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Specialist business advice for social enterprises is essential…we would say that, but it is true.

Dan Roberts, Policy and Research Officer at the Wales Co-operative Centre, explains why.

By Dan Roberts · November 6, 2020

See this page in: Cymraeg

As political parties discuss their manifestos ahead of the Senedd elections next year, the Wales Co-operative Centre is asking them to commit to continuing to fund specialist business support for social enterprises over the next five years.

Across political parties we are seeing a shift in economic policy as the parties put more emphasis on wellbeing, resilience and sustainability. We believe that one way of putting well-being and resilience at the heart of our recovery from this crisis is to ensure that social enterprises make up a greater proportion of our economy in future. Social enterprises already play a crucial role in our economy and communities, but they have the potential to do even more. For that to happen specialist business support and finance is essential.

What do social enterprises do for Wales?

The social enterprise sector has seen impressive growth. In 2019, the social enterprise sector was valued at £3.18bn, an 87% increase on 2014. It employed 55,000 people, up 45%, and was made up of 2022 businesses, up 38%. Like all sectors of the economy, social enterprises have been hugely impacted by the Covid-19 crisis. However many have transformed their services to play a crucial role in supporting their communities through this difficult period.

The positive impact of social enterprises could not be clearer. They are essential to the foundational economy and operate across our communities, especially in deprived areas where they are needed the most. Profits are re-invested in their communities. Seventy -six per cent of social enterprises pay the real living wage to all their staff. In the context of the looming unemployment crisis, the fact that 17% of new staff in social enterprises were previously out of work is significant. The social enterprise sector also reflects Wales’ diversity – 40% of social enterprises are led by women, over twice as high as SMEs more widely (17%), and 9% of social businesses have a leader from a Black Asian or Minority Ethnic (BAME) background.

Why is specialist support so important?

Specialist business support for these enterprises has been identified by the businesses themselves as being crucial to their growth. For the last few years business support to social enterprises has been delivered for Welsh Government by the Wales Co-operative Centre under the name of Social Business Wales. Survey data shows that clients receiving support from this service rated it very highly. The support has helped grow these businesses, created hundreds of good quality jobs and safeguarded many others.

An independent evaluation of Social Business Wales highlighted an “ongoing need for specialised support for the social business sector, recognising the multi-stakeholder environments and specific legal, constitutional and financial arrangements that have wide-reaching implications for the successful operational of social businesses”.

The key requirement is that advisors have a specialist understanding of the characteristics of social enterprises – that they are multi-stakeholder, have a triple bottom line, differing legal structures and alternative funding options. This specialist support must be available to social businesses at all stages of the business cycle, from support to nascent entrepreneurs to established firms who are seeking to export or work across borders. As well as being responsive to the demands of social businesses, this service should be proactive, building new markets and developing social enterprises in response to market needs.

Conclusion  

The Deputy Economy Minister Lee Waters recently launched a Vision and Action Plan for the Social Enterprise Sector. It aims to make social enterprises the business model of choice by 2030 and for Wales to be the best place to start and grow a social enterprise. The continuation of specialist business support is crucial to this objective.

Key decisions over the future of Social Business Wales will be taken next year, and we are asking all political parties to commit to building on the success of Social Business Wales and continuing to fund specialist business support for the next five years. Social enterprises have a fundamental part to play in helping Wales to ‘build back better’ from the Covid-19 crisis.