Eyes on the prizes of social enterprise

Adopting a new business model would bring companies profits – and social and environmental improvements too, says Duncan Thorp

Talking Mats chose a social enterprise business model over a private sector business model. Picture: Complimentary

WE PERHAPS don’t hear enough about the good things that private companies do for society. When the enduring media message is one of failed banks, corporate greed and fat cat salaries, it’s easy to demonise. Certainly, bad practices exist but we do need to recognise the good that is done through such things as philanthropy, ethical and green companies, Corporate Social Responsibility, employee volunteering and charity fundraising.

But let me lay down a challenge. Instead of simply “giving a bit back” to the community, what if private businesses actually considered becoming social enterprises themselves? What would this mean? What impact would it have? This is relatively easy for an SME to do but why not include big corporations too?

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Of course the choice of starting up or changing a business to a social enterprise business model comes from a passion to improve people’s lives and our environment. This desire and this belief must come first. It’s really about changing values.

A social enterprise is an independent business that exists specifically for a social and/or environmental purpose (and invests and locks in all profit into that purpose). This is still seen as a radical step for many business people, who are used to the traditional ways of doing business.

But the economic and debt crisis certainly means there’s a need to do things differently. We need resilient business models, with buy-in from the wider community. The shocks that have rattled capitalism, the monetary-market system, continue to reverberate. This economic turmoil adversely affects businesses and the individuals who run them in the same way as everyone else. There’s now an underlying anxiety that what we’ve seen is only the beginning – unless we change what we’re doing.

Social Enterprise Scotland is holding a social enterprise dinner event in June, in partnership with the Scottish Council for Development and Industry (SCDI), where we’ll be connecting private sector business people with social entrepreneurs, as well as linking up with public sector leaders. It’s a place to begin a dialogue, build relationships and understand each other better. We’ll talk about economic contribution, social enterprise potential and why we need to change what we’re doing.

As a first step, businesses should engage with social enterprises because they bring real benefit in terms of opening up new markets and new business opportunities. Joint bids for public contracts and other ways of partnership working are options too.

More importantly, economic failure produces social failure that affects every private business. Whether we care or not, high unemployment, homelessness, increased illegal drug use, anti-social behaviour and other issues are bad for business. They have a direct, negative impact by reducing customer spending power too. Social enterprises work at the frontline to tackle these social problems and indeed are a wiser investment than simply giving to charity.

Bigger businesses can also contract social enterprises into their supply chains. This could be, for instance, a catering contract, graphic design or meeting space hire. It’s also about employees volunteering in social enterprises, in a skills exchange, for learning and personal development.

But aside from the variety of ways to engage, there’s a different, more satisfying path in business, that invests in society. After private business owners have put a decent roof over their heads and provided enough for themselves and their families, becoming a social business may be a logical next step.

Private “ethical companies” can certainly make the easy decision to change their business to a social enterprise, whether it’s a simple asset lock or becoming a Community Interest Company or Scottish Charitable Incorporated Organisation. Social enterprise is a natural fit and a new customer base.

Social enterprise is not perfect, it’s certainly not a panacea for all economic problems – but it’s one of the solutions. Private sector business people can begin to play more of a pro-active role and perhaps take a bolder step to convert to a social enterprise business model.

The evidence is clear that business solutions can indeed improve lives and tackle environmental challenges and in this economic climate these must be our priorities. Free social enterprise solutions are the ones that endure.

A social enterprise society would be one where we embrace profit but where social and environmental improvement is the priority. This would create hugely positive outcomes, based on both practical business realities and human needs. A society of social enterprises would be a resilient one and a thriving one because it would benefit every one of us.

• Duncan Thorp is policy and communications officer at Social Enterprise Scotland