The trouble with social enterprises is that they require businesses to sacrifice profit in favour of principle – right? Not judging by the stories of the companies that have just picked up awards from Royal Bank of Scotland, which runs the RBS SE100 Index, an index of more than 850 social enterprises active in Britain today.
Take Right Track, a provider of education and employment training based in the East Midlands. Set up by chief executive Stuart Bell in 2009, Right Track’s revenues are up by 146% in its 2012-13 financial year, following growth of 97% in the previous 12-month period.
Bell says too many people patronise social enterprises as businesses that lack commercial know-how even if their hearts are in the right place. “We’d like to go national, to be a household brand,” says Bell who founded Right Track because he believed many people had been let down by mainstream education.
“I want to show that social enterprises can compete with the big boys in the commercial world. Don’t let them pigeonhole us as just do-gooders. We are commercial people and we can deliver a better service at a good price.”
That’s a message echoed by Gill Walker, who set up Patchwork People two years ago after being made redundant from a 30-year career in the public sector. The business works with young people interested in the fashion sector, helping them to work on clothes and accessories that are then sold through a retail outlet and at markets and festivals. There is no point setting up a social enterprise that doesn’t work at a commercial level too, Walker says.
“We quickly learned we needed to look at income streams and that we needed to generate income to become self-sustaining as a social enterprise,” Walker says. And with revenues up by 112 per cent over the past year, Patchwork People is achieving those objectives. “We have managed to double the turnover by year two, reduced our grant dependency and, this year, it’s really beginning to take off,” Walker adds. “We have a model now that we are looking to replicate.”
Right Track and Patchwork People are among several award winners unveiled by Royal Bank of Scotland today. And the bank’s SE100 index shows just how successful many of these businesses now are, with the companies included in the benchmark delivering average revenues that were 82% higher over the past 12 months.
These businesses are high performers on other yardsticks too. For example, the percentage of women in senior management positions at the social enterprises in the index now stands at 59%, miles ahead of other private sector businesses.
The British Government recognises the potential of the social enterprise sector – as a force for good, but also as a significant contributor to the economy – and has now promised to offer tax breaks for investors in such organisations.
But as well as financial support, social enterprises need to see attitudinal change. While the performance of many organisations over the past 12 months emphasises their enormous potential, too many social enterprises are still suffering from the sort of prejudices hinted at by Gill Walker and Stuart Bell.
These trailblazers – and their many colleagues in the sector – deserve better. Not because the work they do makes such an important contribution to the wider community, though it does. But because they’re successful entrepreneurs who are running high-growth businesses.