Government interest in the Skoll proposal that there should be a stock market for social enterprises (Third Sector, 5 September) is laudable, but for most social enterprises also laughable. In common with too many of his Westminster colleagues, Ed Miliband is focusing his attention on the vocal minority rather than the silent majority.
It has always been the case that business success, in the Government’s eyes, is rapid growth followed by flotation and then sale. Self-made multi-millionaires such as Sir Richard Branson and Lord Bilamoria, among others, are regularly thrust in front of the budding entrepreneur, who is encouraged to follow their lead. For the few, this is a dream they can realise. For most it would represent a nightmare.
British entrepreneurs of all flavours usually start their businesses to make a difference, not a fortune. They want to change their own lives and those of the others they care about. They want the freedom to follow their passions and to choose when to work and when to play. They know deep down that extreme wealth is not for them. Their interests lie in their work and its impact on the world, and most are unwilling to take the personal risk of entering the fast lane and pressing the business accelerator to the floor.
Few engage with business angels and fewer still seek listing, even on the alternative market. Social enterprises are really no different. They seek funding from families, friends, fools and their banks. They rarely aspire to achieve the size and scale at which stock could be traded on any scale. The only traded stock they are likely to encounter are the Bisto cubes in Tesco.
But of course the young and growing social enterprise does need investment and too few individuals can see, let alone understand, the opportunity. The community interest company model creates a structure by which almost any social enterprise can combine a ‘limited by share’ dividend payment option with the overtly wholesome mission of a true social enterprise.
Investors here are found in the same way as they are in the for-profit sector. That is by networking and referral. What is needed is a way of scoring a social enterprise’s potential because there is always more than one bottom line. The potential investor needs to consider success on two axes. First, the potential dividend income by which he or she derives their financial return; and, second, the impact the organisation has on an area of need that is as important to the investor as it is to the enterprise’s founders.
Of course, Skoll and others should explore the big opportunities for traded social enterprise stock, but this should be undertaken only when a robust and simple methodology has been developed and established to help those smaller investors evaluate the risks and returns of putting their money (and, usually, their expertise) into the thousands of young emerging social enterprises, from among which those rare ‘stock market’-traded social enterprises will emerge.
- Robert Ashton is an author, entrepreneur and social activist. www.robertashton.co.uk