Social enterprises – your time is now!
Can social enterprises grow in a recession? I think they can. By nature they tend to be resilient and resourceful. The very good level of support being offered by the Scottish Government is a real shot in the arm. This will give social enterprises with a sound business plan access to capital in an economy where access to credit is now all.
To survive a recession any business must get the basics right and social enterprises are no exception. Cash is king. Access to working capital is vital. Good credit control is essential. Bad debts will rise and people will hold back payments until they see the whites of your eyes.
Controlling and if necessary cutting costs will be the name of the game. But the most challenging area will be sales. Maintaining sales in a recession is tough but not impossible. It is too easy to think yourself into recession. Cutting back on marketing costs could be the wrong thing to do.
Cutting costs in other ways and directing the savings towards sales promotion can work. At the Soap Co, one of our businesses, we have done just this and sales over Christmas last year were a staggering 20% above the previous year without resorting to half price offers, at a time when most retailers are experiencing double digit % decreases.
For the brave and the efficient, a recession is the time to invest and to take advantage of the weakness of competitors and to prepare for the inevitable upturn. The opportunity for social enterprise is now.