How to start a social enterprise
Do you have a passion to make the world a better place? Perhaps you’ve identified a need in your community and come up with a creative solution to it? Or maybe you’re keen to use your business skills in a way which benefits people and planet? If this is the case, then setting up a social enterprise may be for you!
Starting a social enterprise is a choice – a choice to set up a business where society profits. Whilst setting one up has many similarities with starting a regular business, there are certain unique things to consider when you embark on your social enterprise journey. For example, you won’t just need to think about how you provide quality goods or services for your customers, but also how you make sure you’re meeting your social or environmental goals.
Key things to consider
Social enterprises work to deliver social and environmental objectives above and beyond the desire to create profit for the owners of the business.
Creating a surplus is the objective of any sustainable business. How that surplus is used sets social enterprises apart from wholly commercial companies. Surpluses should support and enhance the delivery of the social or environmental purpose. The overriding feature is that social enterprises are working for the benefit of people and planet.
Set out your ideas for how income will be generated to sustain the business abd make sure you consider the following:
- Find out whether there are other businesses delivering the same or something similar.
- Does the market have room for your business?
- Understand your customers. Will they buy from you, and what will they be able to pay for the goods or services?
- Test your market with simple market research.
- Work out your finances, such as income and expenditure forecasts, and your cash flow forecast. Do your finances add up? This is absolutely critical as no business can survive without robust financial planning!
- Research legal structures to identify the best one for your business.
When thinking about a legal structure, you’ll need to consider your trading and supplementary income sources. Sustainable trading income is the best way to ensure the company is viable for the future. Supplementary income might influence the choice of legal structure. Only Community Interest Companies (CICs) limited by guarantee and charities can effectively access grant income. Some social investors also may require the company they invest in to have a fixed asset lock, such as a CIC or charity.
Identity and independent governance may also influence the choice of legal structure. For instance, some local authorities prefer to contract with CICs rather than with companies limited by shares because of the stated social purpose of this type of company and recognition of social enterprise status. Research the different legal structures available and work out which model would be most appropriate for your business. You can find further information from our partners at Good Finance here.
Access our free online start-up guide
Still have questions? We’ve put together an online course which goes into more detail on the steps you need to take to get your social enterprise up and running!
It goes through the main questions we hear from start-up social entrepreneurs – from explaining asset locks and the different forms CICs can take to drafting your articles of association and the steps required to register your new business.
It’s open to anyone and can be accessed through our online portal – all you need to do is register using the link below to create a free profile on our member community. You’ll also have access to a space where you can contact our business advisor, Fiona Napier, with any further questions.
How Social Enterprise UK can help your start-up
We are the national voice for social enterprises and exist to represent, support and advocate for social enterprises of all shapes and sizes. As a growing movement of business for good, a significant proportion of our membership are start-ups. Joining our network gives you access to a vibrant community of social enterprises, an accreditation badge proving you are a certified social enterprise, an online Members’ Area which hosts training and business support, the chance to attend sector networking events, and possible new market opportunities through our social procurement work.
What’s more, membership is FREE for start-up social enterprises! So, once you’re all set up and ready to go, make your next step joining Social Enterprise UK! You can find out more about membership by clicking on the link below.