12 January 2021|Business Growth, Latest Posts, Launching a business
By June O’Sullivan MBE. For many years, social enterprises have been quietly revolutionising the world and its economy for the better. With the potential to transform lives and communities, these businesses are driven by a clear purpose to use their business and their profits to promote, encourage and make positive social change. In other words, doing good by doing good business.
Take for example, London Early Years Foundation (LEYF) – a social enterprise created to provide high quality nurseries to children from all backgrounds, especially those from poor and disadvantaged backgrounds. Back in 2005 whilst working for a small childcare, I became convinced that we needed to disrupt the existing ways of delivering childcare services. In doing so, we needed to create a sustainable social business model to ensure children from all backgrounds could be guaranteed an affordable high-quality nursery experience. It seemed fundamentally unfair that this was not available for small children, given the raft of national and international research which demonstrates how much it benefits their learning and development.
Today, we have 39 nurseries across 11 London boroughs, providing over 4,500 children with high quality Early Years care and education using our unique social pedagogy. We employ over 800 staff, train 60 apprentices annually and have established the first Early Years Chef Academy as well as the LEYF Global Academy.
Setting up a social enterprise comes with the usual investment challenges, compounded by social entrepreneurs choosing to operate in a way that deals with a pertinent social issue. This is often driven by a personal passion to improve a service that had failed them or their family or friends. My personal challenge was to create an inclusive nursery model because that was sadly missing for me when I was a very young single parent working as a night nurse and desperate for a welcoming nursery. My experience was woeful and sowed a seed that would one day become LEYF.
We are now one of the 100,000 UK based social enterprises which, when combined, are worth a staggering £60bn a year to the UK GDP – employing 2 million people. Operating in all sectors of the economy, social enterprises are diverse, creative and solve problems in every part of society earning their income through trading and competing in the marketplace. In fact, 77% of social enterprises earn more than 75% of their income from trading and reinvest their profits back into delivering their mission. Furthermore, 40% are led by women and 35% have BAME directors making social enterprises much more representative of the population as a whole.
Ten years ago, the UK suffered its biggest recession since the Second World War. In response, the UK government embarked on an ambitious programme of business tax cuts and rate reductions to the tune of £137bn.
However, according to Bounce Back Britain (published by the Social Market Foundation) LINK, these business tax cuts have not delivered results. In fact, there is no clear link between cutting taxes and increasing business investment (rather the tax cuts have been passed on to shareholders or held in cash stockpiles). Growth has instead been sluggish, investment low and productivity has experienced the biggest slowdown since the late nineteenth century.
According to the report a fresh new approach is urgently needed, especially following the Chancellor’s latest forecasts for the UK’s public finances, which have been battered by the Covid pandemic.
This new approach looks at the structure of business and suggests that if every organisation adopted a social enterprise style approach and put the profits into social purpose and its staff, the shift would result in £100bn of investment in the country each year. That’s around 5% of GDP!
The LEYF approach is all about reinvesting in its staff, resources and community. This is especially important because the quality of a nursery is not driven by a fancy building or glitzy resources but by highly trained staff, a strong pedagogy and the means of measuring the pedagogy to ensure it is operating effectively and consistently. Too many children attend low quality services and, for those from poor deprived backgrounds, that doubles their disadvantage.
Never has there been a greater need for more social enterprises. The best way to start is to have a strong business plan, sensible support and adequate investment. Then think about growth and scaling up. We need a High Street of social enterprises. Of course, expanding is not a simple matter of being ambitious and pressing the accelerator – you need to build a first-class team with the right skills and an efficient infrastructure – and this costs serious money. Your passion will only get you so far.
Think about your role as a leader of both your business and within the sector. The place for social leadership is becoming more evident daily. The importance of kindness, empathy, optimism, agility, trust, collaboration and storytelling make a powerful mix.
The late Peter Drucker predicted that the 21st century would be a century of the social organisation. The more economy, money and information became global, the more the community would matter. Now, more than ever, is the time to recognise the true value of the sector and put growing social enterprises at the heart of the UK’s economic strategy – and that must include Government backing and investment. By doing this, we create a better economy that helps future generations and makes the world a kinder and more just place.
Advice for Setting Up a Social Enterprise:
· Set out your vision and social purpose
· Consider business eco systems
· Decide on your governance model, how will you run your business?
· What will be your ownership model?
· How are you going to finance the business?
· Build your business network. Start by getting advice from trusted social entrepreneurs
· Get Going, Feed Your Passion and Change the World at the Same Time.
· Remember our vision for a High St of Social Enterprises.
About the Author:
June O’Sullivan MBE is a Social Entrepreneur and CEO of London Early Years Foundation (LEYF).
When appointed CEO in 2004 of a small local charity which depended on local authority grants, June quickly realised that this model of raising funds for nursery education, was neither sustainable nor a disrupter to the status quo. Having seen the need for something completely different, she created a new model for outstanding nurseries which could operate in poor neighbourhoods, offer the highest quality education with a specialist pedagogy, employ and train staff from local diverse communities and, most of all, have a social conscience at its heart.
Having developed London Early Years Foundation (LEYF) in 2008 as a social enterprise with 39 nurseries across London which uses a fee system to allow families to access good quality nurseries at a fair fee price whilst subsidising children who would otherwise would not access childcare, June has grown the business fivefold and increased turnover from a £2m charity to a £22m sustainable social enterprise.
Linked in: June O’Sullivan