Social Enterprise

The document can be included in the Social Enterprise section

Trading Arms

When should your organisation set up a trading arm?

  • When the trading is no longer primary purpose trading (trading not directly linked to the purposes of the charity) but generating income for the organisation a trading arm should be considered.
  • Income generated from a trading arm, unlike grant funding, is unrestricted and can be used by the Charity for any charitable activity.
  • Developing trading income for an organisation can help improve an organisations sustainability, reducing dependency on grant funding or donations.

PEST Analysis

As part of the process of developing or establishing a social enterprise it is worthwhile carrying out a PEST analysis (Political, Economic, Social, and Technology) as early as possible.  A PEST analysis is used to help assess the market for a business or project.  It is best used for business and strategic planning, marketing planning, and business and product development.

SWOT Analysis

As part of the process of developing or establishing a social enterprise it is worthwhile to carry out a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats).  A SWOT analysis is used to help assess the business position.  It is best used for reviewing strategy, position and direction of the business.

Market Research

Carrying out market research is vital for any Social Enterprise.  Through Market Research organisations can find out who their potential customers are, what they want and how much they are prepared to pay.  Market research is also the key to understanding competitors' strengths and weaknesses, and identifying the opportunities presented by the business environment in which the Social Enterprise plans to operate.

Social Enterprise Support Agencies

There are a number of support agencies in Scotland that support Social Entrepreneurs and Social Enterprises to develop and grow. Here are a list of useful contacts to get you started:

Development and Learning

www.justenterprise.org – Support, learning and development for new and established social enterprises.

www.theacademy-ssea.org - a social enterprise delivering learning and development programmes for anyone working for social purpose.

Funding and Finance

Ideally your work will eventually generate enough income to finance its delivery and ongoing development, and sustain you and your aspirations.  It may be easier to identify a direct income for some aspects of your work than others: you may be looking at a range of work and services so elements that are not income generating, (but are vital to the profile and development of your practice/business), can be subsidised by other activities.  However, you are still likely to need finance to:

Business Angels

Business Angels (BAs) invest their own capital into your business.  They are a certified investor.  BAs will want to be involved in your business so this option is not advisable for businesses who want complete autonomy. They would normally expect one of the following in return for their investment:

Contracts and Service Level Agreements

Statutory bodies are increasingly turning to voluntary and community organisations to deliver services under contract, and both the UK and Scottish Governments are currently keen to increase the sector’s role in delivering public services.  For some organisations, this is an opportunity to improve financial sustainability, and to increase and improve the services they can deliver.

Start Up Costs

Before deciding to set up a Social Enterprise, it is essential that you consider the initial costs involved and you work out your estimated expenditure.  If this is not done then the new Social Enterprise could fail to get beyond the start-up phase.

Why is it important to work out start-up costs?

It is important to know whether you can afford to start your Social Enterprise and knowing the start up costs is vital.  It will also help you when you ask for funding from:

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