Business survey reveals scale of social enterprise network
Twenty-four per cent of UK SME employers in 2012 thought of themselves as social enterprises and had a combined income of £217.7 billion.
There are an estimated total of 971,700 social enterprises employing around 2,255,900 individuals, although 80% of social enterprises employment between one and nine people.
The Social Enterprise: Market Trends survey (published June 5) defines social enterprises in two categories according to the following criteria:
* The enterprise must consider itself to be a social enterprise;
* It should not pay more than 50 per cent of profit or surplus to owners or shareholders;
* It should not generate more than 75 per cent of income from grants and donations;
* It should not generate less than 25 per cent of income from trading;
* It should agree that it is 'a business with primarily social/environmental objectives, whose surpluses are principally reinvested for that purpose in the business or community rather than mainly being paid to shareholders and owners'.
Those that conformed to criteria 1-4 and agreed they were 'a very good fit' at 5 are defined as 'very good fit' social enterprises in this report.
Those that conformed to criteria 1-4 and agreed they were either 'a very good fit' or 'quite a good fit' at 5 are defined as 'good fit' social enterprises in the report, a new classification.
Six per cent of all SME employers conform to the very good fit classification, a total of around 70,000 enterprises when grossed up to Business Population Estimations. This proportion was slightly, but insignificantly, lower than that observed in 2010.
Fifteen per cent of all SME employers conform to the good fit classification, a total of 179,500 enterprises when grossed up. This proportion was lower than that seen in 2010.
Very good fit SME social enterprises are estimated to employ 973,700 people in the UK; good fit social enterprises are estimated to employ 2,136,600.
Very good fit SME social enterprises are estimated to have total annual incomes of £54.9 billion; good fit SME social enterprises are estimated to have total annual incomes of £162.8 billion.
The GVA of very good fit SME social enterprises is estimated at £18.5 billion, and £54.9 billion for good fit SME social enterprises.
Very good fit social enterprises were more commonly found in certain sectors such as food/accommodation, health and arts/leisure. They were less commonly found in manufacturing, construction, information/communications, business services and administrative services.
In terms of whether they had increased the numbers of people employed in the previous 12 months, social enterprises in 2012 performed worse than SME employers generally.
This had not been the case in 2010 when the good fit social enterprises had performed better than average in this respect.
In terms of employment forecasts, good fit social enterprises were less confident than SME employers overall.
Social enterprises had much lower annual turnovers than SME employers generally. The mean average for a very good fit definition social enterprise in 2012 was £665,000, and £677,000 for a good fit social enterprise, compared to over £1 million for all SME employers.
Both very good fit and good fit social enterprises were less likely than SME employers overall to have made a profit or surplus in the previous 12 months.
Social enterprises appeared to have had more difficulty getting the finance they required compared to SME employers overall.
Thirty-one per cent of very good fit social enterprises and 29 per cent of good fit social enterprises obtained no finance, compared to 21 per cent of SME employers that applied overall.
Rejections by the first source approached were most likely among good fit social enterprises that sought bank loans (53 per cent received nothing) and bank overdrafts (45 per cent received nothing).
Top ten sectors are: membership organisations, accommodation, sports and leisure, social work, food service, food manufacturing, creative arts, residential care, human health and computer manufacturing. More than two thirds operate in urban centres.
The proportion of good fit definition social enterprises that employed more people than a year previously in 2012 was the lowest in the past four Small Business Surveys, and the proportions employing fewer or similar numbers of people the highest.
The mean average turnover of an SME employer in the 2012 survey was £1,033,000, compared to £665,168 for a very good fit definition social enterprise, and £676,518 for a good fit definition social enterprise.
Overall, 78 per cent of SME employers said that the economy was an obstacle to the success of their business. Fifty-seven per cent cited taxation (including VAT, PAYE, NI and rates), 56 per cent competition in the market, 52 per cent regulations, 50 per cent cash flow, 38 per cent obtaining finance, 28 per cent a general shortage of skills, 25 per cent recruiting staff, 22 per cent the availability of suitable premises, 17 per cent pensions and 15 per cent the lack of managerial skills and expertise.
Very good fit definition social enterprises were more likely than average to have cited obtaining finance as an obstacle (48 per cent), and this was also the case for the good fit definition social enterprises (45 per cent).
Good fit definition social enterprises were also more likely than average to claim that the economy (83 per cent) and shortage of managerial skills/expertise (19 per cent) were obstacles.
