Wednesday, June 23, 2010

Where next for social enterprise in the 'Big Society'?

There’s increasing interest from politicians and investors for social enterprises to enter ‘non-traditional’ market places (apparently there’s a belief that social enterprises don’t usually foray out of construction, catering or childcare into markets like telecoms, IT, financial services, etc etc...), especially into industries where private businesses have failed.

So – leaving aside the argument that if other businesses fail in these markets, where is the logic in us entering them?, this may seem fair enough, but ask any actual trading business about their entering new marketplaces and they’ve very hesitant. This is because this strategy for business growth is proven to be the most risky, and most likely to fail.

Therefore we need an incentive – if the state wants us to take such high risks, then they should recognise the cost to us for delivering their agenda (assuming that we decide it’s actually a good idea to enter new marketplaces). This doesn’t and shouldn’t be through grants, but maybe through tax and investment reliefs, interest free loans, and so on – possibly the need that the big society bank that’s being created could meet?

But if we do diversify and enter these ‘non-traditional’ market places, ultimately it should be because we see that there’s business sense in doing so – otherwise we change into charities or subsidiaries of the state and loose our distinctiveness.

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