Get with the programme
Social Enterprise magazine, March 2004
Five years of pioneering work has seen Social Firms UK create a new sector, new businesses and numerous jobs for people with disabilities. Gerry Higgins outlines the organisation’s future plans.
Ion the five years since its formation, Social Firms UK had taken a prudent, even cautious approach to growth. There may be 11 regional and national (Scotland, Wales and Northern Ireland) networks around the country linked to us, but they employ their own staff and govern themselves their own way.
Social Firms UK wanted to keep central staffing to a minimum, due to both the difficulty of funding a national support structure and a desire to concentrate resources at local and regional levels where they can benefit members the most. We began with just two staff, and from 2001 to 2003 operated with four plus a small team of ‘associates’ (consultants who have become our champions and supporters). Although the networks employ considerably more staff between them, this feels like the ‘right way up’ for a new sector as it concentrates on supporting organisations that are creating new enterprises.
The downside of this ‘small is beautiful’ approach is that in the current climate of great interest in social enterprise, Social Firms UK has found itself struggling to meet the demands of its members, regional networks and external agencies. To respond more effectively to their needs, we are boosting our staffing and range of programmes for 2004.
A detailed analysis of the business support programme Social Firms UK ran from 2001 to 2003 has set the agenda for future developments. We found that our support activities were dominated by feasibility studies and business planning for potential social firms. Now our resources will be focused on ‘winners’ -organisations with the drive, capacity and business ideas most likely to succeed. These need to be fast-tracked.
The sector also needs higher-profile, larger- scale social firms with name-recognition among the general public. Each region should have one or more well-known social firms that reflect the values of the sector and can inspire others to create similar high-quality businesses.
In fact, very high quality social firms are one of the things the sector needs most. We accept that many firms had low start-up costs and low investment in capital, but the problem of this low-risk, low-cost approach is that existence for many firms is precarious. Such conditions are unlikely to lead to high wages, security of employment, or good opportunities for career and personal development, while the quality of support for workers will come under pressure as the enterprise struggles to allocate resources. Social Firms UK is not content to foster the development of a sector that creates low-quality jobs. The sector needs prestigious firms that can champion the enterprise model in their sphere of activity.
The genesis of new social firms is a key issue for the sector. Although there has been a great deal of interest from organisations running day centres and rehabilitation projects, in response to financial pressures and the need to modernise services, there has been little conversion of these ideas into viable firms.
Some sector experts are now emphasising an approach that focuses on start-ups rather than attempting to change existing services into social firms. Our new ‘Flagship Firms’ programme will deal with capacity at the outset using formal expressions of interest, tenders and interviews to determine whether groups have the resources, support, skills and determination required to run a successful enterprise.
To spearhead this approach, I have taken on the new role of business development director, having been CEO of Social Firms UK since it was incorporated in 1999. Sally Reynolds takes over as chief executive. We plan to introduce a programme of franchising, replication and procurement initiatives to establish social firms that are commercially robust and capable of inspiring and motivating a new generation.
Some of the key features of the programme, which will be funded in England by the Small Business Service’s Phoenix Fund -and in Scotland, Wales and Northern Ireland by a range of funding initiatives -include Social Firms UK acting as a franchiser in the manufacturing and retail sectors, with member enterprises as franchises.
The franchise model is an alternative to the traditional approach of building a business from scratch. Franchises that work well for social enterprises, and others that come from a private sector background, will both be piloted. Last year, for example, Social Firms UK engaged in successful ventures with the Shetland Soap Company and the Daily Bread Wholefood Co-operative in Northampton and Cambridge.
Franchises have a number of advantages over other kinds of start-up enterprise, including being more amenable to bank funding and mainstream business support. The franchiser can provide a range of support services, and we will be able to link franchised firms together so they can support each other.
Social Firms UK plans to replicate businesses that work well as social enterprises. Naturally replication will only take place if it can be done without endangering the original enterprise. We are already undertaking preliminary work with organisations as diverse as Recycle 11; Rolls on Wheels, Pack-It Product Promotions (the most recent winner of the Enterprising Solutions Award), and Edinburgh’s 6 Mary’s Place Hotel. With replication, the established firm can advise the new firm, enabling it to circumvent the potentially costly process of learning by its mistakes. It can also provide mentoring and support, and pass on systems that ensure the business works efficiently.
And it isn’t all one-way traffic: we are looking at ways in which the replica firm can add value to the original. This could include joint marketing initiatives, collaborating to meet large contracts/orders, or staff development initiatives. We are working with our members to ensure any attempt at replication results in a realistic payment for intellectual property and know-how, is carefully planned and managed so that the source business isn’t adversely affected in its capacity or reputation, and tries to identify synergies and added value for both parties. If done well there should be no danger of competition: most social enterprises have local or regional markets and replica enterprises will cover a different geographical territory to the original.
The project will also examine the possibility of creating social firms based on public sector procurement markets. There are some examples of this in Italy, where much of the very substantial social firm/social co-operative sector is based on contracts for providing products and services to the public sector. Social Firms UK is working with government agencies and other partners to examine sectors where there may be potential for market making and new enterprise start-ups. With the production of its Procurement Toolkit, the DTI is also helping raise awareness and break down barriers across a range of public services.
We have already met with government departments to discuss procurement as a way of meeting the inclusion and employment targets for people with mental health problems and disabilities. Our ongoing discussions will look at a wide range of possibilities including:
‘Market making’ where firms are specifically created to provide a product or service to a high standard, thereby addressing supply or quality problems.
Greater access to tendering and supply for new and existing social firms that would like a share of the NHS market.
Establishing consortia of social firms and social enterprises to service large contracts that would exceed the capacity of individual firms.
It goes without saying that our projects, however ambitious, are unlikely to succeed if nobody knows about them. Many firms struggle to allocate sufficient resources to marketing, and the majority of new small businesses have problems identifying and reaching their customer base. That’s why we intend to develop our trading subsidiary, Social Firms UK Trading, as a support company for franchised enterprises. It will engage in marketing on behalf of products produced through the Flagship Firms programme.
So what do we expect to get out of this? Although the programme is primarily about motivation and inspiration, we want to establish 12-15 high-profile businesses that reflect all the social firm values. We expect the firms to provide well-paid employment, thereby overcoming disincentives to work caused by social security benefits. We hope these firms will raise awareness of the abilities of small businesses employing disabled people to survive and thrive in competitive marketplaces.
We are currently identifying organisations and entrepreneurs with the capacity to establish high-quality enterprises -including ones not currently involved with social firms. We want to break the cycle of social firms being operated entirely by voluntary organisations that already support disabled people. We want to bring new perspectives and experiences to social firms by engaging with other elements of the social enterprise sector, and the private sector, to change expectations.
Our current estimate of the development cycle for a social firm suggests that it takes three years from start-up to become a viable business. This project aims to reduce chat to 12-18 months through accelerated and intensive support and development.
And, although we do want to create new firms and jobs, our main purpose is to fundamentally alter the way people view enterprise creation for people with disabilities. (It is likely that none of our flagship firms will be small-scale landscaping, cafe or furniture restoration enterprises, for example.) Each firm will have to demonstrate the quality of its support to workers, its systems and processes, and its working environment. And most of these flagship firms will work with banks or CDFIs to satisfy their capital and start-up financing requirements. This will build relationships with financial institutions and make future financing less problematic than it is at present.
For Social Firms UK the last five years have been all about creating a sector chat gives disabled people a route into employment through enterprise. In so doing we have significantly enhanced choice and access to jobs for people who would otherwise be excluded from the labour market. Our new programme aims to spread chat success still further.
Gerry Higgins is former CEO and now Business Development Director at Social Firms UK. Website: www.socialfirms.co.uk