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What is a social enterprise?

A social enterprise is a business that generates an income through selling goods or services, and it reinvests some or all that money back into the community, or is working towards being able to do that.  As part of its business plan, it aims to maximise the social good it does as well as meet financial targets.

Ideally, according to Social Enterprise UK, a social enterprise should:

  • Have a clear social and/or environmental mission set out in their governing documents
  • Generate the majority of their income through trade
  • Reinvest the majority of their profits
  • Be autonomous of state
  • Be majority controlled in the interests of the social mission
  • Be accountable and transparent

‘Social enterprise’ isn’t a formal legal term, and so lots of different types of businesses and organisations can class themselves as one, including co-operatives, Community Interest Companies, community businesses, companies limited by guarantee.  A charity can be a social enterprise too if it doesn’t rely on grants and donations, but gets most of its income from selling something, for example, through running a charity shop or café.

Examples of big national social enterprises are:

Examples of some local social enterprises are:

Ideally, you will need to have a business model that generates enough income to cover your running costs, and allows you to make a profit that can be reinvested in your social aims, for example:

  • You may run a café or a shop to earn income to invest in training for disadvantaged young people, or
  • You may offer professional services to business so that you can invest in offering the same services to local community groups for free
  • You may run a community shop, village hall, pub or post office at cost to make sure that those essential facilities remain in your community
  • You may run a care home or care service in your local community at cost to make sure that local people have access to good quality affordable local care

It’s a good idea to put together a business plan.  This will help you think through what you’re going to do, how you’re going to do it, and what the risks and challenges might be.

Things you need to think about are:

  • What is the product or service that you want to sell?
  • Who will you be selling it to?
  • What will your social mission be?
  • How will you achieve that?
  • How will you demonstrate your social impact?

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