Turning Ideas into Viable Social Enterprises

Turning Big Ideas into Viable
Social Enterprise
Investigating the Ways in Which the Right Technical

Business Support Can Turn Real Social Needs into Viable
Social Enterprises
A report prepared for

Turning Big Ideas Into Viable Social Enterprise
2
ESRC Centre for Business Relationships, Accountability,

Sustainability and Society (BRASS)
Cardiff University
April 2004
About the BRASS Centre
In 2001, Cardiff University won £3.1 million in research funds from the Economic and
Social Research Council to develop a Research Centre for Business Re lationships,
Accountability, Sustainability and Society (BRASS). The Centre is a joint venture
between the University’s schools of Business, City and Regional Planning and Law.
It brings together the three Schools’ existing research expertise on issues of
sustainability, business ethics, company law, corporate reporting and business
communication.
The Centre started work in October 2001 under the leadership of Professor Ken
Peattie of the Business School, Professor Terry Marsden of the Department of City
and Regional Planning and Professor Bob Lee of the Law School. The funding of the
Centre covers an initial five -year period, but this should just mark the beginning of
BRASS’ contribution to creating more sustainable and responsible businesses
locally, nationally and globally.
3
Executive Summary
This report is the result of research commissioned by Triodos Bank into the provision
of technical support for social businesses in the UK in 2004. It aims to provide an
insight into the nature of the social enterprise sector and offers an introduction that
considers the difficulty of getting to grips with a sector that is highly complex, multi-
layered and labouring under a weight of definitions and redefinitions. The report
identifies some of the key changes in attitude towards the social enterprise sector by
national government and other stakeholders, and offers some introductory remarks
on the role and function of social businesses in the UK today. It discusses the
technical support pote ntially available to these business and the types of support
they are likely to require, pausing to reflect on why social businesses fail or succeed
in their attempts to provide socially focused goods and services.
The report provides a n analysis of the data obtained through interviewing nearly 40
social businesses from across the UK. It provides some insights into what these
businesses do, whether they have grown and what business models they follow and
discusses their experience with, and opinions of, technical business support. The
report covers a broad spectrum of social businesses and also focuses on two
different sectoral case studies; that of the waste electronic and electrical equipment
refurbishment, reuse and recycling sector and that of the care sector. The former is
chosen as an example of a sector that has close links with commercial
organisations, is focused around material values and products whilst maintaining
strong social principles and providing value in the form of training, employment and
skills capacity building. The latter is an example of a sector closely tied to the public
sector, to the provision of services for disadvantaged groups and communities and
potentially operates in much less of a business environment than the first case study.
The report finds that while policy and strategy in the UK appears to suggest that
substantial progress is being made in developing support for the social business
sector, the reality on the ground is less convincing. There appears to be a lack of
coherence and integration, a degree of confusion about what support is available,
and a general lack of understanding of the specific requirements of social
businesses. It is clear from the research that there is a lot of work for technical
support services at all levels if they are to reach a basic level of satisfaction for the
support they provide the social enterprise sector.
The report concludes by responding to some of the expectations raised by the

review of literatures that is presented early on in the report, and provides a set of
recommendations arising from those conclusions. Despite the quantity of other
reports available on research conducted on social businesses in the past few years
in the UK, few of these seem to have reached the desks of businesses in the social
enterprise sector. It is hoped that the ideas and summaries provided in this report
strike chords with the managers of those social businesses, and add weight to the
argument that more needs to be done to provide the UK’s valuable social enterprise
sector with more assistance and capacity by which they can flourish and grow.
4
Contents
1. Introduction 6
1.1 Introduction to the Social Business Sector – A Question

of Definitions 7
2. Research Methodology 11
3. Social Businesses in the UK : Issues of Development,

Support and Sustainability 12
3.1 The Changing Organisational Landscape and the

Rise of Social Businesses 12
3.2 The Role and Function of Social Businesses in the UK 15
3.3 Technical Support for Social Businesses 17
3.4 Why Do Social Businesses Fail or Succeed? 22
4. Research Findings 24
4.1 Overview 24
4.2 Cross sectoral analysis 24
5. Case Study Sector 1 : The Electrical and

Electronic Equipment Refurbishment Sector 37
5.1 Research Sample Sector Profile 38
5.2 Summary 46
6. Case Study Sector 2 : The Care Sector 48
6.1 Research Sample Sector Profile 48
6.2 Summary 53
7. Conclusions and Recommendations 54
7.1 Recommendations 56
8. References and Bibliography 60
Appendices 63
5
1. Introduction
Social enterprises, social businesses or community enterprises, however defined,

are being acknowledged as an increasingly important part of the economy in the UK.
Where once the social economy was not viewed as a vital component of the British
economy, it is now argued that it makes a substantial contribution to the economic
regeneration and growth and social well being of many areas of the UK. Research
carried out by Ecotec Research & Consulting for the DTI on the mapping of social
enterprises estimated that the number of social enterprises1 in the UK is around
5300. They are seen as offering benefits that are out of the scope of the private and
public sectors, and “policy makers increasingly recognise [they] reach[es] parts of
the population which are beyond the reach of the conventional public and private
sectors” (Larsen,2004).
Social businesses or enterprises span the whole spectrum of economic and social
activities. They fill the gap between commercial profit driven private sector
companies and the services provided by the public sector. The flexibility and
dynamic nature of social business and the many models or forms that the y may take
means that they can often fill a niche in the market for goods and services that may
not so effectively and easily be filled by the private or public sector.
While social businesses in their various forms have existed in the UK for many
years, some models stretching back into the 19th century, there has only been a
significant revival of interest in the sector in the last few years. In the late 1990s
there was a substantial amount of work done at national, regional and local
government level, within economic development agencies and within the sector itself
to develop a range of strategies, programmes and initiatives to track the progress of
social businesses. This work also aimed to find out what makes social businesses
succeed or fail, and to identify what needs to be provided in terms of business
support to ensure that the social enterprise sector grows and contributes increasingly
to the social and economic welfare of Britain.
1
These are social enterprises with trading income of 50% or above
6
This research project was designed to build on existing studies carried out to
investigate these issues, and to provide further understanding in areas of concern for
the social enterprise sector in the UK. It presents a brief analysis of the recent
development of the sector, recent national government interest and actions in trying
to support the sector, and the technical support issues that may lead to social
businesses failing or succeeding. Primary research was also carried out with a small
number of existing social businesses across the UK, of varying sizes and across a
range of sectors to find out what was happening on the ground, and to what extent
the support concerns of these businesses were being answered by current levels of
support from a variety of sources.
The research and report were commissioned by Triodos Bank, an ethical and social
bank that lends to social businesses across the UK. Box 1 provides a brief profile of
the Bank. Some of the social businesses included in the research sample are funded
by Triodos Bank and as part of the research were questioned as to the support they
received from the Bank, and this analysis forms part of the report. The report
provides some brief conclusions as to the problems facing social businesses in the
UK today, the support that is available to them, the support that the y need if they are
to grow and remain successful, and the role that social businesses may play in the
future in terms of the economic and social well-being of the nation. Included are
some recommendations for social businesses themselves, for support providers and
for Triodos Bank in seeking further answers to the questions that concern the sector
at the current time.
Triodos Bank was established in 1980 in the Netherlands. It is a fully

independent bank with offices in Belgium, the UK, the Netherlands, Ireland
and Spain. It also has an International Development Unit financing fair-
trade and microcredit in developing countries.
Triodos Bank only lends to organisations that create real social,

environmental and cultural value. This includes social businesses,
charities, community projects and environmental initiatives. It acts as a
financial partner to social businesses, one that recognises and
understands the way they work, their values, and operates to find the most
suitable financial arrangements to meet their needs.
It lends financial support to these social businesses from the funds it

receives from savers and investors. It acts to ensure transparency and
provides those who save or invest with the Bank and clear understanding
of where their money is being invested and what social, environmental
and cultural benefits are arising as a result.
(Adapted from Inspiring Change Triodos Bank Project List 2003)

www.triodos.co.uk 0117 9739339
Box 1 : A Profile of Triodos Bank
1.1 Introducing the Social Business Sector – A Question of Definitions
7
The very nature of the social business sector means that it is beset by a plethora of
terms and descriptions. This tends to muddy the waters at times for those trying to
gain an understanding of what the sector is, who it contains and how they operate.
There are a number of models of social business, and these are sometimes called
slightly different things according to their legal ownership, their structure and mode of
operation, their relationship with communities, their functions and a variety of other
criteria. This section of the report attempts to briefly identify some of the terms and
descriptions used and provides in doing so the boundaries used during the research
for the project.
The UK government has recently developed and published a strategy for social
businesses Social Enterprise : A Strategy for Success. In the strategy, which came
out in 2002, the definition of social enterprise is given as
“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 profits for shareholders and owners” (DTI, 2002).
Under the heading of social enterprise, however, there may be many forms of activity
that have some form of business component and social component. Table 1 below,
taken from the Social Economy Bristol webpages, provides just one of many
examples of definitions of these different social enterprise models. 2
Type Definition or key characteristic
Employee owned business Create jobs and preserve jobs as part of

economic development strategies
Community Development Finance Independent organisations which provide
Institutions including Credit Unions. financial services to generate social and
financial returns. They supply capital and
business support to individuals and
organisations whose purpose is to create
wealth in disadvantaged communities.
Marketing Co-operative (not Associations of persons united to meet
agricultural/farming) common economic and social need through
jointly owned enterprises
Farm/agricultural co-operative As above but focused on farming usually for
supplies, marketing or services.
Development Trust Community based regeneration
organisations
Social Firm Business created for the employment of
people with a disability or other
disadvantage in the labour market.
Intermediate Labour Market firm Provide training and work experience for the
long-term unemployed
2
It is the intention of the authors of this report for Triodos Bank to use the terms social enterprise and social
business interchangeably despite their division and definition within Table 1. This decision has been taken in
light of the similar interchangeability of use of the terms by the Bank within their literature, and the general
confusion that appears to exist about the meaning of social enterprise (Pharoah and Scott, 2002)
8
Social Business Non- profit business, often set up to support

the work of a charity or NGO
Community Business Social Enterprises that have strong
geographical definition and focus on local
markets and services
Charity trading arm/company Enable charities to meet their objectives in
innovative ways, legally separate from the
parent Charity
Table 1 : Defining Types of Social Enterprise
Social enterprises are therefore essentially businesses with social and environmental
objectives. They are, as stated by Jonathan Bland, the Chief Executive of the Social
Enterprise Coalition, “self sustaining businesses that trade in the market place, [and]
their core purpose is social and / or environmental” (SEC, 2003). There are a
number of other features that can be used to help define what a social business
actually is. They are
“directly involved in producing goods or providing services to a market”
have
“explicit social aims such as job creation, training or the provision of local services”
their profits are
“principally reinvested to achieve their social objectives” (SEC, 2003)
and they are also characterised by their social ownership i.e. they are
“autonomous organisations whose governance and ownership structures are

normally based on participation by stakeholder groups…or by trustees or directors
who control the enterprise on behalf of a wider group of stakeholders” (SEC, 2003).
So a social business is defined by what it does, by the way its social mission is
embedded into the business in its structure and governance, and by the way it uses
its profits (SEC, 2003:8). The types of social enterprise may include, therefore,
organisations with charitable status, though by no means all social enterprises have
this. However, there are a number of charities that do have social enterprises
attached to them to raise money for their charitable work. Community enterprises
are those that trade following social principles but which are based within a
community. They are owned and controlled by the local community, serve the
interests of that community, and use any financial surpluses fo r community benefit
(Tym and Partners, 1999). Community enterprises are generally small, including
micro sized business to those up to 100 employees, and may also include trading
organisations (community businesses), community financial services (credit
unions, local exchange trading schemes), wider remit organisations such as
Development Trusts or community based housing associations). Co-operatives are
operated according to a set of international principles which may, or may not, be
incorporated, and which also may be in the form of a worker’s co-operative, a
9
consumer co-operative, a housing co-operative or other depending on who it is that

owns and controls the organisation. Development trusts locally community based
enterprises which engage in regeneration activities through a variety of trade and
services such as environmental improvements, community development, training,
building restoration and so on.
Definitions are important. They are important because they sometimes determine the
access a social business has to support services, grant funding, loans, contracts and
a variety of other things that may determine how successful and sustainable the
business is. Some social businesses themselves may be unaware of exactly how to
describe themselves, or ho w changing their status from one category to another may
affect their interaction with the different types of support organisations and networks
available.
The same may be true of the legal structure of the business. Social businesses may
have a number o f different legal structures, and the choice is generally determined
by the needs of the business, and how it wants its stakeholders to benefit from, or
influence, its activities (SEC, 2003). Social businesses will usually be incorporated,
either as companies limited by guarantee or as Industrial and Provident Societies
(IPS), although many also have charitable status (Leslie, 2002). Legal structures
may prevent some social businesses from obtaining funding that would be available
to organisations with only charitable status, for example, or may pose yet another
barrier to those running social businesses in that knowledge and experience of legal
definitions may be a scarce resource within the business itself.
It would appear that the British public has a general lack of awareness of the social
economy and the businesses, enterprises and other organisations that are part of it
(Cambridge Co-operative Development Agency, 2003; Smallbone et al, 2001). The
plethora of types of social businesses, the terminology that surrounds them, and the
ways in which their legal structures allow them to interact with the public in different
ways may be some of the sectors biggest problems. While the person in the street
may feel they are fully conversant with the idea of charities, of co-operatives and to
some extent the notion of community based organisations, they are much less likely,
even if using their products or services, to be aware of the concept of the social
business or social enterprise. The scale of ignorance of the social economy and the
extent to which each individual or household interacts with it, may in itself provide a
barrier to the rate of progress in providing support for the sector. Policy making and
implementation are often stimulated by public interest or concern about specific
social issues or wants. A higher profile for the social business sector would seem to
be a potential key to unlocking more central and local government commitment, and
a more user friendly and transparent terminology might help the development of
such a profile.
10
2. Research Methodology
The research strategy for this report aimed to build on the findings of other reports
and surveys, by carrying out research interviews with a small sample of about 40
social businesses3. One of the main objectives was to obtain data from a
representative sample of Triodos Bank’s client list across a range of sub-sectors of
social enterprises. These twenty organisations were to be supplemented by another
10 organisations that were also selected using a parallel representative sample, but
which were not Triodos clients, and were thus funded by a variety of other means.
Finally, two specific sub-sectors were identified as being of particular interest, and
possibly highly illustrative, cases of a number of technical business support issues.
These were the electrical and electronic refurbishment sector, and the care sector,
and from both of these a sample of five organisations was identified for research.
Data was gathered using a mixture of telephone and face-to-face semi-structured

interviews. While a list of questions was prepared for these interviews, it was
important that sufficient flexibility was allowed to enable interviewees to develop
areas of particular concern or interest. A copy of the questions asked during the
interviews can be viewed in Appendix 1, but essentially they focused on five main
areas;
• A profile of the business – to include age, number of employees, function

and similar details . This area also included questions about the growth of
the business and the premises inhabited as it was expected that these
might prove to be key areas where technical business support would be
crucial in assisting the business to be successful
• A technical section – this included questions about the skills and resources
needed to set up and run the business. It focused on the source of these
skills and resources and aimed to determine the level of in-house
resources that were used compared to external resources
• Obtaining support – this section concentrated on the types of technical
support that the business accessed, how they accessed them and the
quality of support that was received. It specifically asked questions about
Business Link/Connect/Gateway, and pro-bono support as these were felt
to be likely points of contact for most social businesses at some point in
their existence
• Relationships with support providers – it was felt that the key to accessing
effective support might be, at least partly, influenced by the kind of
relationship a social business had with the different providers of support.
There were specific questions in this section about Triodos Bank and the
support that it offered, as well as more general questions about other
funders or support providers that applied to all businesses interviewed
• A final question was asked of all businesses that focused on their overall
opinions of the role of social businesses in the UK, and the general overall
quality and level of support that is available to the sector
3
The DTI’s SEU publication on Collecting Data on Social Enterprise (see References) was used to develop an
initial framework for the development of the sample, and for identification of some of the fields used, although
it was not always possible to obtain more sensitive data on turnover and other financial matters
11
3. Social Businesses in the UK : Issues of Development, Support

and Sustainability
Despite the relatively recent level of interest in social businesses or enterprises,

either from an academic or business perspective, there have already been a
substantial number of surveys, reports and academic papers published, along with
documents from central, regional and local governments. This section of the report
focuses on the findings of these various literatures and identifies a range of points
and expectations for the findings of the current research project.
3.1 The Changing Organisational Landscape and the Rise of Social Businesses
There have long been social businesses in the UK. Charities, worker co-operatives,
and non-profit organisations have been part of the organisational landscape from the
late 18th century, and became a well developed part of the Victorian social
landscape. In addition, a number of high profile commercial companies developed
social principles that embraced the working conditions of their employees, the
training of the socially disadvantaged and the inclusion of the community into the
daily life of the company. From that period and throughout the 20th century, many of
these organisations, often those with charitable and non-profit functions, have had
clearly defined social aims and objectives and have achieved much in the support of
activities generally overseen by public bodies. The feature that often characterised
these organisations was their strong adherence to the social aspects of their role.
There was often less interest in ensuring the organisation was being run on business
principles. The existence of social businesses appears to grow and decline in cycles,
sometimes thought attributable to economic upturns or downswings. Community
enterprises, for example, were well supported in the late 1970s and 1980s, lost
support from government agencies and economic agencies throughout the years of
economic growth in the early 1990s and then have seen increased support through
EU funding and the Single Regeneration Budget i n more recent times (Tym and
Partners, 1999).
It is only very recently that the phenomenon of the social business has taken on a
somewhat new meaning, one that appears to blur the boundaries between business
and social principles, and to take social businesses into a new role as a third sector
or third way in which societal and economic aims and objectives can be fulfilled by
their actions and outputs.
3.1.1 Changes at the National Government Level
Central government in the UK has been rela tively lukewarm in its espousal of the
social business model until very recently. It was only following the election of the new
Labour Government in 1997 that a new approach to the development of the social
economy, and a new attitude towards social businesses, occurred. In 1999 the
National Strategy for Neighbourhood Renewal published by HM Treasury included
recommendations that suggested central government and other interested
organisations should work together to enhance the potential of social enterprise. It
also suggested that social businesses should be recognised as deserving of support
in national funding criteria for such initiatives as the Single Regeneration Budget,
12
and that there should be encouragement for social businesses to move away from
dependence on grants towards the use of loans (HM Treasury, 1999).
The establishment of the Social Exclusion Unit (SEU) in the Office of the deputy
Prime Minister (ODPM) in 1997 was an indicator of the increased level of interest in
social businesses by central government. It aimed to bring more integration to
initiatives designed to address social and spatial inequality. The Enterprise and
Social Exclusion Policy Action Team of the SEU was instrumental in developing a
new way of thinking, bringing, as it did, a social policy component to the
development of new types of financial institutions to address economic and financial
exclusion (Social Enterprise Coalition, 2003). There were a number of other ideas
and initiatives that were connected with this new set of concepts. These included
Community Development Financial Instruments (CDFI), various approaches to
bottom up community regeneration, New Deal initiatives for gaining access to
employment, the development of the Small Business Service (SBS) and Business
Links, and in particular the setting up of the Phoenix F und, which was developed to
bring together business support for enterprises in disadvantaged areas (Social
Enterprise Coalition, 2003). The Social Enterprise Unit (SEnU) was established in
the DTI in 2001. Its stated objectives were to act as a focal point and co-ordinator for
policy making affecting social enterprise; promote and champion social enterprise;
take action needed to address barriers to growth of social enterprises; and identify
and spread good practice (http://www.dti.gov.uk/socialenterprise/about.htm). The
SEnU recommended that the Regional Development Agencies and the Small
Business Service should support social enterprise as a way to assist neighbourhood
renewal. This move sparked off a general interest in government circles in the
concept of the social business, mainly as a way of supporting existing central
government funded public services. In 2002 the SEnU published its strategy for
social business, entitled “Social Enterprise: a strategy for success”.
Central government in 2002 was therefore seen to be positive in its espousal of the
social economy and the contribution it could make to the provision of goods and
services in the UK. It stated that social enterprises of various types could “deliver
against national standards in a way that promotes choice and customer focus”, and
could offer the “specialist knowledge, experience and skills gained through direct
knowledge of the groups that use their services” (Boateng, 2002 cited in
GOYorkshire and Humberside, 2002).
The latest evidence of commitment to the social business idea by central

government are the proposals launched for the introduction of Community Interest
Companies (CICs) in the Companies (Audit, Investigations and Community
Enterprise) Bill, as introduced in the House of Lords on 3 December 2003. This
would be a new type of company specifically designed for social enterprises who aim
to use their profits and assets for the public good. According to the DTI website,
“CICs will be easy to set up, with all the flexibility and certainty of the company form,
but with some special features to ensure they are working for the benefit of the
community. CICs will report to an independent regulator on how they are delivering
for the community and how they are involving their stakeholders in their activities.
[They] will require legislation, covering a regulator, a community interest test, and
community interest reports.” (http://www.dti.gov.uk/cics/)
13
It is likely that the earliest date companies formed under this model will be able to
register will be in 2005.
3.1.2 Changes at Regional and Local Level
In the last three or four years there has been a resurgence in support for social
businesses at the regional and local level. There have been a number of regional
and local frameworks developed for the support of the social economy (see, for
example, Social Enterprise London, 2002; GOYorkshire and Humber, 2003).
The Regional Development Agencies (RDAs) have also shown an interest in the
social enterprise sector, and in 2003, there was seen to be increasing pressure both
from within the regions and from the DTI for increased support (Social Enterprise
Coalition, 2003). However, it has been difficult for the RDAs to meet this pressure,
partly due to the lack of centrally set targets for social enterprise, and partly due to
the steep learning curve they face (Social Enterprise Coalition, 2003). Different
RDAs appear to have focused on different models of social enterprise according to
existing patterns, experiences, demands and resources. There also appear to be
three main models of strategic approaches to social enterprise. These are to build a
suite of enabling structures for support and different RDAs have made varying levels
of progress along this path. Second, some RDAs, often those with less access to
European funding, have not got as far as developing a comprehensive support
network, and are, instead, placing resources into pump priming, gap filling or
brokering between social businesses and other means of support. Finally, practically
every RDA has some form of regeneration zone or local neighbourhood dimension to
support, deriving from past experience of RDAs with the Single Regeneration Budget
and its ongoing impact (Social Enterprise Coalition, 2003).
There appears to have been a variance in the perception of social businesses by

local government. While huge sums of money were invested by local authorities in
community businesses, worker’s cooperatives and other types of social business in
the 1980s, by the end of the 1990s it appeared that local authorities didn’t really
believe that such businesses could provide solutions to problems facing
disadvantaged communities (Brown, 2002). Again, however, there has been some
change in this attitude recently, with some local authorities once again providing
some extra support and resources for social businesses within their locality.
There are also a number of approaches to the bringing together of other agencies
within each region to help support the social business sector. There have been a
number of fit-for-purpose partnerships or networks, where agencies with specialist
knowledge are matched with organisations with regional kno wledge and local
interests. (Social Enterprise Coalition, 2003). Some of the agencies involved include
the Local Investment Fund, Community Action Network, the Development Trusts
Association, and also Business Links, as these have been given a more high profile
role for social business at the national level. In addition, there are a large number of
projects operating at regional but also local level that have been funded by various
sources including the EU, the Phoenix Development Fund and others aimed at
supporting the development of social businesses in regions and sub-regions of the
UK (see, for example, the Enterprising Communities Project, Voluntary Action
Cumbria, 2002).
14
3.1.3 Summary and Points of Expectation for the Research
§ The relatively rapid increase in interest in social enterprise at national,

regional and local policy level would suggest that a relatively high level of
activity in terms of social business support might be expected
§ A lot of recent and current activity has been focused on the development
of policy and strategy and it may be that social businesses themselves are
less aware of this type of activity depending on their size, sector and level
of knowledge
§ As policy and strategy appears to have been the recent focus, it may be
that there is less evidence of growth in actual support activity on the
ground
§ Promotion of co-ordination between support agencies appears to have
been a key focus at the regional and local level. Co-ordination is never
easy to achieve, and the expectation is that little evidence of this will be
apparent
§ Business Links (England), Business Connect (Wales) and Business
Gateway (Scotland) have been tasked with providing specific support for
social businesses.
§ There is a multiplicity of support and funding agencies surrounding the
social business sector, and apparently plenty of information available. It is
expected that some measure of confusion about what is available will be
encountered amongst the social businesses contacted
3.2 The Role and Function of Social Businesses in the UK
The Social Enterprise Coalition has identified a huge range of roles and functions
that can be, and are being, fulfilled by the social business sector. These include
“creating jobs and wealth; developing leading edge public services; regenerating
inner city neighbourhoods; combating rural decline; encouraging active citizenship;
developing a dynamic and committed workforce who ‘buy in’ to your corporate goals;
making money in a socially and environmentally responsible way” (SEC, 2003:5).
Clearly, there are many reasons why social businesses are set up. They don’t all
start out from a business base, by any means. They may begin as a voluntary
organisation or charity, perhaps particularly focused on solving local problems; as a
public sector agency or local authority that sees an opportunity to deliver its services
through a particular social model; or indeed, as a business that has at its heart social
objectives to be achieved through gaining profits for reinvestment into the solution of
local community issues. Community businesses or enterprises may, for example,
trade in goods and services that neither private sector or public sector offer to people
in a local area. These may include goods and services which have a higher social
value than their market price e.g. care services, culture and recreation or
professional services such as bookkeeping (Tym and Partners, 1999). In fact, one of
the key functions that has been recognised by central government for social
businesses is in the delivery of public services (HM Treasury, 2002). Contracting
with the social economy is another issue and GO Yorkshire and Humber (2002)
argues that “purchasing policies favourable to social enterprises need to be adopted
15
[e.g.] by Primary Care Trusts, Local Strategic Partnerships..and advocates are

needed to achieve this”. They also suggest that public sector procurement managers
need to be “sensitised to the benefits of contracting with the third sector”.
Social businesses may also be p roviding goods and services that cannot be supplied
by the private sector profitably, for example, furniture refurbishment (Tym and
Partners,1999). Where value may be gained from activities requiring little initial
capital investment, but which are disregarded by the pri vate sector as not profitable
enough to warrant action, social businesses are likely to develop. Value can often be
derived from materials that are generally seen as low value or valueless, and this
goes a long way to explaining why there are so many social businesses engaged in
the recycling and reprocessing of materials, waste collection and to some extent
energy management.
In addition, there are a wide range of social businesses that exist to support
communities, whether these are local communities or communities of interest. One
local community model of social enterprise is the credit union. Community credit
unions are savings and loan co-operatives set up for the mutual benefit of all
members as a non-profit making voluntary organisation being tied to a particular
area as local residents in that area are members. Communities of interest may be
served by social businesses that require support. These may often be targeted at
specific care needs or medical needs, for example, such as specific disabilities,
progressive illness or those with particular mental health problems.
Many social businesses see training and employment as a key function of their work,
even though they might be dealing in very different goods and services. Training
may vary from quite basic social skills training to highly structured, well developed
and funded training programmes leading to a variety of qualifications including Non
Vocational Qualifications (NVQs). The provision of environments in which trainees,
volunteers or employees, as they may be called, feel unthreatened, supported and
able to develop skills and confidence, is at the heart of many social businesses. A
recent trend and increasing p ressure from a variety of stakeholders to make these
businesses more ‘businesslike’ or ‘professional’ sometimes brings these principles
into conflict.
There are a number of social businesses that have been established to address
perceived gaps in provision of very specific services, sometimes those that might be
seen as more esoteric or less mainstream. These may include those businesses that
have a religious or spiritual focus, or those aiming to develop artistic and cultural
activities. For this type of business the focus on the ‘business’ aspect of their
organisation might be even less of a core issue than with the general stream of
businesses in trading or service provision sectors.
§ Social businesses have many different roles.

§ Social businesses generally have more than one function, and it is
expected that those businesses contacted for the research will also exhibit
this multi-functional pattern
16
§ Training levels also follow many different models, and this pattern is
expected to be exhibited by the businesses interviewed
3.3 Technical Support for Social Businesses
3.3.1 Introduction
In 1999, there appeared to be relatively little support for social enterprises. The HM
Treasury Report on Enterprise and Social Exclusion argued that social enterprises
were “less understood and rarely promoted in a consistent way by the existing
infrastructure for business support” (HM Treasury, 1999:108). While there was some
support from a range of voluntary organisations and local authorities, these were
seen as operating separately from mainstream business support agencies.
The agenda of central government in recent years has meant that there is more of
an incentive for business support organisations to provide assistance to social
businesses. The establishment of the Phoenix Fund and other community and local
based finance initiatives, the existence of organisations already providing support for
social businesses including those based around co-operative movement principles,
and the promotion by the Treasury for the development of an integrated network of
business support and training to social enterprises, have all meant that there are
many initiatives designed to develop better cohesion and efficiency in the provision
of business services through Business Links/Connect/Gateway, the SBS (DTI, 2003)
and others (Social Enterprise Coalition, 2003). There appears, therefore, to have
been more actual or potential substantial technical support for social enterprises
more recently. The Business Link Network has, since April 2003, for example, been
required to provide its services to those seeking assistance from the social
enterprise sector (DTI,2003:38). The DTI in their Progress Review appear to identify
the Business Link service as one of the main ways in which the government will
support the development and growth of social enterprise. They recognise that this
service is yet to provide a satisfactory service, when they state that “ [W]hile there is
still much to be done to deliver the consistent level of excellence required, the first
steps have been taken” (DTI,2003:38). Thus, in the government’s aspirations for the
social business sector to have
“innovative and sustainable companies that will help to grow the local
economy…..the emphasis is on timely and relevant business support and training,
e.g. through Business Link organisations and other intermediaries, and improved
access to appropriate and affordable sources of finance” (DTI website cited in Social
Enterprise Coalition, 2003:12).
3.3.2 Funding and Finance for Social Businesses
Funding for social businesses comes from a wide range of sources. This includes
grants, often from statutory agencies such as Local Authorities and RDAs, lottery
funding, support from charitable trusts and foundations, loans from banks and
community development finance institutions, venture capital, ethical share issues
and bond issues (Social Enterprise Coalition, 2003). The GO Yorkshire and Humber
Framework argues that funding should be “attracted to what works, not necessarily
what is new – and that includes continuing to invest in successful projects”. They
17
also argue that there needs to be an understanding that social enterprises cannot
move from grant dependency to financial self – sufficiency in one move. Social Firms
Scotland states that existing evidence shows that social businesses need finance to
pump prime business development, and that they need a longer period of time than
commercial firms to achieve viability (Social Firms Scotland, 2004). They also argue
that new social businesses will generally need subsidies for employment, as this will
create a level playing field with commercial firms. GO Yorkshire and Humber identify
the difficulty that social enterprises face in trying to raise finance for expansion and
suggest that social venture capital funding needs to be developed. They argue that
many social enterprises that rely to some extent on grant funding often have cash
flow problems and this is an issue that needs addressing. Joint ventures with the
private sector are another way in which they see social businesses having better
access to finance.
There has been an increase in the amount of government funding targeted at the
development of social enterprise. In Wales, for example, Finance Wales is working
with the Welsh Assembly Government and the Social Economy Network to develop
the Social Enterprise Strategy for Wales. It also established a community Loans fund
in 2001, and has approved loans of more than £1 million to social businesses since
that time, (Western Mail, 2004) offering loans of between £5000 and £50000.
Community based social businesses aim to be financially self-supporting and

sustainable, and to operate without subsidy from the public sector, but few are likely
to achieve this degree of independence. Most need soft loans and non-commercial
capital finance to start up. They also need non-financial support such as training,
business advice, mentoring and so on, usually for a longer time than a private sector
business (Tym and Partners, 1999). They often get much of their income from the
public sector as they are providing goods and services to or on behalf of the public
sector. The Community Development Finance Institutions (CDFIs) are a financial tool
for economic, physical and social renewal in deprived communities. 23 Community
Development Finance institutions were accredited by September 2003 – to raise
about £100 million of investment by 2006 (DTI, 2003). They exist to provide loans
and investment into organisations in these areas that cannot access mainstream
finance, including social businesses. One of their aims is to generate social returns
(SEC, 2003).
The barriers to gaining funding and finance still appear to be substantial. In a Sunday
Observer article it was argued that “mainstream lenders rarely lend to such bodies.
To banks a social enterprise company’s balance sheet is hard to understand.
Detailed information on the sector is scarce and companies that don’t retain profits
are alien. Its hard to make equity investments in social enterprises” (Mathiason,
2003).
Tym and Partners identify a particular problem with the banking sector and its
understanding of social businesses. They feel that there is a significant level of
ignorance about this type of business, and the problems of those who start them up.
These people may often have a limited or non existent track record in terms of
finance and even career, and as such may be seen to pose to great a risk for
traditional financial lending institutions.
18
3.3.3 Business Management Support
There are a wide range of agencies and organisations that directly and indirectly
interact with the social business sector.
ProHelp was established in 1989 by Business in the Community (BITC) and currently
includes 1000 member companies in a large number of locations across the UK. In
2003 it provided £4.5 million of professional advice and expertise to local community
groups. These groups request help from one of the many local ProHelp groups.
Services accessed include legal and accountancy advice, planning applications,
structural survey work, property valuations, marketing services, business planning
and others (http://www.bitc.org.uk/programmes/programme_directory/prohelp).
New Deal for Communities (NDC) is a government programme that aims to reduce
deprivation in the poorest communities in the UK, and is often a source of trainees
for social business training programmes, providing some measure of business
management support at the same time. It often does this through such initiatives as
the New Deal Environment Task Force, and the New Deal Voluntary Sector Options.
These programmes are partnership driven and include relationships between
government agencies, community and voluntary organisations, local authorities and
businesses.
There are a number of locally based agencies providing support to social

enterprises. One such is BACEN in Bristol, which over the last ten years has helped
to set up a wide range of social businesses and community enterprises through
providing business advice, training, access to networks, assistance with funding
applications, staff recruitment and personnel issues, business planning, marketing
and so on.
3.3.4 Types of Technical Support Required
There is much agreement over the types of support that social businesses require.
The same views appear to be reflected at all levels, from central government to
those representing the social businesses themselves. The SEnU for example, states
that
“Social enterprises require business support and training delivered by people and
organisations that understand what they are trying to achieve and the additional
pressures that creates” (Social Enterprise : A Strategy for Success, 2002: )
The Go Yorkshire and Humber Development Framework for the social economy
identified the following areas as needing support: training for human resources,
legal, it uses, business development, financial management, social enterprise boards
and audit work. They also identified that the type of training required was to be
short, local and flexible, and accessible in all senses of the word. They argued that
mentoring and advice provide by people active in social enterprises was the most
appreciated form of support such as that provided through the region’s School for
Social Entrepreneurs. They also argued that the number of professionals in legal,
accountancy and marketing areas that are familiar with the social enterprise sector
19
needs to be increased. Legal advice is important for social businesses, not least in
the setting up of the legal structure of the business as inappropriate legal structures
may constrain the business (Tym and Partners, 1999). Business in the Community
may also have the potential to play a large role in that it could facilitate the
secondment of experienced managers to work in the social economy.
Support agencies also need to have good links with the businesses they have as
clients, and need to be approachable and user friendly (Tym and Partners, 1999).
Support agency staff need to have skills particularly developed for supporting the
social business sector. These need to be professional business skills, as for any
private sector support that the agency offers, but also needs to include a clear
understanding and sympathy with the principles by which social businesses operate,
so that “proposals are assessed in the context of their overall impact on the
community and allowances are made for applicants’ lack of a conventional business
approach.” (Tym and Partners, 1999). In particular, support agencies need to offer
intensive advice and hand-holding especially in relation to pre start up e.g. business
planning, acquiring premises, grant and funding identification, contract negotiation,
skills training e.g. bookkeeping, marketing, budgets and so on, access to
professional services at no or low cost, and links to similar businesses to gain
assistance with specific problems. They can also play an advocacy role, and help
social businesses to liaise with public bodies, local government and others (Tym and
Partners, 1999).
The GO Yorkshire and Humber Framework identifies the importance of clusters and
networks between similar types or sub -sectors of social business. It suggests that
support agencies have “a key role in making these clusters effective” and also
suggests that the support agencies themselves should “be better networked”.
It is important that support agencies are flexible in their approach to social

businesses.
3.3.5 Key Problems of Technical Support for Social Businesses
The type of people that start social businesses are sometimes not the most
appropriate people to move the business forward. Social Firms Scotland identifies
the need of the social firm as being “crucial to recruit management staff to run the
business with the appropriate commercial background or business skills. The staff
recruited need to have a combination of an entrepreneurial approach and a
participative management style” (Social Firms Scotland, 2004)
Another key issue is the amount of support required by most businesses. It is

suggested that people starting social businesses often have limited skills and
experience especially in business management, and as these businesses often
operate on low margins in a situation where anybody can start up a similar scheme,
the issues of business management are often acute. As a result, they require a high
level of business support.
A further issue is that of sustainability in the sense of providing ongoing support. One
of the problems that appear to face many social businesses is that support provided
through projects and initiatives may be tied to projects or government programmes
20
which have a short ‘shelf life’. Having raised expectations within a community of
social businesses by providing such support, its withdrawal can have severe
consequences. Ongoing assistance is needed for social businesses in the same way
that any business may need assistance. Financial needs, training, asset
replacement, refocusing of activities, management demands and ongoing business
planni ng are all areas where support will be needed as the business grows.
Co-ordination of existing support for social businesses through business support

networks appears to be a key issue for many social businesses. The GO Yorkshire
and Humberside Framework highlighted this as an issue in the response to their
consultation document. People did not want more new business support agencies,
they want existing ones to work better together. The Framework suggested that
there needs to be better Business Link and social economy development
partnerships at the local level.
§ More technical support seems to be available for social businesses and

Business Link in England and its counterparts in Scotland and Wales
appear to be at the forefront of providing access to the many agencies that
provide this support
§ It is expected that most of the social businesses contacted during the
research will have some contact with, or knowledge of, the services
provided by Business Link
§ Most social businesses are likely to be funded by a variety of different
means, and it is expected that the research will find funding patterns to be
complex and difficult to disentangle
§ It is an expectation that few of the businesses contacted will be financially
self sufficient
§ There appears to be limited contact with banks and similar institutions and
the expectation is that responses to questions about loans and funding
from banks are likely to be negative
§ Triodos clients are generally expected to provide a positive message
about the Bank and their relationships with it
§ There is a lot of agreement about the types of technical support social
businesses are likely to need, and it covers a wide range of skills and
specialist knowledges
§ There is also agreement about the level of experience and skills
possessed by those who start and run social businesses. This experience
and skill is generally thought to be in short supply
§ It is an expectation of the research that many of the social businesses
contacted will state that they do not have many of the skills that they need.
It is also expected that many people will say they have had to develop
these skills by themselves, especially if the business is more than a few
years old
§ As with many government policies, the progress and investment is often
made through funding sources that are relatively short term. There is likely
to be a pattern of projects and initiatives that exist to support social
businesses, but not all of these will be long term funded. It is expected that
21
some of the businesses interviewed will identify the sustainability of

support as an issue
§ Coordination of business support in Britain has always been an issue for
mainstream commercial businesses especially for SMEs. The expectation
for social businesses is similar; that there will be a lot of different support
agencies and projects, but that these will not always be coherent and
integrated
3.4 Why Do Social Businesses Fail or Succeed?
Brown (2002) identifies some extremely important reasons why social businesses
fail. He looks to the past, specifically the 1970s and 1980s, and sees, in particular,
the issue of size being a key factor in causing the demise of large numbers of social
businesses during that period. Social businesses that are too small are simply not
sustainable in the majority of cases. As evidence of the need for size, ECT, a waste
kerbside collection social business can be considered. ECT started in 1980
operating a minibus for community groups, but has grown in the last twenty plus
years and now operates a transport scheme, a London bus route, a repair depot and
a recycling company with sixteen local authority contracts, having a turnover of £22
million in 2003/4 (Harris, 2004). It is so successful that it has reached the point
where it can take over other failing organisations , such as Avon Friends of the Earth
in 2003, and the Chief Executive of ECT argued that “It [also] proved that we have
come of age as a social enterprise, because that is what real businesses do – they
take over others that have failed” (Harris, 2004). Here, the business has been a
success because it has grown to such an extent that it can do what commercial
enterprises do, and exhibits very similar behaviours.
A further issue has been the under-resourcing or under capitalisation of social

businesses. Lack of strategic financial planning skills within the sector has meant
that there have been many social businesses set up without sufficient expansion
capital, or even sufficient initial resource capital for items as essential as equipment,
marketing support, or other basic business needs. There has been a significant
problem in recent years in targeting funding from financial institutions, especially
from equity investors, meaning businesses start without sufficient real capital for
them to grow even in the relatively short-term. Indeed, finance often emerges as the
greatest barrier for social enterprises to overcome (Leslie, 2002). The complexity of
the funding situation also provides barriers to success. Many smaller social
enterprises expend a lot of effort in trying to obtain grant funding, and can become
entangled in highly competitive conflict situations with other social businesses and
sometimes with business support agencies themselves.
The SENU’s Strategy for Success identified some major barriers to the growth of the
social business sector. These included a poor understanding of the value of social
enterprise by many stakeholders and a lack of coherence within the sector. A further
barrier is identified by Leslie (2002a) who suggests that bureaucracy frustrates
growth and causes many administrative problems for business managers, in addition
to which they are also likely to have problems accessing premises and equipment.
There have been some responses put forward suggesting ways in which social
businesses might be assisted to succeed. Brown (2002) reinforces the views of
22
Social Enterprise London in their promotion of the idea of social intrapreneurs, and
argues that the way forward for the social business sector is to follow the
intrapreneur model. A social intrapreneur is defined as an employee of an existing
private, public or voluntary sector organisation charged with the task of creating a
social enterprise from the existing organisation, either through complete
transformation of that organisation into a social business, or by the development of a
social business spin off. Brown argues that these people will need to have the skills
of the entrepreneur, the business adviser and the business manager, but will have
the support and resources of the existing organisation behind them. Leslie, from her
study of social businesses in rural Cumbria, suggests that success in managing
social businesses is determined by possessing a social conscience, by having a
networking ability and by being able to obtain support and mentoring from other
entrepreneurs (Leslie, 2002a) and these are expected to figure largely in the
responses from the businesses involved in the research for this report.
§ As with commercial organisations, the reasons why social business fail are
many and varied and the expectation is that a wide range will be
encountered during the research. A lack of basic business skills, business
acumen or experience may often be the simple reason for failure
§ Social businesses may, however, be much more dependent on short-term
or relatively insecure sources of funding, especially during their set up
period, and may experience periods when continuation looks very unlikely
§ Size may be an issue. Very small, or micro, social businesses may simply
lack sufficient resources of any sort to achieve stability or growth
§ Competition for resources, including funding, means that many social
business managers spend less time managing the business and more
time trying to secure enough money to keep it going
§ Social businesses may succeed despite all the odds, often because of the
level of commitment and sheer determination to win through based on the
beliefs and values held by the social entrepreneur
§ There may be new or alternative models that social businesses could
follow that might be more successful
23
4. Research Findings
4.1 Overview
Even a small scale study such as this shows that social businesses make up a
substantial component of many different sectors of public and business life in the
UK. From organic farms and co-operative retail ventures, to care and health related
services, religious and spiritual retreats to the management of waste, there is little of
British life and society that does not include some form of social enterprise activity.
While central government strategies and reports seem to indicate that there has
been rapid and substantial progress in supporting the social economy and in
particular social businesses, the reality would appear, from the small sample used in
this research, to be somewhat different. Although there is undoubtedly progress in
the understanding of the social business concept within a number of support
agencies and networks, on the ground the delivery of this support appears to be less
in evidence. On the whole, most social businesses appear to find that the support
offered lacks understanding of the principles on which they are based, and they are
frustrated about the difficulties they have in obtaining even basic advice to help them
with the many tasks that face them in the daily running of their businesses.
The analysis of the findings of the research are split into two main parts. First, the
results from the cross sectoral analysis telephone interviews are presented and
discussed. The two sub sectors chosen for more detailed face to face interviews are
then covered, firstly the electronics recycling and refurbishment sector, and then the
care sector.
4.2 Cross sectoral analysis
The sample of businesses was identified using the client list of Triodos Bank for
2003. The representation of each sector was established and used to select a
representative sample for both Triodos and non-Triodos clients. The sample was
taken from across the UK, including businesses located in London, Scotland , the
South East, East Anglia, the South West, Wales and the West Midlands.
24
4.2.1 Profile of Social Businesses Sampled
Type of Organisation Number surveyed

Housing 4
Social Enterprise 3
Organic 8
Fair Trade 1
Religious 2
Health 2
Special Needs 1
Education 3
Arts 1
Sustainability 1
Renewable Energy 2
Table 2 : Sectoral Representation in Sample
The sample produced 28 businesses that agreed to be interviewed 4. Due to the large
number of organic farming enterprises that comprise part of the client list, there was
a substantial number of organic related businesses in the sample. They were not all
farming enterprises, however, but included businesses engaged in the wholesale
and retail of organic foodstuffs. Housing and the more generally termed social
enterprise5 were also significant sectors, and this is probably generally reflective of
the structure of the social enterprise sector in the UK as a whole. There were less
‘care’ related businesses than expected, as these make up a significant part of the
sector in Britain, but, due to the nature of their funding, the ways in which they are
established and their relationships with Local Authorities, the likelihood of this type of
business obtaining funding from Triodos Bank is much less. In part, this was one of
the reasons for the selection of the care sector as a case study, as this enabled a
fuller understanding of a sector that was dependent on other sources of support than
some of the sectors identified above.
The age of the social businesses interviewed varied tremendously from those that
had been established for a long time, sometimes as much as 30 years or more, to
those that were just a few years old, and some that were in the process of just
beginning. The average age of the businesses sampled was just over 11 years.
4
The sample was actually for 30 companies but due to a number of refusals, and difficulties obtaining times for
interview within the short period of time available for research, two businesses finally had to be deleted from the
sample.
5
This included in Triodos client list such businesses as retail food businesses, bookshops, housing co –
operatives, community development trusts and others
25
Businesses were mostly small to micro-sized, with only one that was of a medium
size with 25 full time employees and two that were much larger. Both of these had
over 100 full time or equivalent employees, but both had been in existence for more
than 10 years.
While 21 businesses stated that they have grown since being established, a
significant number had not. Of the seven businesses that hadn’t grown most of them
were still very newly established, or only a few years old. The two sectors that
showed non-growth despite the b usinesses being of some age, were the organic and
the religious sectors, and these relatively long established businesses had reached a
sustainable capacity for the kind of work they were doing, and were unlikely to seek
growth in the future.
Type of non-growth No. Age

organisation (years)
Social Enterprise 1 3
Health 1 1
Religious 1 10
Renewable energy 1 1
Housing 1 4
Organic 2 10 / 5
Table 3 : Non-Growth Businesses in Sample
Most of the businesses interviewed had grown, however, and this was felt to be
unsurprising given the demand for the activities, products and services they were
providing. Housing and education, for example, were two areas where the provision
of services filling gaps in public sector supply was likely to be warmly welcomed by
the communities they served.
4.2.2 Reasons for Start-up
The reasons provided for the establishment of the social businesses interviewed
were many and varied. They included those that had started as a result of the
demise of some other organisation or body, those that had spotted a gap in the
market and started a small social business to fill it, ones that had arisen out of social
concern, some that had arisen out of links with a Local Authority or RDA or other
public sector body, and those that arose from a common desire or feeling by a group
of people who had set out to achieve a common goal or aim.
4.2.3 Premises and Buildings
In the review of literature carried out as part of the research, obtaining buildings or
premises for the business was identified as one issue which caused difficulty for
social entrepreneurs and business managers. It seemed appropriate to ask those
businesses interviewed about their premises, to see particularly if those businesses
26
that had experienced growth had been forced to find new premises, and if these
were mostly rented. Buying new premises is likely to be beyond the resources of
most small social businesses, and they are forced into competition for rented
accommodation, often small offices or business units, with similar sized commercial
businesses.
1
1
Owned
Rented
10
Partly Owned
16
not stated
Figure 1 : Types of Tenure of Business Sampled
In terms of whether businesses were in the premises in which they were established,
19 of the companies are in their original premises, 8 are not (and 1 declined to say).
Of those that had moved into new premises, 50% of these premises were rented.
There was no significance to the pattern of age of companies that have moved, as
they range in age from 3 years old to over 30 years old. The relationship of tenure to
sector of businesses was also considered. The most interesting pattern to emerge
from this was the amount of premises that were, in fact, owned by the businesses. It
was expected that more would be rented, because of the cost of buying premises.
However, a number of these social businesses were set up specifically to purchase
premises for a variety of functions, whilst others were shops, the original
entrepreneur’s house and even portacabins. Of those that were wholly in rented
premises, the Arts sector was least surprising, as the somewhat tenuous and
perhaps more transient nature of the services provided means that rented premises
are more likely to provide the flexibility such businesses need.
27
Renewable Energy
Sustainability
Arts
Education Owned
Special Needs Rented
Health partly owned
Religious
not stated
Fair Trade
Organic
Social Enterprise
Housing
0 5 10
Figure 2 : Relationship between Sector Type and Type of Tenure
4.2.4 Sources of Business Support
4.2.4.1 Internal Sources
Many of the social businesses interviewed stated that their technical knowledge and
support came from internal sources, or from closely associated bodies such as
Boards of Trustees or committees attached to the business. They said that
“committee members are used for skills”, “the Director is a business man”, “Trustees
have skills”, “[we] make use of retired executives”, and the “bulk of experience is in-
house or through network[s]”. A small number of the respondents stated that they
didn’t need any business support as they were capable of dealing with all the issues
themselves, but these tended to be the educational or sustainability related projects,
and were not those that were more directly engaged in providing products or
services.
4.2.4.2 External Sources
Table 4 reveals the different types of support used by each sector. Government
support agencies are the most popular option, used by 15 of the respondents.
Informal networks and consultants are the second most used options, both listed by
7 respondents. The sustainability organisation and one health organisation were the
only ones not to indicate that they looked to any of these options as a means of
support.
28
Type of support
Sector of Government Board/ Formal Informal Consultants

respondent support Committee Network Network
Housing 2 3
Social 2 1 1
Enterprise
Organic 6 1 1 1 1
Fair Trade 1 1
Religious 1
Health 1 1
Special Needs 1 1
Education 2 1 1
Arts 1 1
Sustainability
Renewable 1 2
Energy
TOTAL 15 1 5 7 7
Table 4 : Sources of Technical Support used by the Cross Sectoral Sample
While formal networks have been identified by various strategies, reports and other
documents as being a possible means of providing social businesses with support, it
appears from the responses given in this small sample that informal networks are
likely to be more useful. Consultants, too, rate quite highly, but are likely to be used
for a fairly small range of specific highly skilled tasks. These include planning and
building issues, financial matters, energy related issues and similar things. By far the
biggest number of external sources relate to government generated support,
seeming to provide evidence of a growing provision of social enterprise targeted
services from this support sector. However, support provided from external sources
was viewed very variably.
4.2.4.3 Business Link, Business Connect, Business Gateway
The national business support network did not gain as many positive responses as
would have been expected from the figures discussed previously. Only four
respondents felt they were in Business Link’s target community. Three of these were
from the organic sector, and one from education. Of these, one organic respondent
felt they received a very good response to their requests, whilst the other three felt
the response was only average.
29
Most of the respondents did not consider themselves to be a target for Business Link
or its parallel organisations in Wales and Scotland . Of the 21 businesses that said
they weren’t a target, quite a large number felt that they could comment on the
quality of response they had received from Business Link/Connect/Gateway, with
some 10 organisations from 9 different sectors expressing a view.
Quality of response from Business Link

Very Good Average Poor
• Education • Housing • Fair Trade
• Organic • Special Needs
• Social Enterprise • Arts
• Renewable Energy
• Health
• Organic
Table 5 : Quality of Support from Business Link/Connect/Gateway

By Sector
It is quite clear from even suc h a simple analysis of opinions that the overall
impression of the national support service is that it provides a poor quality of support
and was, on the whole, not well perceived by many of the social businesses
interviewed. Of the 11 recorded responses, only 3 organisations felt that support was
appropriate. Two of these were in the organic sector, and one in Education. Those
that felt support was not appropriate came from the following categories: Housing
(1); Fair Trade (1); Special Needs(1); Organic (2); Arts(1); Renewable energy (1);
Health (1).There is no response at all recorded about these questions for three
respondents (1 health; 1 religious; 1 renewable energy). Comments about the
support bore out this pattern of inappropriateness. Respondents argued that
“Business Link is not specific enough for co-ops”, “Business Link was not helpful as it
didn’t understand the business”, “Business Link is not promoted to people like us -
we are not normal and they can't deal with people out of the norm”. In Scotland, the
comments about Business gateway were similar, “there are no real business people
out there to help, and the Business Gateway type don't understand. We need a
regional social enterprise person who can actually help social businesses with real
business knowledge.” Only two comments appeared to be positive, one was
because the person acted as a mentor for Business Link, but the second stated that
“as an independent trader it is hard to find time but Business Link came to you”, and
this was seen as a very positive action. However, it was hardly representative of the
main body of responses.
4.2.4.4 Other Organisations
There were other, mainly government sponsored, bodies or organisations that were
used to obtain business support. These included Local Authorities, and of the two
respondents that used them, the view seemed to be quite positive ; “Support from
local Councils was sufficient - no need to look elsewhere” and “Business adviser
from Local Authority very good”. There was only one respondent who appeared to
30
have contact with the Regional Development Agency for its area, but here the view
was positive with a comment that the “RDA gave all help needed”, but as the RDA
had been instrumental in the setting up of this particular social business, the opinion
is not really representative or without bias.
Of the 7 respondents that used commercial consultants, 4 felt that these delivered
the support they needed. These positive respondents fell into the following sectors:
social enterprise; special needs; arts; and organic. One respondent had used a
consultant for a few years, but reported that he was now moving away from this
option because of the cost.
Overall, the views of external support agencies and organisations was not
overwhelmingly positive. While there were a few positive comments, the general
impression is that social businesses do not rate external support very highly
especially that provided by government sponsored agencies. While the sample used
is very small, it nevertheless appears to provide some level of indication that the
progress expected of Business Link and its Welsh and Scottish counterparts has not
yet been achieved, and that they face some challenging times if they are to provide
social businesses with the kind of focused, clearly targeted support that they need.
4.2.4.5 Pro Bono Support
Pro Bono support appeared to be more or less non-existent amongst the cross
sectoral interviewees. Only one identified pro bono support as being made available
to them, and as this was one of the oldest social businesses interviewed it would
seem likely that the company would have had plenty of time to develop contacts
allowing them to access such support. They rated the support they received as
“average”. Many people interviewed had no idea that pro bono support was
potentially available to them.
4.2.4.6 Alternative Types of Support
Businesses were asked if they had any alternative forms of support to the ones
described previously. Many of the respondents replied positively to this question,
with 15 social businesses identifying other sources.
31
Yes No
(number of businesses) (number of businesses)
Social Enterprise (2) Fair Trade (1)
Organic (2) Organic (6)
Religious (2) Special Needs (1)
Health (1) Health (1)
Education (2) Education (1)
Arts (1) Housing (1)
Sustainability (1)
Renewable energy (1)
Housing (3)
TOTAL = 15 TOTAL = 11
Table 6 : Other Sources of Technical Support
The kinds of alternative support they identified included formal networks, Boards of
Trustees or committees attached to the business, and informal networks, and it was
the last of these that was most commonly cited.
4.2.5 Relationships with Funding or Business Support Providers
Both Triodos and non-Triodos clients were asked about their relationships with the
different support providers. It was hoped that responses to this question might
provide some insight into why support was more easily accessible by some business
than others. In terms of relationships with grant funders or similar bodies some of
the businesses interviewed felt that the situation had got to a point where
unreasonable demands were being on them, arguing that
“sources of public funding are getting increasingly over designed and put often
impossible demands on grant recipients – there is always tension involved”
and went on to say that it seemed to be a
“case of the blind leading the half blind”.
An atmosphere of frustration and tension appeared to surround a lot of the

conversation with the social businesses interviewed when the issue of relationships
with funding bodies was discussed.
4.2.6 Triodos Funded Social Businesses
There were a number of questions asked of those social businesses that already had
loans from Triodos Bank. The first question aimed to identify the different types of
support the businesses were getting from the Bank. 20 respondents in the sample
received at least one service from Triodos Bank; and six respondents received two
services. In total, Triodos provides 10 mortgages, 9 accounts and 7 loans to the
sample group of its clients.
32
2
Mortgage only
3 7 Loan only
Account only
1 Mortgage & Loan
Loan & account
Mortgage & Acount
4 3
Figure 3 : Services Provided by Triodos Bank to Social Businesses in the

Research Sample
The second question aimed to find out what level of communication there was
between the social business and the Bank. All respondents said that they found
communications between themselves and the Bank “useful”, although one said that
“contact has reduced as the loan gets paid off”
The final question asked businesses about their relationships with Triodos Bank.
Four respondents consider their relationship with Triodos as’ excellent’, these were
mainly from the housing sector, and one was from special needs. The remaining 16
business rated their relationship as “good”. One commented that they felt the Bank
had quite a non interventionist approach and stated that the “hands off relationship”
suited the way they worked, while another commented that “the high street bank is
more hands on and totally commercial”. No respondents felt Triodos worked with
others to offer them support in any joint partnership or other relationship. 9 of Triodos
clients felt that they had “good” relationships with other support providers; a further 3
believed their relationships to be “average”.
4.2.7 Opinions about the Availability of Technical Support
There were quite a substantial number of comments about the ease of gaining
access to, or knowledge of, technical support.
Business managers interviewed said that it was
“Not clear where to go for support….No real network so difficult to find out how other
organisations cope”
and that there
“Should be more opportunities for similar businesses, not aware of what support is
out there”
and although one organisation felt that things weren’t as bad as they had been in the
past, they were still far from perfect
33
“Help has improved over the past few years, the organisation is well structured and
trustees are business minded, the problem is when you are smaller and the workload
is greater. Time is limited and you need to find information, larger organisations
have people approaching them. It is difficult to know who to contact, we need a
directory”
Others felt that although there was support available it was often poorly focused on
the social enterprise sector, or was poorly co-ordinated. So comments such as the
first one from the East of England were fairly typical
“There is a mismatch of business support agencies with different agendas and

getting them to join up is quite difficult. There is an awful lot of info out there but it's
not necessarily hooked together as well as it could be.”
and in terms of the range of services provided by the support sector, it was felt that
“If the social enterprise sector is to grow what it needs is a far wider range of inputs
to support activity, not just business advice e.g. how to build social capital, legal
inputs, architects, quantity surveyors, management skills. Communities and
community enterprises are pushed to do it all themselves – this is very misleading.
What they need to do like any other business is hire in resources.”
but the buying in of skills was felt to be a big problem as it was
“Impossible to get funding for core activities and business consultancy funding for
business skills”
These opinions were generally typical of those from all of the social businesses
interviewed. It was clear that while some progress had been made in providing
support in some areas, notably London, on the whole the social enterprise sector felt
that it was not the target for business support, and that their needs were not really
understood. They also felt that if they wanted high quality support they would have to
buy it in, and they lacked the financial resources to pursue this option.
In terms of spatial differences in the provision of support available, most respondents

felt that there was no particular difference from one area to another. The only
exception was in the access to funding, and one business felt strongly about this
issue, arguing that
“Financially there is a distinct level of finance in some areas. It is a big issue and a
serious consideration. If we moved we would only go where the money was. Some
areas that are categorised as suffering from social degeneration seem bizarre, they
are not always logical. There seems to be a mismatch between what is stated by the
local authority is some departments who say that there is no need for some of these
activities, and an actual huge demand that exists in the day to day social service
department personnel. “
Such inconsistencies would make smaller social businesses especially quite

nervous, and would potentially prevent them from seeking to expand the products or
34
services they provided, if they felt that they would be placing themselves in an
insecure position financially and contracturally.
4.2.8 The Role of Social Businesses in UK
The final question for the interviewees was aimed at finding out what they thoug ht
the role of social business is in the UK, and whether they had noticed any changes in
government, business or other stakeholder attitudes towards the sector and the
goods and services it provided. While there were some positive trends noted, those
interviewed felt that there was still a long way to go before the sector was truly
accepted as a “third way”.
“Our role has changed enormously over the last 10 years, it has moved from the
situation of doing what you wanted to do to being encouraged by funders' interest
areas. Many arguments have been won and we are no longer seen as radical
hippies trying to change the world but are working in partnership with people, being
believed and supported. The Government does not necessarily have the breadth of
expertise so need to second people [to Government]…. generous fees but it
weakens the organisation”
“A lot of the issues are political , a lot of the difficulties Social Enterprises have
accrue to misperceptions of the community and voluntary sector by mainstream
private and public services. So what is actually required is some major re-education
of people in the mainstream about the real strengths of the community organisations”
“Agencies should trust people more and save time on monitoring exercises, they
need to be more like facilitating bodies. There is a great potential for community
development but it is in danger of floundering because of bureaucratic interference.
Different messages are given by Government and local civil servants. Local
volunteers will give up over time unless they get the help they need.”
4.2.9 Summary
The cross sectoral social businesses interviewed provide a small but probably
reasonably representative set of views for social enterprise in the UK at the current
time. While there may be slight variations in opinion from region to region,
influenced, perhaps, by areas where social business strategies and programmes
have been more effectively developed, on the whole the picture of technical business
support does not appear to match up to that suggested by the plethora of policy
documents, strategy documents and pronouncements that have arrived in recent
years from central government.
Despite the focus and task being given to the national business support service,
represented in England by Business Link, there appears to be relatively little
progress in developing skilled focused support for the social enterprise sector, and
social business remain rather cynical and disillusioned about the quality of the
support provided.
It appears that on the ground, social businesses rely much more on their own
knowledge and skills, information and advice they can obtain informally from
35
networks or from friends and acquaintances, occasionally help from local

government, or assistance they can obtain from trustees or committees attached to
their organisation. They value the assistance given by networking with other social
businesses in their sector, and think that more interactions of this sort would prove
valuable.
The use of pro bono support was practically non-existent and the lack of awareness
of the potential provision of such support is a cause for concern. While pro bono
schemes are unlikely to cover the whole of the UK, there is obviously a marketing
issue for those schemes that do exist, as many of the businesses interviewed felt
that such support could provide a useful option for them. The cost of commercial
services such as that provided by consultants was obviously a barrier for
businesses, meaning that few used them, but pro bono advice would have the
potential to fill this gap.
Generally, those interviewed felt that they had good relationships with the different
organisations that provided them with support. Triodos Bank was well regarded
amongst the businesses that formed its clients within the sample, but even outside
this group, most managers felt that their relationships with agencies were good, it
was just the quality of the support that they were less satisfied with.
36
5. Case Study Sector 1 : The Electrical and Electronic Equipment

Refurbishment Sector
This highly specific sub-sector was identified for further research for a number of
reasons. The issue of electrical and electronic waste management in the UK has
recently come to the fore because of new legislation from the European Union. The
Waste Electrical and Electronic Equipment Directive (WEEE) is currently under
transposition into British law, and the UK Government, industry, local government,
retailers and the waste management industry are in discussions about the best
means of providing waste take back and reprocessing infrastructure. The social
business sector has become an increasingly important part of this infrastructure in
the last fifteen to twenty years and over 300 social businesses of varying sizes now
exist to collect, refurbish, recycle and reprocess different sorts of electrical and
electronic equipment.
This sector combines environmental aims focused on waste diversion and the
reclamation of resources from the waste stream, with social aims focused on the
creation of jobs and training for people previously excluded from mainstream
employment (Nelmes, 2004). There are a variety of social business models that exist
in the sector including salaried training (Nelmes, 2004) which may also include the
provision of qualifications such as NVQs to City and Guilds in such subjects as
electrical servicing to basic office skills and administration (Nelmes, 2004).
To obtain some idea of the size of the sector, the example of the Furniture Reuse
Network (FRN) is useful. This is an umbrella organisation that coordinates some 300
organisations that refurbish fur niture and electrical appliances. In 2002, the
organisations covered by the FRN employed 1500 full time and 700 part time staff,
10000 volunteer placements annually, 5000 community service placements, 3000
trainee placements and 1000 special needs placements. These figures are growing
exponentially (Nelmes, 2004) mainly due to the WEEE Directive, and to contracts for
bulky waste with local authorities.
The UK generates about 1 million tonnes of WEEE per year of which about 43% is
large household appliances, and 39% is IT equipment. Of this some 6450 tonnes are
recycled (5%) (RealiseIT, 2003). Many of the major social enterprises in the UK are
based on the reuse and recycling of WEEE often through the repair and reuse of
whole appliances and the recovery and reuse of spare parts using labour intensive
processes. One of the most well known examples of successful organisations in this
sector is CREATE, which has two locations, one in Liverpool and one in Tottenham.
In Liverpool, it has provided 170 traineeships since its establishment in 1995 with
over 60% gaining employment or going into full time education at the end of the
training period. It provides NVQ training in a wide range of manufacturing and
service industry skills. A different model is that of Intermediate Labour Markets (ILM)
whereby people are employed on fixed term contracts for six to twelve months with
accredited training and counselling included. These programmes are aimed at
people with the worst job prospects, and use human resource management,
business management and partnership development skills to achieve their
objectives. The CREATE centre model in Tottenham highlights the need for well
developed partnerships to access skills and resources (Nelmes, 2004), as it is
through such partnerships that it has been able to achieve such a degree of success.
37
The social businesses involved in the refurbishment and recycling of WEEE have, as
with many other waste and material resource based social businesses, to maintain a
professional business sta ndard in their operations. They are often under contract to
local government, and deal with a large number of private sector and public sector
organisations in a face to face situation whilst receiving materials. They have to deal
with the waste industry which is well known for its hard edged commercialism, and in
addition, have to maintain high standards in their dealings with employees and
volunteers, especially those with special educational needs or those seeking to re-
enter society after experiencing a range of individual social problems.
5.1 Research Sample Sector Profile
There were eventually four Electronic and Electrical Equipment refurbishment social
businesses interviewed as part of the research. These included two fairly large
organisations and two small ones. The ages of the businesses varied from 3 years to
21 years, though the two in between were both around 8 years old. These
businesses are located in London, East Anglia, Somerset and South Wales. They
employ between 3 to over 100 full time staff, but large numbers of trainees,
volunteers or other people benefiting directly from their activities. Similar models
were used by all four businesses; people were trained and employed on a variety of
WEEE sorting, disassembly, repair and rebuild tasks, for which they could receive
different kinds of training qualifications and often they had the opportunity to
construct their own equipment, most often computers, as well as adding value to the
process of the business. Most of these businesses had a combination of
environmental and social principles as their central focus. One said that
“[We] repair, recycle and upgrade the computers and related equipment received
and then send it out to charities, people on benefits, pensioners and others. [We]
never really charge unless for internet ready or need to deliver a long way out of our
normal runs.”
Whilst another identified the product benefits from their work as a central function
“We recycle computers and related equipment given to us by businesses and Local
Authorities. It enables disadvantaged people to obtain IT. It helps to break down the
digital divide and the whole process is completely equality driven; experience,
knowledge, support.”
All four businesses said that they expected their work to grow significantly in the next
12 months, as the demand for outlets for waste was a growing concern for
businesses in the commercial sector, and the need to obtain low cost computer
equipment was an increasing issue for low income families.
5.1.1 Why the EEE Refurbishment Sector has Grown
One of the first questions that was asked of the case study companies was why they
thought the sector had grown so substantially in the last few years, and what it was
they offered as EEE related social businesses that made them attractive to people
seeking training and employment. One of the respondents said that it was the
38
development of the skills base that made its trainees attractive to other employers
and to people in poorer communities. They argued that “ there had been a lack of
repair for years….as colleges have dropped courses…[and that] the main knowledge
about the repair of WEEE is within the social business sector…”. They said that
some EEE refurbishment social businesses had a very high level of skills, and tha t
they were hoping to develop training courses with a local college to address the
overall lack of skills in the UK in this sector.
One of the smaller businesses said that they did a lot of work on training for the Job
Centre. They said that they had a focus on “sheltered environments for the people
who come for training as they are often ex-offenders, recovering from addiction, had
special needs and so on.” Even this relatively small business had been very
successful in that they had “trained 112 people so far (since 2001) of which 72% are
now in full time employment and 98% completed the training.” They offered training
blocks of 10, 13 and 26 weeks, and had a six to eight week waiting list for people to
train with the company.
It was also felt by two of the businesses that the access they offered to volunteers
and paid employees or trainees alike to computer equipment was very attractive for
people in low income jobs or those who were unemployed
“Volunteers are for the majority unemployed or work as shift workers. Some will
come in to gain training for work, others to build a computer out of bits. The company
has a waste pod in which they keep bits and volunteers can use these and barter for
other components to build or even buy spare parts.”
The caveat to all of these positive messages was that none of the businesses were
sure about what would happen once the WEEE Directive was transposed into UK
law. There is a possibility that a system could be set up that will remove the highest
quality items from the waste stream and return them to commercially based
disassemblers, thus effectively cutting the sector off from its main value materials,
but until the transposition period is complete the impacts are unlikely to be known. 6
Some of the businesses in this sector recognise the changes that may create
problems for them in the future, and are beginning to think about ways to adapt to
these changes, but it is difficult for them to be proactive when decisions have not yet
been made in central government.
5.1.2 General Management Problems
The issue of increasing pressure from commercial organisations, waste

management companies and a variety of other stakeholders was acknowledged by
the businesses questioned. It was stated that they have had to change the way they
work over the last few years, and they have had to become “more professionalised”.
It was also argued that the sectors social businesses had to work at 120% whereas
commercial businesses worked at 100%, and this was because being classed as a
voluntary organisation or charity meant that businesses “did not take them seriously”.
6
The WEEE Directive has to be implemented in the UK in the Autumn of 2004
39
While finding this increasing pressure to be professional a challenge, it was also

recognised that it was the way things were going to be from now on. They argued
that while it was not possible to be “flashy in terms of facilities and furniture as
private businesses” because they were essentially about people, it was accepted
that certain things were needed in order to succeed in today’s markets. It was not a
case of waiting for things to happen, as these businesses “have had to be reactive to
the market rather than just sit there.”
It was often a question of resource and financial management that made the general
management of the business such a problem. Buildings and premises seemed to be
one of the particular issues that caused managers to struggle.
5.1.3 Premises and Buildings
Social businesses often inhabit run down or elderly buildings because of the low cost
and lack of competition from commercial companies. The quality of these buildings
does, however, reach a point where they are no longer suitable in terms of working
conditions, or the business grows to such an extent that they need to find
somewhere else. One company said it was very successful but the building by
today’s standards was classed as below the line for employees. It was seen as very
comfortable and family orientated but they knew they would have to make
fundamental changes to improve the standard and to raise the profile of the
business.
One of the problems with buildings or premises was actually being able to find them
and take possession of them, and this often related to the financial commitment
involved. One of the businesses said that all their properties were rented or leased.
They were looking to buy premises but found that funders were not interested in
helping. They argued that it was particularly difficult with grant funding because
funders wouldn’t give money for buying buildings as it was seen as giving
organisations an edge over their competitors. At the end of the funding period they
would also have to pay back the residual value of the buildings, which would have
gone up. The same business had considered getting a mortgage or loan to purchase
a building but the organisation’s Board has concerns, and the whole process was
becoming very difficult.
The actual process of obtaining premises was seen to be particularly difficult without
support
“It was a nightmare to get a lease. It is a scary process as the leases were
frightening and what we were given was a horrendous document, totally in
gobbledegook. It is still terrifying with the unit, as it is not clear what we are
responsible for and we don’t know if certain things happen, who is responsible,
although we feel we can negotiate with the leasing company as they are quite
supportive.”
The same business also highlighted the problems besetting the small social
businesses that had no in-house expertise
40
“We asked for help with surveyors, architects, lawyers, planning. We twisted
somebody’s arm otherwise there would have been no free help. We had to do all of
the work looking for new premises by ourselves, only once was the Chairman of the
Board asked for help.”
and the problems don’t necessarily stop once the business obtains its new premises
“There have been problems with the telephone connections, with the electricity
supply, with alarms and with fire extinguishers.”
It is the enormity of the task that causes concern within the sector, especially as with
the disassembly and refurbishment of large quantities of items and recovery of
materials, the need for larger premises is more pressing than with social businesses
engaged in other sectors.
5.1.4 Funding Support
There is a pattern to the funding of smaller EEE refurbishers in the social business
sector. These seem to rely on a complex mix of relatively short term grants and
funding bids, from such sources as the European Social Fund, Communities First
funding, contracts for Local Authorities through training budgets, waste management
budgets, social services budgets or a mixture or all three. Some monies were also
received through contracts with Job Centres using a variety of government into-
employment initiatives.
Generally, the business managers of the smaller businesses asked spent a large
proportion of their time searching for funding, sometimes to the detriment of the
social principle side of their work.
“It is difficult to get funding as there is nobody to signpost the way to funding
opportunities. Nobody can walk you through how to bid for things, no-one. Different
bids are changed by having a different focus.”
and although others said that they could access funding it meant that sometimes
they had to rethink the way that they applied for it
“We can get funding easily as long as we are prepared to amend the criteria to fit
requirements”
It was almost accepted as a given that getting funding for work in the sector was
going to take up a lot of time and resources, that it would not always be easy to
access, that it could be short term and not always secure. Although there was an
acknowledgement that quite a lot of funding existed in the UK at the current time in
relation to waste management projects, there was a caution about the longevity of
this funding, and the need to maintain the sustainability of services once started.
Partnerships were often seen as the only way forward, as larger consortia of social
businesses and their stakeholders were thought to be more likely to access large
funds.
41
There was a general feeling that the focus on funding could be misleading, and one
interviewee commented that although they felt positive if the support was available,
they wished that they did not have to prove themselves in purely financial terms.
They felt that it needed to be more generally accepted that the money side wasn’t
the only aspect that should be looked at as social businesses have value elsewhere.
There was a concern that new social businesses could get as far as doing a
business plan and have a great idea but not pursue it. It could be a good project in
terms of the social side but not financially. They also felt that the Government was
starting to put pressure on social businesses in terms of professionalisation. They
were quite happy to move to a more professional ethic but said it was very hard to
achieve this professionalism. Social businesses are having to be accountable in
ways they didn’t have to be previously. It was argued that it is different for new social
businesses as they instil this sense of professionalism and accountability from the
beginning and don’t have to change. The interviewee believed that certain social
businesses will not survive because of these pressures.
5.1.5 External Technical Business Support
5.1.5.1 Business Link, Connect, Gateway
The comments made by this sector reflected those of the other respondents in the
study. The Business Link service was felt to be “appropriate when [it] has the
answer”, and it was argued that they had tried hard to “target social businesses,
especially in London,” although it was noted that many staff with expertise in working
with social businesses had been laid off recently in London at least. One of the
business managers interviewed had, in fact, done some presentations for Business
Link on social enterprise, but this was done because it was one of the largest EEE
refurbishers in the UK and the manager was well networked.
On the whole, however, the comments given were rather negative and it was felt that
Business Link was
“Not very good. [There is a] Strong need for i) more generic advice on basic aspects
such as handling maternity leave and, ii) one-to-one mentoring activity. The
establishment of good personal relationships is essential, which Business Links don’t
seem to provide, perhaps due to limited time. It’s more about people than numbers.
Many people in social businesses are not business minded. Although they are
passionate about their work they have limited business skills. Business Links are
talking in the wrong language.”
and that
“Business Connect don't have understanding of social businesses… they focus on

Business Plans which is not appropriate to our way of doing things.”
Even when there was an appreciation of the work done by one of these
organisations, there was nearly always a qualifying statement
“Business Link have too much information, it is harder for Business Link to advise
everybody as they don’t know these different directions. They are amenable and do
42
respond quickly and are good at prioritising but we struggle to get accurate
information from them.”
Even from such a small sample, it appears that the national business support service
has yet to provide the kind of help that social businesses in this sector require. There
is a general feeling that this is not the first option of choice for business support, and
the task that has been placed on the service by central government in terms of
providing more focused social business support will be a substantial challenge if the
evidence of this research is as widespread as it seems to be.
5.1.5.2 Other Organisations
The four businesses interviewed used consultants in a very limited way, and this was
generally because of the cost attached to using their services. Two of the businesses
never really used commercial consultancies as “the cost is prohibitive”. One of the
larger businesses did use consultants and said they were “good for basic
assistance.” The problem was that once businesses had grown in size and were
effectively a medium sized business the problems appeared to escalate
“the nature of the problems faced are different (e.g. need to establish new layers of
management and more robust accounting systems). Not many consultants can
provide these services at affordable rates. In addition, the larger social businesses
get the less likely they are to be able to obtain this sort of advice for free.”
As with other types of support, consultants could provide some useful help, but the
barriers to its use appeared to outweigh the benefits.
5.1.5.3 Pro-Bono Support
As with the responses given by those contacted in the cross sectoral survey,
comments about pro bono support were not very positive. Pro-help, for example,
was described as “nonsense” and “a frustrating experience” by one of the
businesses interviewed. They pointed out tha t there was only one member of staff
available in the Pro-help office that they had contact with and although there was a
monthly newsletter, it was described as too “slow and under resourced”, meaning
that opportunities for funding could be missed.
One interviewee didn’t realise that pro bono support was available and hadn’t heard
of the BitC programme until recently when it was found on the website
‘grantsonline.co.uk’. The business was now interested in it and wanted to find out
more about it, but had not had time to pursue this. Another business said that they
thought BitC didn’t really operate in their area and seemed to be “very lacking” in
support for their kind of business. A final comment from the fourth business
interviewed was rather backhanded i n its seemingly positive comment about pro
bono support, as they stated that
“We are not convinced the service would be any better if we paid, it tends to be last
minute but at least its free.”
43
Where pro bono support was felt to be of a better quality, it appeared to have been
arranged by the social business itself and their contacts gained through informal
networking. Even here, however, the subject matter of the support appeared to have
an impact on the quality of the support gained. Free legal advice that had been
gained through direct contact with solicitors had resulted in a very good experience.
It was thought that in general, legal advice may be better because of indemnity
implications. It was argued that If the advice is something that can be ‘sued’ against
it tends to be good. However, if the advice is less legal or regulation based then the
principle of caveat emptor appeared to apply. One of the larger social businesses
said that, i n general, their experience of pro bono support fell into one of two
‘camps’: i) Legal advice provided by lawyers; which was very good, with nothing
short-term or unprofessional about it and ii) marketing/financial advice/support, which
tended to be more informal, less structured, less professional and almost certainly
short-term.
5.1.5.4 Alternative support
As with the cross sectoral responses, the EEE refurbishment sector tended to use a
varied range of other sources for support. Again the role of networking amongst the
social businesses that existed in the sector appeared to be a vital link. One of the
largest businesses interviewed said that they looked at external bodies in their own
sector and beyond. They believed that the community sector is probably more
informed than commercial sectors because they are used to sharing information and
barriers are broken down. With social businesses, they argued, people want to help
and are willing to share best practice and advice but this is not necessarily the case
for commercial organisations due to competition.
More than one of the businesses interviewed obtained support from voluntary sector
representative organisations either at the national or local level. The Association of
Chief Executives of Voluntary Organisations (ACEVO) was identified as being
extremely useful, and “great for management training and mentoring.” They were
said to operate almost like a trade union; as a set fee is paid annually. At the local
level, a voluntary service was described as “a lot of help and only £25 a year”.
There were other places that these businesses had tried for support. One had been
to its RDA, and tried to get help from an entrepreneurship in action programme, but
said that it lacked understanding. Another business had used its local Chamber of
Commerce who helped to publicise what they do, and had also used the Learning
Skills Council to help them with their training and other activities. There was use of
the Community Action Network, who had organised a franchising workshop funded
by the P hoenix Fund (DTI - Small Business Service) which was attended by one of
the business managers. One company had gained information and support from the
Charities Commission, from Companies House, ACAS, and from their local Investors
In People office. Finally, one of the businesses was a Christian based charity and
had found it useful to be part of a network of other religious communities.
The question was asked as to whether the businesses were aware of any specific
sector support, especially as informal networking and contacts seemed to be one of
the key ways in which these four businesses accessed help and advice. There did
not appear to be any such support, however, and although the businesses were
44
aware of general waste management and recycling networks which are quite active
in the UK, there did not appear to be WEEE sector networks for support, although
the more general Furniture Recycling Network (FRN) was said to be a good source
of WEEE information and support. The businesses reported that they did have ad
hoc contact with some other businesses, but the smaller businesses interviewed felt
that they were not regarded with much interest by some of the larger organisations in
the sector.
It appears that even with a sector that provides a substantial amount of employment
and training, and which provides benefits in terms of low cost goods to local
communities, thus having clear economic, social and environmental benefits, the
ability to access consistent, well focused targeted support is quite difficult. The
national business support services do not seem to be providing the kind of quality of
support that is needed, and currently these businesses appear to rely more on local
networks, contacts, and help provided by organisations that are not wholly set up as
support providers.
5.1.6 Relationships with Support Providers
The businesses interviewed said that their relationships with support providers were
positive for the most part, and that the work they did in terms of environmental and
social benefits was appreciated by these support providers. One business said that
“most of them come and see what we do and appreciate the value of the work and
the benefits and how we help people in the community, and the landscape.”
5.1.7 General Comments on Technical Support
There was overall a fairly negative feeling about business support for the social
businesses in this sector. Comments abounded and revealed the level of frustration
amongst business managers in what is a tiny fraction of the social businesses in this
sector; one saying that
“There is very little support, technical support.”
another that
“Sometimes we feel ‘flooded’ by support organisations. However, there is little

continuity and no substantial help. Much support is therefore of limited use.”
When support was available it was felt to be poorly focused as it was mostly
“‘business’ not ‘social’.” It was argued that generic advice was ‘ok’ but more in depth
advice on management skills was lacking and this was a concern for those
businesses that were growing. It was felt that the re was
“a clear need for improved provision of longer-term mentoring services and support
focusing on aspects of business/management psychology”.
One of the business managers expressed frustration that more support was not
offered by commercial business. As the EEE refurbishment activity saved
businesses a lot of money by removing waste from landfill that these businesses
45
would have had to pay for otherwise, it was felt unfair that these same businesses
were unwilling to support the sector financially or otherwise.
There were a number of comments made that generally expressed the anxiety and
frustration felt by this small sample of EEE refurbishment businesses. One stated
that
“We didn’t know what questions to ask of support providers”
and as a result had not made the best use of support available. The problems of
finding time to access support were also highlighted, as it was argued that the
business was crisis managed and hadn’t the resources to seek help. The
sustainability of support was also identified as an issue, as one business argued that
“Lifelines can go, just like that. People don’t consider the long term.”
5.1.8 The Role of Social Businesses in the UK
The four EEE refurbishment businesses interviewed were also asked their opinions
about the changing role of social businesses in the UK. There was a general feeling
that social businesses were increasingly part of the fabric of British life. They
acknowledged that social businesses are “growing prodigiously”, and said that this
pattern seemed to be the zeitgeist. Another argued that
“Social businesses are vital. It is an eye-opener as to how many people they employ
and help, and there would be many missing out if they weren't there. There is a real
need for social businesses whatever they are doing. There won't ever be enough
especially because the State is not providing all that is needed.”
The social benefits of the business and the services it offered to its employees or
trainees or volunteers was seen as a central principle that remained a vital
component of the sector
“Volunteers need to have their morale boosted and their confidence built up. We are
in a commercial area but we still need to have a heart.”
But it was acknowledged that social businesses in the sector has to change if they
were to continue to exist, and there was a clear move towards the incorporation of
commercial business skills and activities. As one interviewee stated
“We have had to go towards more of a standard business model to cope with the
pressures.”
5.2 Summary
The Waste Electronics and Electrical Equipment refurbishment, reuse and recycling
social business sector is growing. Its future is not secure, but it seems likely that the
social business will remain an important part of the infrastructure set up to deal with
the thousands of tons of waste items that exist in the UK. It is a sector that is
perhaps more commercially orientated than some other social business sectors in
46
that it focuses on the recovery and value of materials, and the resale or provision of
equipment back into communities. While it has strong links with the many other
actors in the WEEE network, however, the small size of many of these social
businesses means they are highly dependent on good quality business support and
information. They need support that it highly focused, and rapidly delivered if they
are to operate in a world in which material values and diversity of products is
constantly changing. They need to spot market niches, have highly skilled
employees and still have a core of social principles designed to provide those with
limited employment prospects with the help and confidence to progress into the full
time job market. On the whole, it seems as though the support they require is not yet
forthcoming, and as one of the interviewees pointed out, the sector is not sufficiently
robust to ensure that all of the many smaller businesses remain viable. While in
business terms the demise of an inefficient business makes economic sense, in
social and environmental terms it can be extremely damaging for its local
community.
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6. Case Study Sector 2 : The Care Sector
The care sector is as diverse as any other social business sector. The sector
includes social businesses that provide services in caring for the terminally ill, the
elderly, people in sheltered accommodation, people with specific disabilities and
many others. They are often linked to public sector provision through Local
Authorities, providing as they do non-profit making facilities that support the public
sector without being too expensive for use by individuals. There are a number of
success stories in the care sector. One of these has been highlighted in the SEC’s
2003 publication, There’s More to Business Than You Think. Sunderland Care Home
Associates is a major service provider for Sunderland City Council’s social services
department. It provides domestic services and personal care to hundreds of people
in the city providing some 3500 hours per week, offers training and employment
opportunities to many women and unemplo yed men from former mining
communities, and is employee owned, with a turnover of more than £1 million
annually (SEC, 2003). It is care related social business on this scale that underpin
many of the public sector services provided in the UK, although those receiving the
care may be unaware of its source.
As the UK’s population gets older and the demand for services increases, it is likely
that this sector will continue to grow. The pressure on national and local care
budgets is rapidly growing and there is a need to find ways to achieve ever better
standards of care at lower cost. The changing nature of the family unit has also
added to this burden. As the tradition of the extended family continues to decline and
children become less willing to accept the responsibility of caring for elderly or ill
relatives within the family circle, the demand for individual or group related care
services increases.
The care sector is very different from the EEE refurbishment sector. There the focus
is on training, skills and the management of materials and products for
environmental and social benefit. Within the care sector the focus is more or less
completely on the provision of services, and while it may provide training for its
employees in care related skills, its main function is to provide services that make
the quality of life better for individuals within sets of communities, either local
communities or communities of age, disability or illness. This means that the social
business here may have even less of a focus on the business aspect of what it does,
and that the support provided may be even more difficult to target and make
appropriate.
6.1 Research Sample Sector Profile
There were five care related social businesses interviewed as part of the research.
They varied in size but all were relatively small, with the largest having 15 full time
employees and the smallest having no actual full time employees but being staffed
wholly by 4 volunteers. Volunteers were a feature of some of the other businesses
interviewed, with one having 40 volunteers to its full time staff of 10. Three of these
businesses were over 10 years old, and the other two were between 2 and 3 years
old, although one of these had not actually been set up other than in name only and
was seeking support at the time of the interview. These businesses were all located
48
in the South West and Wales, as the difficulty of obtaining agreement for interview
and the limited amount of time available for the research meant it was difficult to set
up interviews further away. These five businesses either followed a residential model
or were set up as office based businesses with some drop in facilities attached. Two
of the businesses had been set up in conjunction with local public sector bodies, one
with the Youth Service and the other with the Local Health Trust, but the latter one
now operated independently and the former appeared to be relatively independent in
its activities. The remaining three had been established because there had been a
gap in the market for the provision of specific services for disabled people, and the
social entrepreneurs who started them felt strongly about the need for the services
that they provided.
6.1.1 Funding Support
All of the business interviewed in this sector thought that obtaining funding was a
problem, and one identified funding above all other kinds of support as the most
important, stating that
“It is the financial support that the [business] is lacking, not the business support as I
already had business experience.”
and there was a similar comment from one of the other businesses who argued that
“Although there is plenty of advice available, it is the financial support that is missing,
I probably won’t even apply for financial support as it is so problematic.”
In fact the issue of funding was perceived to be such a problem with yet another of
these businesses, that they were looking for funding so they could appoint a specific
fundraiser to help them access even more funding. Another felt that funding was very
restrictive as it meant the business had to answer to funders rather than
concentrating on the main social function of the business itself. A third business was
rather frustrated by their search for funding and felt that there was competition of the
wrong type, arguing that
“There is not enough support, we thought the lottery would help but that is not the
case – [it is] a source of good financial support that has been abused.”
The very nature of the care provision that was carried out by these businesses
meant that they were not in such a strong position to obtain any value from their
activities that could be reinvested back into the business, unlike those in the EEE
refurbishment sector who could, in theory, obtain revenue from the materials and
equipment they processed. Although it was possible for one or two of the care
businesses to obtain income, for example through the provision of residential
holidays for disabled children, the amount they could charge for these services was
relatively low compared to the capital outlay, and ongoing level of care they needed
to supply their clients.
6.1.2 External Technical Business Support
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6.1.2a Business Link, Connect, Gateway
None of the businesses interviewed in this sector had any real knowledge of
Business Link or Business Connect. They did not really understand what the support
agency was, and appeared to have had no contact with it. Two of the businesses
had received some business advice from what they termed government sources, but
this was found to be a county level ‘Business Initiative’, that was funded through
local economic development funding from Local Authority funding amongst other
sources.
6.1.2b Other Organisations
One of the businesses interviewed received support from the Local Authority’s Social
Services department with whom they worked closely to assist deprived families in
their area. The Social Services department supported the project and kept in close
contact with the business through quarterly meetings. The same business also
received a measure of informal support from an academic at a local university, and
engaged a specialist consultant to help them. With these different sources of support
the business was able to keep going and gain further funding. None of the other
business identified other external organisations as sources of support.
6.1.2c Pro Bono Support
None of the five businesses had any kind of pro bono support, and were generally
unaware of the kind of support that could be available to them in this way. This was
probably partly due to the lack of time they had to search for sources of support, but
was also due to the type of services they offered which were a lot less commercially
focused than those of the EEE sector.
6.1.2d Alternative support
In fact, the most commonly cited source of support for these care related social
business was that which was obtained through informal networks and contacts, or
from family and other acquaintances of the manager of the business. Thus, the view
from one business was quite representative when it was stated that
“The informal support networks are the most useful”
and another, who said that they felt it was necessary to
“build up political networks. The informal networks that are most useful have been
built up over time via experience with local authorities, by attending conferences, and
at a local inter-agency meeting that was set up by the church.”
A third said that while he saw himself as a social entrepreneur and knew it was hard
work and that he needed to be driven and persistent to make progress, it was a
question of where you could get training to do the kind of work he was doing, and he
had found that informal networks were helpful in this respect.
50
Two of the businesses specifically identified those who were closely associated with
the business either formally or informally, directly or indirectly through personal
knowledge as being important in providing help. One business stated that
“the Trustees and Members of the Board provide very important links and offer
support, encouragement and commitment.”
whilst the other said that the manager of the business had relied in the past on
“help from friends and relatives, especially when the project was first set up, as there
was no time to look for outside support as the project took up all the co-ordinator’s
time.”
In comparison with the WEEE refurbishment sector businesses, the care sector
appeared from this very small sample to have very little contact indeed with external
business support agencies, and to rely almost entirely on their own internal
resources, skills and experience or those provided through informal networks and
ongoing contacts with family and friends, or those connected with business through
the management structure. This might partly be due to the nature of these
businesses, which may have less obviously recognisable business models being
more closely aligned with the charitable sector and voluntary sector, but may also be
due to a basic lack of awareness on the part of mainstream business support
providers that such social businesses do exist within the care sector.
6.1.3 Relationships with Support Providers
One of the businesses had not really started operating even though it had been in
existence in name for a couple of years and had no real contact with any support
providers. The others stated that the relationships they had with support providers
were excellent or good, but given the dominance of family, friends or closely
connected groups of people, it is hardly surprising that the response should be so
positive.
One of the care sector social businesses was a client of Triodos Bank, having both
an account and also a loan. This particular business said that its relationship with the
Bank was good, although it didn’t feel that the level of communication it had with the
Bank was helpful.
6.1.4 General Comments on Technical Support
The general feeling from these five social businesses was that the level of business
support available to them was inadequate. While some identified little need for
external technical support because they felt that they were capable of addressing the
needs of the business from their own experiences and skills, the majority of the
interviewees argued that
“People are unsupported and need to have so much energy to succeed. It is very
hard to keep going – you need to be inspired, and you need to be professional.”
and thought that the most effective help would be from
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“in kind support from business [that] would be most useful for the organisation in
return for staff training or advice. There is not enough time for the co-ordinator to
look for such help as [he is] busy day to day with the running of the centre.”
The general feeling of the interviewees was that it was difficult to know where to start
looking for support, and that when a source was identified, it was difficult for
businesses within their sector to access the support anyway.
6.1.5 The Role of Social Businesses in the UK
All of the care related social businesses felt that they belonged to a vital sector
supporting weaknesses in the State’s provision of services
“There has got to be a role in the UK [for social businesses] because the services
and therapy they offer are not available in the public sector - there is a void that has
been filled.”
And argued that the social business approach could improve on what the public
sector could do as it
“Can offer more flexible services”
At the same time, they felt that the services they provided were often taken for
granted and that people lost sight of the fact that it wasn’t the State that provided this
wide range of services, but social enterprises that often operated on minimal
amounts of funding and with large number of volunteers. This feeling sparked some
quite passionate comments including
“The Government has tried to put in place capacity building measures, but there is a
need for respect. People think you can run the service for nothing, but we need to
operate to recover full costs.”
which was emphasised by the following arguments
“We need to run the organisation like a business and although it fills a gap for social
services, social service employees assume that they can receive services from [us]
very cheaply.”
“We sometimes come up against Social Service departments that are not willing to
pay or use services as they see the organisation as a threat. Also the Social Service
staff are not aware of how a business is run – they only see how their department is
run and not how all the elements fit together.”
The care sector of social businesses clearly perceives itself as providing a vital
service in supporting the work of the public sector, but at the same time appears to
run the danger of being taken for granted by that same public sector, and by the
clients that it serves.
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6.2 Summary
The care sector had less information to give and fewer opinions about the support
they received from external sources, especially those provided by government or by
pro bono schemes, for the simple reason that they were unaware of this support or
had not been able to access it. Informal networks and the support provided by
personal contacts seemed to constitute much of the help that these five businesses
were receiving. This might be particularly true of smaller social businesses in the
sector, and as it was not possible to interview one of the large care related social
businesses in the UK, it is quite likely that once these businesses reach a substantial
size they become more visible and perhaps receive more attention from the business
support agencies.
In general, the five businesses interviewed rated the support available to them as
inadequate, and although the one businesses that had not started any actual
operations said that they were aware of plenty of advice and support being available,
they had not managed to access any of this in the two or three years since it had
been first established, preparatory to the business being made operational. Funding,
however, seemed to be viewed as a critical issue by all the businesses, and also
seemed to act as a barrier to growth in this sector. The provision of funding for such
businesses appeared to be less sharply focused than it was for the first case study
sector, where the business aspect or trading aspect was more clearly defined. The
care sector seemed to suffer from its own success in some ways, as the job that it
was doing meant that they became integrated into service provision so effectively
that they were no longer clearly regarded as social businesses, but became in the
eyes of some stakeholders inextricably linked with the services provided by the
public sector.
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7. Conclusions and Recommendations
Social businesses and the whole social enterprise sector is without doubt a major
part of British life at the beginning of the 21st century. While there are many success
stories, both those covered in the media, and those who carry on without widespread
recognition, the reality of life on the ground for most social businesses appears to be
less rosy than these success stories would suggest.
While the sample of social businesses used in this research was small, it provides
some breadth in terms of the range of sectors included, the size of businesses
interviewed and the distribution of businesses across the UK. It also provided depth
by focusing on the activities of two very different sectors operating at different ends
of the service-product continuum, where one group of businesses, although being
primarily about the people they employed, nevertheless exhibited characteristics
more common to traditional commercial businesses and the other had similarities
with the public sector organisations that they supported. The sample also exhibited a
wide range of functions and activities including a variety of models of service
delivery, of training, of job creation and of income generation and reinvestment into
the business. The multiplicity of models meant that even in this small sample it was
difficult to pin down a clear definition of what a social business was and how it
operated, and this complexity may provide one of the reasons for the relative
slowness of the business support agencies in developing targeted programmes and
information and advice for the sector.
The research shows that there is a long way to go before business support for social
businesses matches either the aspirations of central government and others, or
satisfies the businesses themselves in terms of the quality and appropriateness of
the information and advice given. Across the social enterprise sector there still
appears to be a great deal of reliance on support gained from informal networks,
personal contacts and other social businesses. External sources of support often
come a long way down the list of preferred options for social businesses because of
their perception of the usefulness of that support.
It was expected that there would be relatively little awareness of the developments in
policy and strategy that had been taking place at the national level, or even at the
regional and local level, and to a large extent this was true. While some of the larger
businesses were aware of what was happening and had even had some input into
national policy through their links with national level representative bodies, the
majority of the businesses interviewed had little real detailed knowledge of such
developments, and lacked the time to find out. Some of larger businesses had been
asked by regional and local government agencies to present workshops or seminars
at business support meetings, and as a result their knowledge of the national
business support services was better developed, but again the majority of smaller
social businesses were largely unaware of these services or found them to be
lacking in quality and focus.
There did not appear to be much co-ordination between the business support
agencies if the perceptions of the businesses interviewed were anything to go by.
Networks appeared to exist at local level of within specific communities, for example,
those with religious links or affiliations, and were much less in evidence between
54
national business support agencies and regional or local initiatives. There was a
significant measure of confusion amongst the businesses interviewed about what
kinds of support actually existed and how they could gain access to it.
While the promotion of national business support services such as Business Link in
England and its counterparts in Wales and Scotland would argue that most social
businesses would use these agencies or at least have contact with them, the results
from the research are not so clear cut. While many businesses were aware of the
existence of the agencies, few felt that were targets for these services, and of those
who had managed to access support there was generally a large degree of
disappointment at the quality of the support they had received. It was felt to be
lacking in focus for the social enterprise sector, too general, too basic, too short-term
and demonstrating a basic lack of understanding of what the sector was about or the
principles by which it operated. There was, unfortunately, a large measure of
cynicism and disillusionment about these agencies, and it will take a lot of hard work
to win many social businesses back to being potential clients of the national
business support services.
The funding patterns of the social businesses interviewed were, as expected, highly
complex and riddled with uncertainty and short-termism. The sustainability and
security of funding was a problem that exercised the minds of many managers.
There was a lot of anxiety found amongst the smaller b usinesses especially about
the difficulty of obtaining funding, and the difficulties of responding quickly to a highly
dynamic funding landscape in which the existence of funding bodies was sometimes
short lived and the criteria and regulations surrounding the funding were constantly
changing. Many of the managers interviewed said that they spent a disproportionate
amount of their time searching for funding, or responding to the high level of demand
from funders once they had managed to secure it. Not one o f the businesses
interviewed could be described as financially self-sufficient, as even the largest had
injections of funding from non-commercial sources. In addition, difficulties in gaining
work in areas where social businesses are well placed to add value because of
financial rules and regulations was an issue of concern. Local Authority contracting
processes mean it is difficult for social business to gain access, especially because a
business needs to have three years of trading accounts before it can bid for a
contract (Islam, 2003), and this was a comment made by more than one business
interviewed.
Although there were a substantial number of Triodos Bank clients amongst the
sample, few social businesses contacted felt that banks and other financial
institutions were really aware of what they did. Loans from banks were not seen as
the preferred option for financing of businesses with the focus on funding
outweighing a desire to access financial support from what they considered to be a
more commercially focused source of money. This was even true of some of those
businesses that already had loans from Triodos Bank, as they were still seeking
funding from other sources.
Those businesses that were clients of Triodos Bank were very positive in their
comments about the service provided by the Bank, and the relationship they felt they
had with the Bank. They felt that the communications they had with the Bank were
55
generally good, but there was some indication that some further work could be done
to improve communications with clients.
The types of support required by the businesses interviewed matched with the
expectations identified earlier on in this report. A range of business management
skills, assistance with legal matters, personnel issues, accountancy and auditing,
building and planning problems, project management and business planning and
many other issues were cited as areas for which support would be really useful.
While some business managers felt that they had sufficient experience and skill of
their own to be able to cope with the problems of managing their business, the
majority were quick to identify the wide range of issues they faced and their lack of
experience and skill in dealing with them. Many of the managers interviewed argued
that the lack of support available to them meant that they had had to tackle these
problems by themselves and had gone through very steep learning curves across a
multitude of skills.
7.1 Recommendations
There are a number of recommendations that proceed from this short report.
7.1.1 For Social Businesses
It is easy for social businesses, as with mainstream commercial businesses, to get

buried in the day to day running of the business, reacting to events and having little
or no time for planning and thinking strategically about where the business should be
going. While this is the model of management in a business, it is unlikely that it will
be able to use what support is available to the best advantage.
There are three main recommendations for social businesses that arise from the
research carried out for this report. First, although time is precious for managers of
social enterprises, it is worth spending some time becoming acquainted with what is
happening in terms of national and regional policy publications of which relatively few
businesses interviewed were aware. The range of funding options through either
grants or loans is also constantly changing and constant checking of relevant
websites is recommended.
Second, social businesses gain most support from informal networks, and argue that
they would most benefit from learning from other social businesses. They should
build on the networks they have and try and promote this approach through dialogue
with sector representative bodies, contacts with government funded business
support providers, RDAs and others. The key to obtaining the specific kind of support
that social enterprises require is to keep asking for it.
Lastly, social businesses should not continue to regard the national business
support services such as Business Link in a negative light. Although these services
do not yet provide the quality of service most social businesses want, they are
becoming more focused and trained, and constant pressure and enquiry from the
sector will ensure tha t this progress happens more quickly.
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7.1.2 For Business Support Services
The technical business support sector has a lot of work to do if it is to be accepted as

a really valuable source of help by the social business sector. Cynicism and
disillusionment set in when business managers are offered help with business
planning, but are then left to their own devices to ‘get on with the job’. Business
support agencies do not, as yet, seem to have understood the need to provide more
intensive and ongoing support than is needed in the commercial sector, despite the
number of surveys and papers that already argue this point. Social businesses are
similar to commercial businesses in that they are overloaded with work, extremely
busy and unable to devote much time to searching for resources and advice outside
the firm. Where they tend to differ is in the lack of business experience and skills that
they have. Social entrepreneurs often start from a voluntary, charitable or public
sector background and do not have the business on the job training that
characterises the entrepreneurs of many commercial organisations. It is likely to be
a difficult journey for business support providers to develop the very focused kinds of
support that many social businesses are demanding. There are four main areas for
which recommendations can be made to improve the support provision.
7.1.2.1 Coherence and Integration
One of the main complaints from the social businesses in the sample was the
confusion that they felt existed in the support sector. They were aware that there
were many organisations out there providing support, but were not clear as to what
support they provided, how they related to other support providers and which point of
access was the most sensible for them to pursue.
The recommendation is that each region or locality provides, perhaps through the
national business support service, a simple map or diagram of support on offer that
identified the different organisations, the types of support offered and the easiest
points of entry or contact for different sector.
It is not recommended that the focus of support is contracted down to just one
provider, or one-stop shop, as the problem of quality, access and response time
mean that a poorly developed one-stop shop that has weak links with other support
providers can do more harm than good.
7.1.2.2 Focus on Specific Needs
Another one of the main complaints about the support providers, whether
government sponsored or commercial, was the lack of understanding of the social
enterprise sector and its specific needs.
It is recommended that further and more widespread dissemination and training

relating to the principles and processes of the social business is developed for all the
support providers. This may build on existing training programmes and information
events that have been organised in the UK in the past few years. Resources should
also be made available to ensure that the support agencies could provide the whole
range of types of support required, from marketing to legal matters and from funding
to personnel management.
57
7.1.2.3 Ongoing Intensive Support
It is clear that much frustration is felt by social businesses when they are attracted to
business support only to find that it consists of one or two telephone conversations
or the delivery of a few leaflets. It has to be recognised that social businesses
require not only a breadth of support in the range of issues covered, but also need to
have depth in the support they receive; it needs to be intensive and ongoing.
The recommendation is that business support providers need to look at the

allocation of their resources to the social business sector. They need to find the most
cost effective way of providing longer term support, and need to avoid the trap of
superficiality. In addition, they need to ensure that support works, and that they do
not assume that having made initial contact with a social business that the business
manager will what questions to ask or how to ask them. Basic training in
management skills is necessary but needs to be followed up by staged progressive
help as the social business grows.
7.1.2.4 Facilitation and Transfer of Knowledge and Skills
Many of the social businesses in the sample identified informal networks, mentors or
other social businesses as some of the best sources of support that they had found.
The recommendation is to build on some of the networks that have begun appearing
regionally and locally to support social businesses by encouraging more active
participation in these networks. Making sure that networks are linked to each other
and providing a range of models of networking, for example, small scale local
workshops, problem solving seminars and so on, would provide the kinds of linkages
that social businesses are used to and find most useful. A further model may be to
encourage the transfer of resources and other means of support between traditional
or commercial companies and social businesses. This might take the form of a
transfer of generic resources as described by Austin from Havard Business School.
He sees this as each organisation providing benefits arising out of common
resources. Another possibility he describes is a transfer of core competencies. Each
organisation will have unique skills or competencies that can be beneficial to the
other, and could benefit from sharing these.
7.1.3 For Triodos Bank
As a financial institution, Triodos Bank is not in the same position as the majority of
technical support providers identified in this report. Nevertheless, there are a number
of areas that the Bank could chose to develop if they wished to become more
actively involved in assisting the development of better support services in the UK.
7.1.3.1 Current Triodos Bank Activities
While Triodos Bank clients in the social business sector appear to be very satisfied
with the relationship they have with the bank, there are indications that
communications could be improved. Triodos clients interviewed were rather unclear
as to how this might be achieved, but further investigations into the communication
58
requirements of these clients might help the Bank to further improve this aspect of its
services.
7.1.3.2 Possible Future Activities
Triodos Bank may see opportunities in becoming more involved in the provision of
business support to social businesses, either directly or indirectly. As many of the
businesses interviewed felt that there was a lack of integration and coherence in the
provision of business support agencies, the Bank could choose to identify a network
of support providers that would most effectively assist its clients in their local area.
This might be achieved through supporting the development of a comprehensive
spatial and informational map of social enterprise and social enterprise support in the
UK. Given the dynamic nature of the sector this would have to be created
electronically and updated regularly, but as no such complete piece of information
currently exists, it would be regarded very positively by the sector.
The Bank may choose to see if there are any opportunities for joint partnership
working with any other types of funding bodies. As the funding situation for many
social businesses is so complex, they may welcome a service that helped them by
identifying joint funding opportunities from the funder’s perspective, rather than
having to do all the work themselves.
Triodos Bank was not well known amongst the social businesses interviewed that
were not its clients. Few of these businesses had heard of the Bank, but were
probably well placed to be considered as clients. The Bank could look at ways of
improving its publicity and promoting itself more effectively through better linkages
with the wide range of organisations that exist to assist social business or to
represent them. For example, few of the pub lications or websites accessed during
this research named Triodos Bank, or appeared aware of its existence.
59
8. References and Bibliography

Austin J E (1999) The Collaboration Challenge: Making the Most of Strategic
Alliances between Nonprofits and Corporations Harvard Business School Social
Enterprise Series No. 6 Harvard Business School : Cambridge MA
Baker Brown Associates (2001) Regional infrastructure for the social economy:
development of a business support model for social enterprise in Devon and
Wiltshire Final Report Baker Brown Associates for Business Link Berkshire and
Wiltshire Baker Brown Associates : Bristol
Baker Brown Associates (2001) Social Enterprise and Business Support

Services Baker Brown Associates : Bristol
Boateng, P (2002) Emerging Issues form the Cross Cutting Review Speech by
the Financial Secretary to the Treasury 7 May 2002
Brown, H and Murphy, E (2003) The Financing of Social Enterprises: A Special

Report by the Bank of England Bank of England : London
Brown, J Social Enterprise – So what’s new? Regeneration and Renewal 23

August 2002
Dees, J M and Haas, P (1998) The Meaning of Social Entrepreneurship

Kauffman Centre for Entrepreneurial Leadership, Stanford University
DTI (2004) Collecting Data on Social Enterprise : a guide to good practice

Department of Trade and Industry : London
DTI (2003) A Progress Report on Social Enterprise: a strategy for success

DTI (2003) Enterprise for Communities: Proposals for a Community Interest

Company – report on the public consultation and the government’s intentions
DTI (2002) Social Enterprise : a strategy for success Department of Trade and
Industry : London
GO Yorkshire and Humberside (2002) The Social Economy – A development

framework for Yorkshire and the Humber GO Yorkshire and Humberside
HM Treasury (2003) futurebuilders – An Investment Fund for Voluntary and

Community Sector Public Service Delivery HM Treasury : London
HM Treasury (2003) Guidance to Funders - improving funding relationships for

voluntary and community organisations HM Treasury : London
60
HM Treasury (2002) The Role of the Voluntary and Community Sector in Service
Delivery – A Cross Cutting Review HM Treasury : London
HM Treasury (1999) Enterprise and Social Exclusion HM Treasury : London
Howland, L., Humphrey, L., and Tims, C (2003) Community into Business-
Growing Hackney through Social Enterprise Hackney Co-operative
Developments : London
Islam, F It all began in a South London gym…. The Observer Sunday November
2 2003
Larsen, A E Community Enterprise…a can do attitude to regeneration The

Western Mail Community Enterprise Supplement March 2004
Leslie, Dani (2002) Rural Social Enterprises in Cumbria – who makes them?
Voluntary Action Cumbria : Penrith
London Social Economy Taskforce (2002) Time to Deliver – a social enterprise

support strategy for London Social Enterprise London : London
Mair, J and Noboa, E (2003) The Emergence of Social Enterprises and Their
Place in the New Organisational Landscape Working Paper No 23 IESE
Business School University of Navarra : Barcelona
Mathiason, Nick (2003) Counter-revolution that gives power back to the

grassroots The Observer Sunday November 2 2003
Nelmes, A Community Groups target social agenda Resource March – April

2004
Peter Lloyd Associates (2003) Social Enterprise in the English RDAs, and in
Wales, Scotland and Northern Ireland Social Enterprise Coalition : London
Pharaoh, C and Scott, D Social Enterprise in the Voluntary and Community

Sectors Paper given at the International Society for Third Sector Research 5 th
International Conference Transforming Civil Society, Citizenship and Governance:
The Third Sector in an Era of Global (Dis)Order Cape Town South Africa July 7-10
2002
RealiseIT (2003)
Social Enterprise Coalition (2003) There’s more to business than you think A
Guide to Social Enterprise Social Enterprise Coalition : London
Smallbone, D., Evans, M., Ekanem, I. and Butters, S (2001) Researching Social
Enterprise Final Report to the Small Business Service Centre for Enterprise
and Economic Development Research Middlesex University : London
61
Tym and Partners (1999) Good Practice Guide to Community Enterprise

University of the West of England : Bristol
62
Appendices
Appendix 1
Questions Asked of Social Businesses Interviewed
Section 1 : About the Organisation
1. What does your organisation do (functions, aims, objectives)?
2. When was it started?
3. Who started it and why (prime influence)?
4. How many people does it employ (these should include paid employees,
full and part time, volunteers and, if appropriate, those who work for
nothing but receive training or similar)
5. What kind of premises does the organisation inhabit?
6. Are these the original premises or has the organisation had to move into
bigger premises (when)?
7. Are these owned or rented?
8. How has the organisation grown (or declined) since it began i.e. numbers
of employees, quantity of work, amount of funding and why have these
changes occurred?
Section 2 : Technical Activities
9. This list is of the skills that you might need when running your social
business or organisation. For each, could you state whether you do in fact
need these skills and whether they are available in-house or do you have to
buy them in?
Skills In-House Buy In

Management
Accounting
Financial Modelling /
Budgeting
Internal Audit and
Controls
Tax Planning
Legal Advice
Construction or Building
Renovation Project
Management
63
Project Planning (before

organisation set up)
Project Management
(during life of
organisation)
10. Are there other similar technical skills that you consider necessary to the
running of the organisation, and if so, are these provided in-house or are they
bought in?
Skills In-House Buy In
Section 3 : Obtaining Support
11. Where do you look for technical business support (i.e. consultants,
government funded agencies – local, or government funded agencies –
national e.g. Business Link / Business Connect (in Wales))?
12. Do you feel you are Business Link’s target community, and if you request
support, what response do you receive?
13. Is this support appropriate and effective (say for each type of support you
receive)?
14. Is the support consistent geographically (i.e. would you be able to get the
same level and type of support if you relocated, or have relocated, from one
region to another in the UK)? If not, why no t (i.e. what is different?)
15. Does the support offered by commercial consultants and advisors deliver what
you want?
16. Can you obtain pro bono support e.g. Business in the Community run a Pro
Help Scheme?
17. If you can get pro bono support, does it work or does it mean less
Professional, short-term advice?
18. Do you obtain any alternatives to any of the above i.e. do you get technical
support from elsewhere, and if so, what and how useful is it?
64
Section 4 : Relationships with Support Providers
Triodos Clients Only
19. What services do you receive from Triodos Bank?
20. How useful are they (details on frequency, levels of communication etc)
21. What kind of relationship does the Bank have with you i.e. do you feel that
they care about what you do, how accessible (friendly?) are they?
22. Do you feel that they work with other support providers to help you in any
way? (joint funding, joint technical support, providing you with contacts in
support organisations?)
23. What kind of relationships do you have with other support providers?
Non Triodos Clients Only
24. What kind of relationships do you have with your support providers?
Section 5 : Overall Opinions
25 We would be interested in your overall opinions about the changing role of

social businesses in the UK, and the overall level and quality of support that is
available, and any ideas you have for improvement in support
65
Appendix 2
Useful Web Addresses
• Business in the Community http://www.bitc.org.uk
The BiTC website provides advice for social business entrepreneurs, explanations of
how BiTC can assist social businesses, and some useful publications
• Business Link http://www.businesslink.org

• Business Connect http://www.businessconnect.org.uk
• Business Gateway http://www.bgateway.com
These three websites provide comprehensive detail about what is on offer generally
to business across the regions of the UK. There are specific pages for social
enterprise
• Community Action Network http://www.can-online.org.uk
This provides learning advice and support for social entrepreneurs across the UK
• Co-operative Action http://www.co-operativeaction.coop
The website for the CA provides information about the grants and loans they provide
for new and existing co-operative ventures
• DTI http://www.dti.gov.uk
The DTI website hosts a wealth of resources on social enterprise. It includes

government strategy and policy papers, consultation papers, publications and links
to major stakeholders
• Esmee Fairbairn Foundation http://www.esmeefairbairn.org.uk
The pages on social development provide information about grants available for
social and community enterprise
• Local Investment Fund (LIF) http://www.lif.org.uk
Provides information on how to access loans for social and community enterprises in
England
• National Council for

Voluntary Organisations http://www.ncvo-vol.org.uk
Provides a wealth of advice and support for voluntary organisations across the UK
66
• Phoenix Fund http://www.sbs.gov.uk/phoenix
Provides information about funding from central government for social businesses,
and advice and case studies for social businesses
• School for Social Entrepreneurs http://www.sse.org.uk
Information about the types of support and advice available from the SSE nationally
and locally, and the programmes they support for social entrepreneurs
• Small Business Service http://www.sbs.gov.uk
Provides information about government policy, the Business Link service, Phoenix
Fund and resources and links to many other useful websites
• Social Economy Bristol http://www.socialeconomybristol.org.uk/
A website containing some useful advice and a range of relevant reports and papers
on social enterprise in the Bristol area and beyond
• Social Enterprise Coalition http://www.socialenterprise.org.uk
A comprehensive and very useful website containing up to date information on what

is happening in the sector, a good range of publications and excellent links to other
sites.
67
The Centre for Business Relationships, Accountability, Sustainability & Society
(BRASS)
Cardiff University
54 Park Place
Cardiff CF10 3AT
United Kingdom
http://www.brass.cf.ac.uk

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Turning Big Ideas into Viable

Investigating the Ways in Which the Right Technical

A report prepared for

ESRC Centre for Business Relationships, Accountability,

The report concludes by responding to some of the expectations raised by the

1.1 Introduction to the Social Business Sector – A Question

3. Social Businesses in the UK : Issues of Development,

3.1 The Changing Organisational Landscape and the

3.2 The Role and Function of Social Businesses in the UK 15

3.3 Technical Support for Social Businesses 17

3.4 Why Do Social Businesses Fail or Succeed? 22

4.2 Cross sectoral analysis 24

5. Case Study Sector 1 : The Electrical and

5.1 Research Sample Sector Profile 38

6. Case Study Sector 2 : The Care Sector 48

6.1 Research Sample Sector Profile 48

7. Conclusions and Recommendations 54

8. References and Bibliography 60

Social enterprises, social businesses or community enterprises, however defined,

Triodos Bank was established in 1980 in the Netherlands. It is a fully

Triodos Bank only lends to organisations that create real social,

It lends financial support to these social businesses from the funds it

(Adapted from Inspiring Change Triodos Bank Project List 2003)

Box 1 : A Profile of Triodos Bank

1.1 Introducing the Social Business Sector – A Question of Definitions

“a business with primarily social objectives whose surpluses are principally

Type Definition or key characteristic

Employee owned business Create jobs and preserve jobs as part of

Social Business Non- profit business, often set up to support

Table 1 : Defining Types of Social Enterprise

“directly involved in producing goods or providing services to a market”

their profits are

“principally reinvested to achieve their social objectives” (SEC, 2003)

“autonomous organisations whose governance and ownership structures are

consumer co-operative, a housing co-operative or other depending on who it is that

Data was gathered using a mixture of telephone and face-to-face semi-structured

• A profile of the business – to include age, number of employees, function

3. Social Businesses in the UK : Issues of Development, Support

Despite the relatively recent level of interest in social businesses or enterprises,

3.1.1 Changes at the National Government Level

The latest evidence of commitment to the social business idea by central

3.1.2 Changes at Regional and Local Level

There appears to have been a variance in the perception of social businesses by

3.1.3 Summary and Points of Expectation for the Research

§ The relatively rapid increase in interest in social enterprise at national,

3.2 The Role and Function of Social Businesses in the UK

[e.g.] by Primary Care Trusts, Local Strategic Partnerships..and advocates are

3.2.1 Summary and Points of Expectation for the Research

§ Social businesses have many different roles.

3.3 Technical Support for Social Businesses

3.3.2 Funding and Finance for Social Businesses

Community based social businesses aim to be financially self-supporting and

3.3.3 Business Management Support

There are a number of locally based agencies providing support to social

3.3.4 Types of Technical Support Required

It is important that support agencies are flexible in their approach to social

3.3.5 Key Problems of Technical Support for Social Businesses

Another key issue is the amount of support required by most businesses. It is

Co-ordination of existing support for social businesses through business support

3.3.6 Summary and Points of Expectation for the Research

§ More technical support seems to be available for social businesses and

some of the businesses interviewed will identify the sustainability of