Nick Priggis continues his series on Social Enterprises by looking at funding.
One of the key components of a successful Social Enterprise is, to my mind, to release resources through profitability. In order to become profitable businesses often require a considerable amount of investment. How a Social Enterprise develops its financial strategy will also affect its sustainability and its ability to reinvest its profits.
A Strategic Financial Plan
An interesting aspect of a Social Enterprise is that it has social transformation at its heart. Whatever the legal set up for your Social Enterprise, you will be able to access grant-funding if you can demonstrate the public and charitable benefit. This type of funding provides Social Enterprises with a very low risk form of investment. However, it also depends on the funder having similar interests and aims as the Social Enterprise. To avoid the temptation to change your focus to accord with the prevailing grant funders’ strategic objectives, other forms of funding are needed within a sustainable plan.
Our Social Enterprise, Hope Initiatives, does lean on grants but it has also developed a range of services offered to customers, which are pitched at the market rate.
- The services we offer are focused on our core business, which is to support young people and the long-term unemployed into employment through training in the automotive and manufacturing industries.
- We have a range of offers that we sell to potential customers such as schools, colleges and other local authority departments. These provide more independent and undesignated forms of income for the Social Enterprise.
- Our Social Enterprise also tenders for delivering contracts based upon our core business. This provides ongoing mission-related work, which delivers a sustained income into the organisation.
- Lastly, our strategy, from the earliest days of the Social Enterprise, was to develop associated businesses, which would share costs and reinvest profits into Hope Initiatives. We first started our commercial garage in 2015 not only to make money for the training charity but also to model excellence in the motor trade. In 2017, we started our second business, which was selling second-hand car parts online. Both these businesses are now contributing monthly to the costs of shared unit space, utilities and overall core costs of our combined Social Enterprise.
Here is a question you might like to consider in your context:
- What funding opportunities might your Social Enterprise tap into and how might it develop its own income revenues?
Next time, the concluding part of this series will look at how to reinvest the profits from these enterprises.