Every week we meet clients who are passionate about the social enterprise sector, and we can’t fail to notice the increasing interest and demand in start ups in and investment in this area.
A report has recently been published which confirms our opinion as it highlights just how much this sector is growing. ‘The State of Social Enterprise Survey 2015’, published by Social Enterprise UK, makes for very interesting reading. (A link to this report is attached at the end of this blog.)
I have highlighted five findings from the report which I found very illuminating:
1. Almost half (49%) of all social enterprises are ﬁve years old or less, with over one third (35%) being three years old or less. Quite an amazing statistic especially when you note that this is three times the rate for Small and Medium Enterprises (SME) new businesses. Indeed the report notes that social enterprise is outperforming its mainstream SME counterparts in almost every key business metric, not just start up rates but also turnover growth, diversity of leadership, innovation, workforce growth, and business optimism. Quite a feat I'm sure you'll agree!
2. Another impressive statistic is that 52% of social enterprises grew their turnover over the past 12 months, showing that their ideas are working. Compare this to SME growth at 40% and you will start to realise just how important the social enterprise market is.
3. But are the social enterprises working, and are they achieving their aims? Well with 50% reporting a profit and a further 26% breaking even it shows that the majority are financially sound. It is worth remembering that all social enterprises operate for social good, and almost all of the sample confirmed that the majority of their proﬁts are reinvested to further their social goals, proving that for them it’s not just about making money.
4. And it’s really good to learn that almost one third (31%) of social enterprises are working in the top 20% of the most deprived communities in the UK, meaning that the effort and social outcomes are being directed in the right way.
5. Most social enterprises need finance when starting up. At Sapphire Capital Partners we meet with many keen entrepreneurs who have great ideas for social good but they need help and support from others by way of investment. The report found that appropriate funding and ﬁnance is important, with 44% of social enterprises seeking ﬁnance in the year.
So all in all the report is very positive, and in terms of new business set ups, social enterprise is the place to be.
There is no doubt that financing has become easier with the introduction of Social Investment Tax Relief (SITR) with the associated tax benefits of 30% income tax relief, and 100% capital gains deferral relief. So it really is a good time to think about turning your ideas into something positive and setting up your social enterprise, or investing in a social cause, or social causes, that you care about. /blog/why-is-the-sitr-scheme-so-important
If you are interested in investing, or attracting investment into your organisation, and would like our help please contact us at Sapphire Capital Partners LLP. We are happy to help.