New report shows up to 18,000 social enterprises are at risk of closure
The most recent Social Enterprise Barometer report published on 9 February shows that the next quarter is critical for many social enterprises with more than one in ten social enterprises across the UK expecting reduced turnover or to close due to the tough economic climate.
The Social Enterprise Barometer reports are published quarterly and provide a snapshot of social enterprise performance and as well as how specific economic and political developments are affecting social enterprises.
The February report showed that overall, across the 101 respondents, 14% are expecting to reduce turnover and staff or to close completely. This is the highest proportion reporting a growth decline since the survey began two years ago.
High costs continue to challenge social enterprises. Almost two-thirds of the social enterprises who took the survey (62%) said they saw an increase compared to last quarter and almost half (48%) saw an increase in staffing costs. Although there was a slight improvement in cashflow and reserve positions this quarter, but a high number of social enterprises expressed concern about projected cashflow and income.
When social enterprises were asked about their turnover position since July 2021, 21% said they saw a decrease while 37% said their turnover remained the same since then. Factors included a reduction in commissioning opportunities for public sector contracts and smaller contracts as local authority budgets struggle.
Despite the tough economic climate, more than half of the social enterprises surveyed said demand for their products and services increased. The number of people being supported through social missions has also increased since last quarter to 63%, demonstrating how social enterprises prioritisation of their mission continues to deliver in times of need.
Social enterprises in London reported particularly weak growth and cashflow positions compared to counterparts elsewhere in the UK.
Peter Holbrook, Chief Executive of SEUK, commenting on the findings said:
“As the UK economy is predicted to fall into another recession and interest rates hit their highest levels in more than a decade, social enterprises continue to face a tough economic climate.
“For many, the financial support they will try to get next quarter will be critical to their survival.
“More than three quarters of social enterprises reported that the profits they reinvested into their social or environmental mission has increased or stayed level, highlighting the resilience and importance of the social enterprise business model to increase investment in the communities they serve.
“Government support must prioritise sustaining businesses that serve our economy, community and planet in order to maximise returns on investment and to ensure that otherwise viable social enterprises aren’t lost to economic uncertainty.”
The Social Enterprise Barometer report can be accessed through SEUK’s Social Enterprise Knowledge Centre. The Social Enterprise Knowledge Centre seeks to be the UK’s most comprehensive source of evidence on social enterprise.