still quite new and therefore the
paper helps contribute to the development of best practice in the delivery of programmes to this sector.
Keywords Business planning, Training, Social accounting, Business enterprise
Paper type General review

Introduction
The Graduate Certificate in Social Enterprise was funded by Brighton and Hove City
Council through a Single Regeneration Budget Fund. The programme was developed
in partnership with Brighton & Hove Business Community Partnership (BHBCP) in
2004 and the first two cohorts were taught in 2005/2006. The course was aimed at
start-up social enterprises and community organisations wishing to diversify their
grant income to traded income. From speaking with social enterprise managers and by
reviewing the literature, it was clear to the development team that generic training
programmes aimed at developing business planning skills were not sensitive to the
needs of this target audience.
The business plan debate
As social enterprises are primarily small or micro size firms, this debate will be
positioned within the small firms literature (Smallbone et al., 2001; BHBCP, 2007).
From a sample survey by IFF (2005) for the DTI, the following size factors were
discovered:
The typical social enterprise employs 10 people. Almost half (49%) employ fewer than 10
people, 38 per cent employ between 10 and 49, 11% have 50-249 employees and 2 per cent
employ more than 250.

Social Enterprise Journal

Vol. 4 No. 1, 2008
pp. 57-73
q Emerald Group Publishing Limited
1750-8614
DOI 10.1108/17508610810877731

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When the small firms literature is examined, it is clear that there is no consensus as to
what extent small firms write business plans and the correlation that might exist with
business growth and success (Kraus et al., 2006). Naffziger and Kuratko (1991) from their
sample of firms found that 83 per cent had written a business plan while in a study by
Georgellis and Joyce (2000) it was only 40 per cent. Curran (1996, p. 4513 in Georgellis,
2000) offers the following potential explanation for the low usage in their sample:
All decisions revolve around the entrepreneur with little reliance on formal planning [. . .]
decisions can be swift, opportunistic, instinctive and bold and are rarely committed to paper.

To what extent this would also apply to the social entrepreneur is still not clear due to a
lack of research in this area, it could well be the case that because of the claimed
democratic nature of decision making within social enterprise (Dees, 2001) and or the
natural conservatism of trustees of many social enterprises (Bank of England, 2003),
the above quote may not apply and formal procedures may be more common?
However, most surveys of private sector small firms appear to agree that a key
motivation for writing a business plan is to attract potential funds from investors
(Hodgetts and Kuratko, 2001; Tapinos et al., 2005; Burns, 2007). Ironically, this is also
probably the case for the majority of social enterprises where potential investors were
either grant funders or public sector commissioners where a business plan or
equivalent would have been a normal requirement.
Other studies have shown that when business plans have been written their level of
sophistication can be quite low. Stonehouse and Pemberton (2002) found that the
majority of their commercial sector sample firms reported having a business plan only
at an intuitive level, rather than having used more formal planning tools. Georgellis
and Joyce (2000), also examined the use of planning tools and found that owner
mangers had a high level of ignorance of what most text books would recommend
should be applied, with over 90 per cent of their commercial sector sample firms having
not heard of a PEST analysis and 80 per cent of a SWOT, although 82 per cent had
applied a form of competitive analysis in their planning.
It is also clear from the few studies that have been made of social enterprise business
planning approaches, that social enterprise managers have rather mixed experiences of
writing and applying business planning techniques, with a low level of sophistication
also often apparent (Bull and Compton, 2006; Bull, 2007; Chapman et al., 2007).
The prescriptive literature, however, is quite clear, that business plans play an
important role for gaining future success and implores nascent entrepreneurs to write
their plans before launching any new enterprise (Barrow et al., 2001; Kirby, 2003; Burns,
2007; Rae, 2007). According to Dees et al. (2001, p. 273) business planning for social
enterprises provides a range of beneficial outcomes, for example, by creating a clarity of
direction, knowledge of the market place, strong commitment from stakeholders
and attract investment. Scott (2001, p. 62) writes in a similar vein and claims that
successful social enterprises begin with a sound business plan . . . identifies future
challenges, engages key stakeholders . . . is the process of testing assumptions and
adjusting accordingly that is the bedrock of disciplined effective management.
When examining surveys of economic or social enterprise business start-up needs,
founders/managers usually report that their key weaknesses are often in management,
finance, IT, marketing and business planning (Smallbone et al., 2001; Thompson, 2002;
Bull, 2007). It could also be argued that as social enterprises tend to be even more

resource scarce (Young, 2006) that these problematic issues will be more apparent,
particularly as social enterprises have a wider stakeholder base to appease and with
more complex funding issues to resolve (Smallbone et al., 2001). The literature cites
other issues as to why business planning is problematic (for and appear equally shared
by) social and commercial enterprises, such as lack of: analysis skills, time, skilled
personnel, funds, professional advice from their board and poor support from external
advisors (Dees et al., 2001; Smallbone et al., 2001; Kirby, 2003; Borzaga and Solari, 2001;
Bull and Compton, 2006).
In the last few years, community- and voluntary-based organisations are having to
diversify their funding sources away from grants, due to increased competition, reduced
funding and a political climate that favours a social enterprise solution (Bull and Compton,
2006). This will therefore necessitate the need to implement a greater level of business
professionalism if these organisations hope to make a success of traded income and raise
finance from more traditional sources (Darby and Jenkins, 2006), or win procurement
contracts from local authority and NHS commissioners. Yet for many of these firms, this
will require a cultural shift from being value led only to becoming more market led
(Chapman et al., 2007) while still maintaining the organisations mission, a difficult if not
impossible balancing act for some to follow (Burns, 2007; Seanor et al., 2007).
Assuming that social enterprises are able to manage these complexities, it is still the
case that the high-street banks and procurement commissioners have mixed
experience or perceptions of social enterprise (Bank of England, 2003) and therefore
will no doubt require convincing business plans before funds are released or contracts
offered. This challenge is highlighted by the following scenario:
[. . .] where will that first cash injection come from when the business is a social enterprise and
there are no personal savings and no property to offer as collateral? Or if it is a social
enterprise entering a new market? Or doing the sort of business the commercial sector isnt
interested in because the margins are too small or too risky? Or with a client base or location
or staff thats just too difficult? Or because the business model is based on the foolish notion
of offering goods or services to people who may have problems paying at all, let alone
sufficiently over cost to allow for an attractive return on capital? (Phillips, 2006).

Although, the perceived relevance and use of business planning is problematic, social
enterprises will need to consider writing a professional business plan at some point if
they wish to be taken seriously by commercial funders and commissioners, and it was
this context that formed the remit to design and run the Graduate Certificate in Social
Enterprise in Brighton and Hove.
The content design of the Graduate Certificate in Social Enterprise
The challenge for the Business School was to identify to what extent the syllabi content
should be the same as a programme aimed at commercial sector start-ups and to what
extent it should be different? This was resolved through a number of sources, including
a review of current accredited and non-accredited programmes as known in 2004
(UCAS; Hobsons, available at: www.postgrad.hobsons.com/; SEP, 2004).
Discussions also took place with our partner BHBCP, a leading supplier of
brokerage support services between the commercial and community sectors and
finally, internal discussions with teaching colleagues who had mentoring or prior
working relationships with the community and voluntary sector. The initial course
design was then reviewed by a panel of local social entrepreneurs, and the final draft

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submitted for quality assurance and validation to a cross-disciplinary panel involving

internal and external expertise.
Social enterprises are viewed by the DTI (2002) as being very similar to ordinary
enterprises, although with some important differences, which need to be reflected in the
design of the curriculum content:
It has been estimated that social enterprises may be 80-90% similar to other businesses, but
that the 10-20% that is different is often the make or break factor. Social enterprises have to
meet both a financial and a social bottom line which can cause tensions and conflicts many
mainstream businesses do not have to face [. . .] The real difference is often found in the
organisational culture.

This is further supported by Pearce (2003, p. 9) who claims that:

Social enterprises are not businesses; they are social enterprises. They require social
enterprise plans, not business plans. They require support and financing mechanisms which
reflect their values.

This difference means that a social enterprise plan must:

[. . .] not only demonstrate that its commercial plan is viable and achievable but also that its
social aims are compatible and also achievable. A social enterprise plan will have social
performance targets as well as business performance targets (Pearce, 2003, p. 93).

The business plan therefore should reflect the major characteristics of what should
constitute a social enterprise as opposed to a commercial enterprise, Pearce (2003):
.
The business ideas must tie in with a clear social purpose, based on a consensus
vision of the host community or constituency.
.
Social enterprise development must focus on how groups work together.
.
Understand how social enterprise structure function.
.
Training lay directors to understand the business and financial aspects.
.
On making democracy work.
.
Calculating how the social costs will be met.
.
Managing unpaid along with paid staff.
As with many such categorisations in business research the literature is not able to
offer a definitive profile and therefore to offer a standardised set of headings is
problematic. However, this author suggests that the following key differences are
evident between a small commercial sector start-up firm and a social enterprise
start-up on the basis of social enterprise literature (cited) and his own experience of
working with social and economic enterprise start-ups (Table I)
The social enterprise value system
The social enterprise value system should be the driving force and the key differentiator
between a commercial sector profit maximiser and a social enterprise as, exemplified by
the DTI (2002) definition:
A social enterprise is a business with primarily social objectives whose surpluses are
principally reinvested for that purpose in the business or in the community, rather than being
driven by the need to maximise profit for shareholders and owners.

The social enterprise value system

Financial management
Human resource management
Legal issues
Marketing

Mission context
Democratic and inclusive decision making
Wide range of stakeholders
Sources of funding
Social auditing
Social costs
Managing volunteers, part time staff, clients
Appointment of directors and trustees
Managing cultural tension
Legal structures
Ad hoc legal issues
Marketing and vulnerable clients
Networking and cooperation
Very low budget marketing

This definition will have a strong influence on the development of a social enterprises
mission and vision and should take priority when reviewing profit led
opportunities (Dees, 2001). It will also have an important impact upon the
development of the firms marketing communications, as the mission should be
communicated as widely as possible to all stakeholders and in particular to potential
clients (such as NHS commissioners who are expected to consider this issue as part of
their purchase criteria PASA, 2006).
As with the commercial sector, the mission should clearly identify the target
audience to focus on and the matching products and services that should be offered.
However, when future opportunities arise a social enterprises options are more
constrained in so far as they must continue to match their social mission and not be
distracted purely by commercial motives[1], so making informed decisions based on
values and their specific social objectives. If this does not occur it could result in
mission drift (McBrearty, 2007) and the potential loss of confidence from
stakeholders (Burns, 2007).
A democratic structure is also usually a key hallmark of a social enterprise which
socially sympathetic funders/commissioners may be interested in discerning[2]. The
business plan will need to make clear how the social enterprise operates a democratic
and inclusive decision-making process that potentially involves staff, clients and
stakeholders (Dees et al., 2001). The business plan will need to demonstrate that this
actually occurs and that systems are in place and a form of monitoring, reports its extent
(Pearce, 2003). If the organisation is registered as a Community Interest Company (CIC)
then this evidence can be used to partly help demonstrate to the regulator that the
community interest test has been achieved (www.cicregulator.gov.uk).
It would also be expected that a social enterprise carries out a full audit of its
stakeholders which would be expected to transcend the commercial sector approach of
just suppliers, customers and staff, to a far wider range of actors within the local and
other relevant communities (Dees et al., 2001). This audit should ascertain stakeholder
needs and information requirements, so that the social enterprise can then claim to
be in tune with and influence attitudes and behaviours, creating a positive public
relations environment from which a range of resources may potentially arise
(see networking).

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Table I.
Distinctive features of
social enterprise business
plans

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Financial management
Most start-up ventures of novice entrepreneurs will have difficulties in raising finance,
as they will normally be considered to be high risk. Research sources suggest that social
enterprises are sometimes additionally hampered by a lack of knowledge amongst
funders as to the context of social enterprise (Pearce, 2003), while equity funders are
often discouraged because of low-expected returns (Bank of England, 2003).
In addition local authority and NHS commissioners are usually more experienced
with dealing with commercial sector contract applicants and may have either no
perception of social enterprises or assume they are small insufficient suppliers of
services[3] and in part led to the DH, 2007 report being published. The business plan
and prior lobbying will therefore need to make a particular emphasis upon educating
such funders and commissioners, even though local authority and health
commissioners are supposed to be already aware and supportive, through the
following publications (SEC, 2005; PASA, 2006; DH, 2007).
In practice, social enterprises will also need to consider other more sympathetic
sources of debt and interest free finance. There are a range of possibilities that can be
targeted, such as the Charity Bank, Futurebuilders, Community Development
Financial Institutions and equity finance from ethically minded sources. The majority
of social enterprises are, however, dependant upon grant funding to a greater or lesser
extent (IFF, 2005) and will therefore need to continue to seek such resources until they
become better understood by commercial funders of start-up finance.
A key element of the business plan for convincing potential funders and enlightened
commissioners will need to be the social enterprises ability to demonstrate that its
products and services will meet a social and community benefit and that in particular
this can be audited (Pearce, 2003). The double and triple bottom line will therefore play
an equal importance in the business plan; the challenge is its measurement!
Measuring social return (or increases in social capital) is often problematic for social
enterprises as this is usually an intangible benefit yet investors will inevitably need
some form of social return measure to determine whether the initial investment is
worthwhile (Rotheroe and Richards, 2007). Although Third Sector organisations have
traditionally collected funding driven user output statistics, one of the first organisations
that has attempted to fully quantify social return in financial terms is Emmaus. The
organisation provides accommodation and work for long-term homeless and asylum
seekers, and they have found that quantifying the intangible can be quite difficult:
[. . .] there are many factors such as improved quality of life, self esteem, and personal
sacrifice that are impossible to value in monetary terms (Emmaus, 2004, p. 11).

However, the existence of Emmaus services results in real savings to society in terms
of: housing costs, unemployment benefit, asylum seeker costs, drug abuse treatment
costs, legal costs, recycling costs, premature death costs and the free distribution of
furniture to poorer households. All these are relatively easy to quantify, as cost data is
normally available from a range of sources, local authorities, the Office National
Statistics and health service providers. The intangible benefits are, improved health of
the residents, savings in terms of public order and, improved life and technical skills of
the residents and staff and, these are quantified by finding surrogate opportunity cost
data from published sources, although this analysis is more problematic in
demonstrating validity and reliability in the data (Evans et al., 2000).

Table II shows a saving to the government and community of 370,053 per annum,
a social return that many investors could certainly be satisfied with.
However, there will still be aspects of the double and triple bottom line that are
difficult to quantify monetarily. The concept of social capital is an intangible one that
deals with the following social phenomena (Kay, 2003, in Pearce, 2003):
.
trust;
.
reciprocity and mutuality;
.
share norms of behaviour;
.
share commitment and belonging;
.
both formal and informal social networks; and
.
effective information channels

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Although the above social capital benefits are subjective in nature the concise project
(Evans et al., 2000) believe they have found a way to measure changes in social capital
by using a questionnaire with proxy questions aimed at local community members to
confirm the level of social capital development as a result of the provision community
services. To what extent most social enterprises have the skill set to develop and
implement such a market research study is probably problematic as marketing is often
cited as a weak skill set (Smallbone et al., 2001).
A particularly problematic financial management issue for many social enterprises
is that they often incur additional social costs because of the way they operate, for
example social firms have within their remit to employ a minimum of 25 per cent of
staff who are disadvantaged in the labour market (www.socialfirms.co.uk). This can
be staff with learning or physical disabilities that will require more support which will
normally result in additional costs (DTI, 2002).
Additional social costs can also arise if the social enterprise is located in an area of
economic or social deprivation where the costs of crime, lack of skills and
low-purchasing power impact upon operating costs. This can be a significant cost for
many social enterprises as a recent survey suggests that 51 per cent of firms are based
in areas of high deprivation (IFF, 2005).
The business plan will therefore need to show how these costs are to be recovered.
Particularly as social enterprises have also been more generally reported as having

Benefit/saving
Assisted furniture scheme (goods donated to households
Asylum seeker support savings
Drug treatment savings
Legal/justice system savings
A&E healthcare savings
Death cost savings
Recycling of waste savings to the local authority land fill sites
Skills training savings
Total benefit/saving
Source: Emmaus (2004)

Inputed value per annum

2002/2003
37,354
4,867
21,000
260,000
4,475
4,272
37,352
733
370,053

Table II.
The opportunity cost
savings for the intangible
benefits of Emmaus
services

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a poor understanding of costing, and how that might be related to service provision
pricing (Dees et al., 2001; NAO, 2005). The difficulty faced by social enterprises is that
when in competition with the commercial sector (that may not have these costs), the
social enterprise can find itself at a cost disadvantage. In theory NHS commissioners
are supposed to take this indirectly into account through the recommendation that the
criteria for supplier selection should include whether value for money, is balanced with
social and health care innovation and multiple benefit outcomes (DH, 2007) for
example, employing staff with disabilities or from districts of deprivation.
Human resource management
A key issue for any firm is the recruitment, retention, motivation, training and
affordability of staff. What is characteristically different for a social enterprise is that
they often employ a mix of full time, part time and volunteers (IFF, 2005). Volunteers
are an important resource as it keeps staff costs down; they can fill skills gaps and
allows for community involvement in the running of the enterprise. Therefore, the
business plan will need to account for this mix of employment in a sensitised way
where a one size fits all management model is unlikely to be successful.
A major issue for social enterprises is being able to recruit staff and volunteers who
have the commensurate business skills and in addition are sympathetic to the
organisations social goals. Liam Black CEO of the Furniture Resource Centre Group is
typical of the sector:
It is very hard to find skilled people who understand how to run a business and who buy into
our social agenda as well (Black, 2002).

Smallbone et al. (2001), Low (2006) and Spear et al. (2007) have expressed further concerns
that social enterprise directors and trustees may not have the requisite business skills and
experience to support the organisation in becoming more commercially orientated
particularly when moving from a grant to a greater commercialised orientation (Bank of
England, 2003):
Because many social enterprises are either in transition from being grant dependent
voluntary sector bodies or are wholly owned by a charity, they often have boards of directors
or trustees who come from a voluntary sector rather than a business background. This can
lead to a lack of business focus and prevent social enterprises from truly reaching their
potential (DTI, 2002, p. 61).

To ensure that a social enterprise firm is being set up to meet a social benefit, the
recruitment of the governing board will be important. The board applicant will need to
be able to demonstrate not only an appreciation of the social needs of the firms
proposed clients or community but also to have sufficient commercial acumen to
advise the firms management; a skill set usually in short supply (Royce, 2007; Spear
et al., 2007) and partly in response to this issue a consortium of community and
voluntary organisations have set up the Governance Hub (www.governancehub.org.
uk) to aid in the recruitment, training and the sharing of best practice of governance
and whose vision is:
[. . .] for a future in which all voluntary and community organisations are better able to fulfil
their missions and play a positive role in society through good governance practice (accessed
21 February 2008).

The business plan will therefore need to clarify how current board trustees can
enhance their commercial skills. There are several specialist courses available from the
Development Trust Association (www.dta.org.uk/) and the National Council for
Voluntary Organisations (www.ncvo-vol.org.uk) which may help to alleviate this issue
and also spread best practice.
Community organisations in transition may well find cultural tensions arise
particularly for those organisations that combine commercial with non-commercial
sources of funds such as grants and or moving from grant funding to traded income
(Seanor et al., 2007). This can happen through philosophical and or political resistance
to the application of the enterprise culture into the delivery of third sector services.
For some staff the use of the label enterprise can suggest unscrupulous capitalism
while the term social entrepreneur can infer associations with shady salespeople
rather than a dedicated community leader (Thompson, 2002).
A more common problem is professional cultural tension where those that deliver
the social service have a negative opinion of those that are involved in administration,
marketing or fund raising:
In development charities for example, the front-line field works and project managers,
especially in the context of disasters and emergencies have status and authority. The
mangers and administrators who do the backroom logistics and negotiations with
government and pay the salaries well they are mere pen-pushers and bean counters. To say
nothing of the fundraisers who are little better than estate agents or turf accountants.

Piper identifies other cultural tensions that can arise, particularly in charity retailing.
The selling price which is normally a financial or marketing decision can be influenced
through pressure from the sales-volunteer staff. They may perceive the items they
have for sale more as a recyclable gift rather than as a strict commercial exchange,
where price should be minimised to the customer rather than maximised to serve the
charitys needs.
Piper goes onto identify that redundancy strategies can equally cause tensions
whereby a social enterprise can be seen to be acting unethically if it places staff costs
above staff well being. Piper concludes that the social entrepreneur will need to develop
the skill of balancing these apparent opposing tensions which an education and
training programme should hope to provide:
It is crucial that social entrepreneurs are not led to believe that the only determinant of
success is how well they match certain social goals to certain economic ends. The successful
social enterprise also does something else. It resolves cultural tensions beliefs, values and
motivations about the social and economic. The social entrepreneur needs to be culturally
astute, needs to be aware that beliefs, values, norms, motivations and other cultural processes
are crucial to the functioning of organisations, especially organisations like social enterprises
in which beliefs and values are explicitly expressed and are important motivations for
stakeholders.

Cultural differences will often arise between those staff that deliver client services and
those staff that are responsible for the firms enterprise initiatives (Low, 2006). The
business plan will need to explain how differing cultural expectations will be managed
between staff who are based within a social mindset and those staff that are
entrepreneurially driven.

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Legal issues
A key legal difference between a social enterprise and a commercial enterprise is the
myriad of very different legal structures that are available for a social enterprise to
choose from[4] (Smallbone et al., 2001; SEC, 2006):
.
limited by guarantee;
.
limited by shares;
.
industrial and provident society; and
.
community interest company.
The above list is not exhaustive but identifies the most common legal structures (IFF,
2005). Each has a range of advantages and disadvantages depending upon the aims
and objectives of a social enterprises mission, with respect to: taxation, governance,
democratic control, the distribution of profits and asset locks (SEC, 2006). A good
example known to the author is that of certain NHS spin-out social enterprise
organisations, some of which have registered as limited by shares, so that staff can
remain within the NHS pension scheme, as opposed to being forced out if other legal
formats are chosen. The normal advice before selecting a legal entity is to develop the
organisations mission and business plan first and then examine which legal vehicle is
best to apply (Mills, 2007).
SEC (2006) also raises a number of other ad hoc legal issues that may impact upon
business planning which can involve: health and safety and the minimum wage legislation
for volunteer and part-time staff some of whom may also be client groups. In the process of
validating the graduate certificate concern was expressed that any business plans
developed by students should note the legal implications for the employment of staff who
will be dealing with vulnerable groups (such as children, the elderly and mental health
clients), issues that NHS and local authority commissioners in particular will need to see
evidence of and compliance with, in the business plan, for example, Criminal Records
Bureau checks and having relevant skills and qualifications (DH, 2007).
Marketing
The small firms literature suggests that because of the relatively higher risks and
failure rates of small firms, the role of marketing can be critical in minimising these, as it
is directly concerned with assessing market opportunities and threats and then
matching these to firm strengths and weaknesses (Stokes, 2006; Kotler and Keller, 2006).
Although commercial start-ups, have been reported as having relatively low
expenditures and usage of marketing tools, the situation for social enterprise has
been reported as being even more limited due to a scarcity of funds or a lack of internal
professional skills (Smallbone et al., 2001). Any business planning course will therefore
need to address how marketing can be achieved on a low budget. It would therefore be
expected that the low-cost tools of marketing would be applied such as public relations,
networking, press releases, newsletters, e-mail and web sites (Fill, 2006; Hastings, 2007).
There are, however, several other key differences that a social enterprise marketing
plan would need to address, one of which is the likely need to identify and provide
services to vulnerable market segments. These groups are often hard to reach and
communicate with, often because of language, disability and cultural and
discrimination issues, creating problems in being able to bridge and effectively

reach through marketing techniques (Chisnall, 2005; Bradley, 2007). In a seminal

paper by Noelle-Neumann (1974), the concept of the Spiral of Silence recognised that
discriminated groups often do not express their real opinions and values in fear of
further discrimination from the dominant culture. The main implication for the social
enterprise is that these difficulties may make it more difficult to identify their needs,
concerns and therefore the provision of relevant services.
The marketing section of the business plan will therefore need to make a convincing
case that the organisation has the expertise to research and then offer services to such
groups. Interestingly, if this can be demonstrated, it may well contribute to the
organisation having a competitive advantage (Kotler, 2005) through its claimed for
expertise, that can be one of the selection criteria for NHS commissioners to consider
(DH, 2007).
According to Dees et al. (2001) an important aspect of an organisations marketing
strategy should be to reinforce and remind all stakeholders of the mission and
raison-dete of the organisation, as this is the key motivation for supplying traded
goods and services rather than maximise profit for shareholders (DTI, 2002). This can
particularly help differentiate a social from a commercial enterprise when competing
for public sector health and social care service contracts (DH, 2007) because
maximising profits for shareholders is not a requirement when pricing a proposal.
Networking and cooperation can be the hallmark of commercial sector start-ups
(Birley, 1985), for social enterprises, the need for this marketing approach with
stakeholders is even more essential as a means of leveraging scarce resources (Dees
et al., 2001; Shaw, 2004), for accessing property, assets, finance and people (Young,
2006). This can also extend to working in cooperation with the commercial sector,
benefiting both parties on a reciprocal basis (CAN, 2005) (Table III).
There could be concern and reservation by some of the motivations of private sector
organisations for the need to partner, anxious that their own knowledge and skills may
be copied and then competed against, an issue sometimes evidenced in the private
sector by small firms when partnering with larger firms who then become predatory
(Mazzarol, 2005).
However, a characteristic of small entrepreneurial firms, private or social is to seek
out networks and partnerships because it can positively lever resources (Shaw, 2004).
The business plan will therefore need to highlight how scarce resources are managed
and utilised for the benefit of its stakeholders (Pearce, 2003) and the contributions made
by networking and cooperation in support of this issue can help enhance the
organisations ability to make full use of available resources. This process of networking

Benefits for the social enterprise

Benefits for the commercial enterprise

Generate new income streams

Reduce grant dependency
Access to finance and capital for particular projects
Access to management expertise
Improve commercial skills
Embed the commercial sector into the community

Access to new markets through partnering

Knowledge and insight into new markets and
their needs
Access specific expertise
Enhance staff morale
Fulfil CSR obligations

Source: Adapted from CAN (2005)

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Table III.
Reciprocal benefits from
partnering

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Table IV.
A comparison of business
plan headings

and cooperation will also support another important aspect of life for a social enterprise;
in ensuring that the organisation stays close to its community and stakeholders, so that
democratic processes are maintained (Pearce, 2003; Young, 2006).
Conclusions and recommendations
Both the small firms and emerging social enterprise literature appear to evidence that
business planning is largely for the benefit of raising finance with little sophistication
of techniques thereafter. It was partly because of this evidence that led to the
development of the graduate certificate in social enterprise, particularly as it was more
likely that social enterprise managers would need extra support as they would
probably have less business planning skills than their equivalent in the small firms
sector, coupled with more demanding stakeholders and internal staff.
A business planning course for social enterprise will have a range of topics and
business plan headings that will be in common with a course aimed at commercial
enterprises.
However, it is clear from Table IV that the social enterprise plan has several
additional headings that reflect a wider audience of stakeholders as well as the need to
demonstrate explicitly the role and contribution the enterprise makes to its community
and the need to satisfy its double and triple bottom line obligations. Where the
headings are similar, the findings of this paper suggests that the devil is in the detail
and that the content of any business planning course should reflect what those detailed
differences are, thus providing course content that is most relevant.
For marketing the key differences would be to ensure that all activities are ethically
implemented and probably within tighter budgets compared to the commercial
small firm. A particular recommendation for resourcing poor businesses is networking
and partnerships; however, there is some evidence to suggest that even working
within their own sector, suspicions and concerns can arise (Brown et al., 2007).
Social enterprise business plan headings

Commercial business plan headings

Cover page
Acknowledgements
Executive summary
Background
Demonstrating the need for the organisation
Description of the organisation
Mission, values, objectives and activities
Stakeholder analysis
Social accounting and audit
Environmental impact
Economic impacts
Marketing plan
Finance
Work plan and targets
Summary remarks and conclusions
Appendices

Cover page
Contents page
General company description
Products and services
Marketing plan
Operational plan
Management and organisation
Personal financial statement
Start-up expenses and capitalization
Financial plan
Appendices

Source: Adapted from templates from Social Enterprise London, www.sel.org.uk/ and Microsoft
office template, http://office.microsoft.com/en-gb/templates/

The University of Brighton has attempted to ameliorate this by running a year long
series of monthly networking events to bring this diversity together.
Human resources are complicated by the potential mix of full time, part time, volunteers
and even clients, all with varying commitments to the mission of social enterprise. There
is also the complication of making decisions as entrepreneur as leader and balancing that
against the need for democratic decision making. The legal considerations are also more
complex with a wider range of governance entities to choose from and legal statutes to
comply with, while the organisations operations will need to ensure that its economic and
environmental impact is positive and preferably carbon neutral.
One of the biggest challenges is the philosophic one of implementing a social
enterprise culture into what may have been a grant only organisation. It should be
noted that in the delivery of the graduate certificate, a range of opinions were expressed
by delegates as to the use of a business and marketing rhetoric. The title social
entrepreneur for example was not always seen as being applicable, a finding similar
to research by Shaw (2004, p. 202) where some in her sample felt:
[. . .] given the collective nature of many social enterprises, those involved are not comfortable
at attributing organisational achievements at an individual level.

There were similar reactions to other terms, for example, profit and the use of
marketing tools such as segmentation and marketing research, all of which could be
problematic and inhibit the application of business tools. Paton (2003, p. 164) reflected
upon this issue that even when mangers take on board the language and methods
associated with the commercial sector these can be seen as jargon by some staff and
resultant cynicism arising.
The necessary content differences and the arising philosophic issues had been
anticipated by the teaching team prior to launching the programme, as a result of
assessing the literature and from talking with local social enterprise leaders. The initial
course application interviews and subsequent classes were then used to raise these
issues as a series of discussion points early on which helped clarify meaning and to
temper any arising negative views.
Future research
To what extent social enterprises use business plans beyond the need to raise finance
and or win contracts would be useful. The evidence from the small firms literature
would suggest that if business plans are continued to be used they are often not very
sophisticated, whether the lack of time, training and expertise would also apply to
social enterprise managers would help support advisors such as business link to target
their resources more specifically.
A more focussed and developing area is that of social auditing and impact tool
measures. The University of Brighton is currently trialling a social auditing tool
(SA4SE) with Social Enterprise London and other partners with the intention of
promoting the tool more widely if successful. There is also the New Economics
Foundation (2004) impact tool Proving and Improving, both programmes may help
social enterprise mangers demonstrate their effectiveness and efficiency in achieving
their social and environmental objectives but how useable are they in practice and are
they really able to quantify the intangible to the satisfaction of stakeholders? Important
research questions to be answered.

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It is also clear that many social enterprise firms that have originated from a grant
orientation have philosophic contradictions within them, research into how these are
tackled and resolved could help identify best practice solutions for others to consider.
Finally, the jury is still out concerning the relevance and usefulness of any support that
social enterprise may receive from training and commitment from advisory bodies
such as Business Link and accredited SFEDI social enterprise advisors, follow-up
research would identify to what extent it was useful, any gaps in provision and best
practice identified.
Implications for practice
As Paton (2003) indicated, social enterprise managers can sometimes be caught
between the accusation of taking on the mantle of managerial professionalism and
becoming out of touch with their staff and their community or alternatively criticised
for not engaging with the needs of contract commissioners and government initiatives
that require management and measuring systems. Sensitively designed courses
specifically for social enterprises such as the one at Brighton and others would help
prepare such managers for this challenge. Managers should be encouraged to network
with others within their sector and across sectors to identify best practice and seek
support networks for themselves and their own staff. It is clear that the current
government social enterprise agenda will continue or even be enhanced by the other
political parties (Conservative Party, 2006; Labour Party, 2005; Liberal Democratic
Party, 2005), and therefore working with the principles of business planning and
measuring systems would be prudent.
Notes
1. The private sector sale of the Body Shop was seen by some as undermining their original
mission leading to boycotts by some stakeholders (Kent and Stone, 2007).
2. The private sector equivalent could be the Investors in People award which some firms will
use as a marketing tool for helping to attracting commissioner attention. This is something
that the social enterprise sector is also signing up to in the absence of a democracy hallmark
for how the enterprise is run.
3. Discussions with NHS pathway social enterprises at the National Council Graduate
Entrepreneurship Flying Start Programme for Social Enterprises in Health (www.
flyingstart-ncge.com/health/) in April 2007.
4. Many of which also choose to register as a charity with the Charities Commission.
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Corresponding author
Clifford Conway can be contacted at: c.conway@brighton.ac.uk

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