Duncan Thorp: Enterprising social businesses are on the up and that's good for everybody
Social enterprises are independent businesses that have a specific social or environmental mission. They generate as much income as possible by trading and invest their profits to fulfil their purpose. from ethical gifts to social housing, inclusive sports centres, childcare, community transport and more.
The new facts and figures in the census demonstrate a thriving sector, with growth, resilience and increasing impact.
There are now 5,600 social enterprises in Scotland, up from the 5,199 recorded in the first ever study in 2015. Of these, 599 social enterprises were formed in the last two years, up from around 200 a year noted in the first census. Social enterprises employ the equivalent of 81,357 full time workers.
In terms of the hard economic data we compare very well with other parts of the economy. The total annual income of social enterprises is £3.8billion, that’s up from £3.63bn in 2015. The net worth of Scotland’s social enterprises is £5bn, an increase from £3.86bn.
The economic contribution of Scotland’s social enterprises is £2bn, up from £1.68bn compared to last time.
We can now see that 34 per cent of all social enterprises are located in rural Scotland and 79 per cent of social enterprises also sell direct to the public, up from 68 per cent in 2015. Twenty years is the average age of a social enterprise and 7 per cent of social enterprises are involved in international activity.
When it comes to ethical business practices we’re doing well too. Sixty-four per cent of Scotland’s social enterprises are led by women, up from 60 per cent in 2015.
Seventy per cent of Scotland’s social enterprises are led by and accountable to people in their local community. The average gap between lowest and highest paid in Scotland’s social enterprises is only 1 to 2.5. There is much more to do and of course more that could be measured next time, from environmental practices to workplace rights, LGBT+ equality and more.
Certainly there are challenges and more research is needed to understand negative trends and tackle their root causes. Social enterprises do their best but they’re not perfect. The increase in the use of zero hours contracts reflects a general trend in insecure work across the economy. This is something to address, though the issue itself is not clear cut.
There is an issue with profitability, as evidenced in the 2017 study and there is a certain fragility in parts of the sector, though 61 per cent of all social enterprises generate at least 50 per cent of income from trading, up from 54 per cent in 2015. Balancing income through trading and income through grants is ongoing for some social enterprises. Half also say that they were negatively affected by the economic climate over the past year.
However, the simple facts and figures don’t reveal everything about social enterprise. Their true impact is not apparent by reading numbers on a page.
The best way to experience social enterprise is by visiting one or buying their products, whether that’s activities at Port Edgar Watersports in Edinburgh, food in Spoon Cafe in Glasgow, outdoor adventures with Venture Mòr in the Highlands or skincare products from the Shetland Soap Company. Their diversity, social impact and great goods and services can only really be appreciated this way.
The general picture is one of success, strong economic and social impacts and future potential. We hope that more members of the public start to understand how their consumer choices can make a difference. Local councils and other public bodies, as well as private sector businesses, have the option to do the same. In addition entrepreneurs can consider a social enterprise option as an alternative to a standard, traditional business model.
The future for social enterprise in Scotland is bright. As we take forward the new Social Enterprise Strategy for Scotland and the practical action plan, we’ll be able to measure real, concrete progress. We all benefit from the growth of our social enterprise community and we can all choose an active part in its success.
Duncan Thorp, policy and communications officer, Social Enterprise Scotland.