Hidden Social Enterprises: Doing well by doing good

Hidden Social Enterprises: Doing well by doing good

Entrepreneurs really are the world’s change agents

In a first attempt to measure the scale of social enterprise in the general business population, a new report by Delta Economics and IFF Research finds that half of the UK’s growth-oriented entrepreneurs set up a company because they want to make a difference. And nearly a fifth of growth-oriented entrepreneurs can lay claim to being social entrepreneurs, even though they are set up as for profit companies. These “Hidden Social Enterprises” do not identify themselves as social entrepreneurs but nevertheless conform to accepted definitions of social enterprise.

The UK study is based on a survey of 2121 growth oriented entrepreneurs across the UK. These entrepreneurs are “survivors”: they have been running a business that is more than two years but less than ten years old and have annual turnovers of greater than £200,000. Across this spectrum of Hidden Social Enterprises, profitability varies, but nevertheless, each business returns between £13 (pure and narrow) and £15 (broad) for every £1 invested in it on average.

The research also found:

• 60% of women and 38% of men are motivated by social enterprise goals generally. There are nearly twice the number of women who set up broad, narrow or pure Hidden Social Enterprises.
• Similarly, Minority Ethnic communities are nearly twice as likely to be “Hidden Social Entrepreneurs” than mainstream entrepreneurs.
• Hidden Social Entrepreneurs set up companies that experience similar growth patterns to their mainstream counterparts but have higher growth expectations.
• According to the survey, it took the average Hidden Social Entrepreneur an initial investment of between £137,000 and £156,000 to set up their business, of which they invested an average of between 66 and 72% themselves (roughly between £98,64 and £102,960). For mainstream businesses it takes on average £104,000 to set up a business of which the entrepreneur invests around 70%.

The one cloud on the horizon is that Hidden Social Entrepreneurs, especially those who comply with the “pure” definition, are far more likely to be worried about the macroeconomic climate and profitability than their mainstream counterparts and to see these as an immediate challenge to growth. However, they are also more likely to be looking for finance, especially for growth and investment meaning that they addressing the issues around the sustainability of their business models.

At a time of economic instability, it would appear that social entrepreneurship is the way forward!


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