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Social entrepreneurs: profit and purpose
Social enterprises fulfil an ethical, moral or environmental purpose, but they’re also increasingly skilled at growing revenues and innovation.
According to the recent State of Social Enterprise Survey from Social Enterprise UK, the social enterprise sector employs one million people and adds over £24bn to the economy. Over the 12 months surveyed, 47% of social enterprises grew their turnover – compared with just 34% of SMEs.
We meet some of the nation’s social enterprises who say putting the planet first can also be beneficial to your bottom line.
Alan Mahon, founder of Brewgooder
Scottish social enterprise Brewgooder was founded in 2016 and describes itself as a “craft beer on a mission”. It aims to bring clean water to one million people worldwide by pouring close to 100% of the profits from its aptly named Clean Water Lager into water charities and projects.
It has supported 87 clean water projects in developing countries, delivering 100,000 gallons, and eradicated ‘water poverty’ for 60,000 people. Projects include installing a 5,000-litre solar-powered tank for a nursery school feeding programme in Malawi, Africa.
“In our second year our turnover was around £150,000. It’s now £500,000 which is a huge percentage growth,” says Mahon. “For the coming financial year, we’re looking at another 40% on top of that. We’ve gone from one member of staff in 2016 to eight now, and we’re continuing to invest in the team and new revenue channels. I’d be looking at a £1m turnover by the end of our fourth year.”
Mahon invests a small amount of the company’s profits in staff wages to ensure that cash flow remains healthy to help drive investment. He says it’s important to strike a balance between its social mission and business growth.
“If you were to continually promise that every single piece of profit would go to your mission while you’re looking to grow, then you may not be able to invest and boost profits further in years to come,” he says. “It’s important to have a growth mindset from Day One.”
Clean Water Lager is sold in stockists such as Asda, but Mahon is keen to expand on a new venture – the Office Beer Club, which delivers beer to thirsty workers at companies including PwC and Amazon.
“We have 100 companies signed up now and we want to have 1,000 by 2020. It will mean regular revenues rather than the typical seasonal highs and lows you usually get at a beer company,” Mahon adds. “People increasingly have beer as their workplace culture and are being attracted to the different craft beers that are now emerging. But our values also align well with those in the tech, creative and start-up space. The millennial generation want to spend their money in a socially responsible way.”
Jack Fellows, founder of The Social Mercenary
The social enterprise founded in 2017 sells bags and caps that have been made ethically by workers in Ghana, Africa.
“We came into the market because we saw that two thirds of millennials wanted to buy sustainably made or ethically sourced clothing because they’ve seen the Netflix programmes about poor factory practices worldwide. But they felt priced out of the market because ethical goods are being sold by luxury brands,” Fellows says.
“I’m not surprised social enterprises are outstripping normal SMEs because we’re doing important work for society. People are looking for more purpose with their spending”
Michelle Wright, founder, Cause4
“So we decided to bring in some really interesting African textiles produced ethically. We started on Kickstarter which helped us validate the market and we went out to Ghana to find textile workers and suppliers to make our products. We also checked the factories to ensure fair labour practices, conditions, wages and that they’re using clean energy.”
The products, priced under £30, are sold in independent stores and online. “We’ve built a £50,000 turnover and we’re reinvesting that back into finding new suppliers,” Fellows adds. “Once we reach a level where the business is sustainable and profitable, we will develop new creative projects in Ghana, such as training local talent.”
Ray Coyle, UK chief executive of auticon
The IT service management company, founded in Germany in 2011, exclusively employs a team of IT consultants all on the autism spectrum. It aims to tackle the problem of only 15% of autistic adults being in full-time employment, despite 79% receiving out-of-work benefits asserting they would prefer to work.
“We operate like any other IT consultancy business charging day rates for our team of experts,” Coyle says. “The only difference is that our consultants are all autistic. We do this because employment levels of autistic people in the UK are very low, but also to make use of their stronger-than-average cognitive skill sets. They’re so much better at logical analysis and sustained concentration and they deliver excellent results.”
The UK division made a small profit in 2017 – its first trading year – and is expected to grow by 50% this year. Turnover is set to double.
“We are a commercially successful and fast-growing business that is also achieving very important social aims. We’re changing perceptions of what autistic people are capable of and tapping into a talent pool that other businesses are missing out on,” Coyle says. “We’re investing our profits back into the business, including a new subsidiary in Edinburgh. The key for any social enterprise is that you’ve got to operate on a commercial basis. You need to deliver high-quality products and services with the social gains built into the business model so clients see the differential with your competitors. It’s no good companies using you for a one-off exercise, you need repeat business to grow.”
Michelle Wright, founder and chief executive of Cause4
Cause4, set up in 2009, is a social enterprise that supports charities, corporations and philanthropists in development and fundraising. Its clients include Close Brothers Asset Management helping train trustees and also working with the Guildhall School of Music & Drama to support creative entrepreneurs.
“We need to run a profitable business to help us grow and help our clients. We reinvest our profits back into training and development such as new e-learning platforms,” says Wright. “We receive fees from client work and grant income. We’ve been profitable every single year since we started and seen steady growth of turnover to sit at £1.2m.”
She believes its success has also been helped by a switch in public mood. “I’m not surprised social enterprises are outstripping normal SMEs because we’re doing important work for society. People are looking for more purpose with their spending. It feels really important to do this right now.”
Wright is proud of Cause4’s growth story but urges social enterprises to be cautious about focusing too heavily on turnover. “About four years ago we grew incredibly fast and the quality of our work suffered a little,” she says. “We were being measured on turnover and employee numbers rather than helping causes,” she says. “Since then I’ve adopted the ‘small is beautiful’ mantra and found that by taking care of the working culture the quality has improved and we’ve become more profitable.”
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