Business planning training for social enterprise start-ups

The Graduate Certificate in Social Enterprise

Clifford Conway

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Introduction

Funded by BHCC (2004) Partnered with BHBCP Two cohorts 2005/6 21 students Entry requirement

Normally NVQ3 + 2 years relevant work experience Teaching staff selected had some knowledge of

the community & Voluntary Sector. Guest speakers

The challenge: Avoid producing a generic programme

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Course content

Literature review Other courses (NVQ/OCN) BHBCP Tutor expertise Local social enterprises University validation

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The Business Planning Literature

The typical social enterprise employs 10 people.

49% employ fewer than 10 people 38% employ between 10 and 49 11% have 50-249 employees and 2% employ more than 250

(IFF, 2005).

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The Small Firms Literature

Variable usage of business planning

83% Naffziger & Kuratko (1991) 40% Georgellis & Joyce (2000)

‘All decisions revolve around the entrepreneur with little reliance on formal planning…decisions can be swift, opportunistic, instinctive and bold and are rarely committed to paper’.

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Use of Planning Tools

At an ‘intuitive level’ only Stonehouse & Pemberton (2002)

Only 10% had heard of a PEST Only 20% had heard of a SWOT

Georgellis & Joyce (2000)

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Why write a Business Plan

Key reason:

To attract investment or debt funding

(Hodgetts and Kuratko, 2001; Tapinos et al., 2005; Burns, 2007)

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Barriers to planning

Lack of time Lack of marketing expertise Lack of financial skills Not considered relevant

Kirby (2003)

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Social Enterprise Planning

Findings very similar to the commercial sector:

Smallbone et al (2001) Bull & Compton (2006) Bull (2007) Chapman (2007)

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Is Social Enterprise Planning Different?

Social enterprises may be 80-90% similar 10-20% that is different is often the make or

break factor. They have to meet both a financial and a social

bottom line which can cause tensions and conflicts many mainstream businesses do not have to face…

The real difference is often found in the organisational culture

(DTI, 2002).

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Is Social Enterprise Planning Different?

Pearce, (2003, p.9):

Social enterprises are not businesses; they are social enterprises.

They require social enterprise plans, not business plans.

They require support and financing mechanisms which reflect their values.

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Is Social Enterprise Planning Different?

a social enterprise plan must ‘not only demonstrate that its commercial plan is viable and achievable but also that its social aims are compatible with the business plan and also achievable.

A social enterprise plan will have social performance targets

as well as business performance targets.’

Pearce, (2003)

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Benefits of Business Planning

Clarity of direction Knowledge of the market place Strong commitment from

stakeholders Attract investment

Dees et al (2001)

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Distinctive features of social enterprise business plans

The Social Enterprise Value System Financial Management Human Resource Management Legal Issues Marketing

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The Social Enterprise Value System

Mission context Democratic and inclusive decision

making Wide range of stakeholders

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Financial Management

Sources of funding Social auditing Social costs

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Raising funds?

‘…where will that first cash injection come from when the business is a social enterprise and there are no personal savings and no property to offer as collateral?

Or if it is a social enterprise entering a new market? Or doing the sort of business the commercial sector

isn't interested in because the margins are too small or too risky?

Or with a client base or location or staff that's just too difficult?

Or because the business model is based on the foolish notion of offering goods or services to people who may have problems paying at all, let alone sufficiently over cost to allow for an attractive return on capital?’

(Phillips, 2006)

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Human Resource Management

Managing volunteers, part time staff, clients

Appointment of directors and trustees

Managing cultural tension

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Legal Issues

Legal structures Ad hoc legal issues

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Marketing

Marketing the ‘mission’ Marketing and Vulnerable clients Networking and cooperation

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Q&A