More social enterprises increasing their turnover, says report

The People's Business, prepared by Social Enterprise UK, is published today - but ministers must help social enterprises more, says Labour's Chi Onwurah

Chi Onwurah MP
Chi Onwurah MP

Thirty-eight per cent of social enterprises increased their turnover in 2012, compared with 29 per cent of small and medium-sized enterprises, according to a new report by Social Enterprise UK.

The report The People’s Business, to be launched today by Vince Cable, the Secretary of State for Business, Innovation and Skills, presents the findings of the State of Social Enterprise Survey 2013, consisting of 878 telephone and online interviews with senior figures in social enterprises. The findings are compared with results from separate surveys of SMEs.

The report says that social enterprises are more optimistic about future growth, with 63 per cent of respondents expecting their turnover to increase in the next two to three years, compared with 37 per cent of SMEs.

But social enterprises have been affected by economic conditions, with the median average turnover reported this year dropping to £187,000 from £240,000 in the last survey in 2011. The report says that 55 per cent of social enterprises have made a profit, 22 per cent a loss and 18 per cent have broken even.

When asked what barriers they face with start-up and sustainability, social enterprises say the biggest barrier is a lack of or poor access to finance or funding, with 40 per cent of social enterprises naming it as an issue at start-up.

Another barrier to growth cited by many social enterprises is public procurement policy. In 2011, 25 per cent of social enterprises that worked mainly with the public sector cited it. This year, the figure is 34 per cent. "It should be of material concern to policymakers that the situation has worsened rather than improved," the report says.

Chi Onwurah, Labour MP and shadow social enterprise minister, said it was fantastic news that social enterprises were thriving and that ministers must support this. "It is worrying that ministers have failed to take on board warnings about public procurement and access to finance," she said. "They should be helping social enterprises build jobs and value in local communities instead of giving super-contracts to big business and vested interests."

The report says that social enterprises are much more likely to be led by women. Thirty-eight per cent of them have a female leader, compared with 19 per cent of SMEs and 3 per cent of FTSE 100 companies.

It also says that 28 per cent of social enterprise leadership teams have black, Asian and minority ethnic directors, whereas only 11 per cent of SMEs report having directors from a BAME background.

Increasing trade with third sector organisations and between social enterprises is also reported. The proportion of social enterprises that trade with the third sector has increased from 39 per cent in 2011 to 48 per cent in 2013, and inter-social enterprise trade is up from 29 per cent to 40 per cent.

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