Why social entrepreneurs (can) never retire

In my decades of walking around different parts of the social economy, there's something that's always personally bugged me - far too few people encourage us to openly talk, and think about, how we get paid (and how much we should be paid).

The focus always seems to be on supporting a person or groups' shiny social enterprise idea, and how to help it create as much impact in the world as possible. There's an implicit assumption that the social entrepreneur leading it will not only be able to give the emerging and growing venture whatever it needs from themselves personally (time, energy, own money, etc), but that they'll be able to do so indefinitely without needing to take anything from it to balance/in recognition of this.

Also, there doesn't seem to be any talk of 'succession' or 'exit' (such as we see in 'mainstream' business support programmes). There's little or no option for social entrepreneurs to take any form of future 'sweat equity' in lieu of foregone wages, the lost time they've incurred in otherwise having been able to build up savings for their own retirement, etc; (does this mean we may see future generations of social entrepreneurs retire into poverty?).

This also creates problems beyond those for the individual person as outlined above - most people who pick up, or are offered the badge of 'social entrepreneur' aren't in privileged or independently wealthy positions. They (we) need to continue to earn money to pay our rent and bills with. And as social enterprises are usually relatively slow to start to be able to generate enough cash to offer and sustain wages, this usually means many start life as 'side hustles' alongside other paid work that the person needs to maintain so they can still afford to live. This in turn, creates more tensions and potential issues for these new social enterprises, as they're being managed with a part-time/split-focus founder.

But despite the potential gloom in the above, I'm starting to see/take some encouragement from a small but growing trend of people who seem to be similarly feeling able to start to talk more openly about the social enterprises they're developing, and who need to recognise and reconcile these tensions and possible contradictions - this has led to my being asked to explore more 'group structure models' (using combinations of linked legal forms to help best manage the tension between a founders' personal, and their respective communities' needs, both now and into the future). It's also involved my starting to be approached by the leaders of more established social enterprises and charities, asking for support with salary benchmarking (although to date, this has highlighted how in general and as a whole sector, we usually pay our people and selves less than in other sectors for broadly similar roles, and this includes with making less provision for future pension and retirement).

I also recognise the tension that underpins all of this - if what we're doing is to ultimately create social good, then to pay better wages etc, we need to charge more. But how can we feel comfortable doing this when we see that the communities we support are in poverty, etc? 

But if we don't find ways to start to address these elephants, then we risk losing talent and skills as people may begin to feel that they can't continue to trade off their personal futures for the sake of helping others today - and actually, research from Social Enterprise UK shows that social enterprises are generally more likely to be profitable if they're trading in areas of deprivation; so it seems that there are ways to reconcile this apparent contradiction.

 

I have an idea that the only way we can start to break this taboo of social entrepreneurs being able (encouraged, and allowed) to pay themselves both today, and with regard for their future retirement chapters without feeling guilty for doing so, and the limitations it's placing on the sector as a whole, is by trying to talk about this more openly and in grown-up ways.

To this end, I'd encourage anyone reading this to share, reply, and engage in these conversations where and how you're able to (although I recognise that talking about money isn't something we Brits do very well). But if no-one talks about it, then nothing can ever change...

time to ditch the fetish of becoming a 'financially sustainable' business

In a social/networking session with fellow freelancers I was part of recently, a recurring theme amongst my fellow self employed, who are in their first few years of trading, kept coming up - namely a desire to become 'sustainable' (aka creating a pipeline of assured regular work).

Let's quickly clarify something about this - this isn't unique to freelancers.

While most businesses make it through their first year, most won't make it past 3. https://www.statista.com/statistics/285305/new-enterprise-survival-rate-in-the-uk/ 

This 3-year threshold is possibly why, if your business makes it past 3 years, it's officially recognised as being financially sustainable: 

https://www.freshbooks.com/hub/startup/how-long-does-it-take-business-to-be-successful#:~:text=list%20really%20expanding.-,Year%20Three,three%20years%20in%20the%20distance.  

However, within 2 years of reaching this magic milestone, 20% of these 'sustainable' businesses will then have had to close their doors for good... Just because you've made it to 3, doesn't automatically mean you're set for life.

So - if all businesses equally struggle to keep going (regardless of it they're large or micro), why do we keep chasing the dream of reaching a promised land of 'being financially sustainable'? The data referenced above shows this will never happen - but that's surely to be expected when you remember that markets, people, and fashions, etc keep changing all the time around us (so what we once thought everyone would want to buy, is now an anathema... disposable plastic cutlery, anyone?).

Surely it would be better to ditch the expectation of reaching a goal that's always going to be unachievable, and instead reframe our language and ambitions to something more realistic and honest: maybe something to do with cash reserves, and how long we can run for if we suddenly run out of paying customers (which would reduce the threat of facing imminent eviction from our homes, and therefore go a long way to helping our peace of mind and achieving a healthier state of mental well-being...).

why are the new wave of start-ups being called the purpose-led ones, when they aren't?

I'm not sure if it's because of the types of circles I usually find myself moving in, or the bias of how stories are reported in the media, or because there really is a general sense of it, but it seems that we're in a period when most new start-ups are being referred to having 'purpose' (and more so than existing/previous waves of start-ups)?

If this is really true, then I'm wondering where are all these new businesses who apparently are motivated by their values and wanting to create impact actually are: 

- the most commonly googled questions by entrepreneurs and people starting up their business include NOTHING about purpose, impact, values, etc (see https://www.hitachicapital.co.uk/business-finance/invoice-finance/invoice-finance-blog/the-most-common-questions-startup-owners-ask-google/)

- and the most frequent search by type of business offer being started is for clothing. And whilst I agree that there are some needed and 'proper' things happening in this industry (labour behind the label, for example), this is an industry that's also strongly associated with a plethora of negative impacts (the cost of 'fast fashion', etc)

So, based on the data from the biggest search engine in the world, these new waves of 'purpose-led start-ups' maybe aren't as prevalent as is being otherwise suggested to us.

Or maybe they're simply not using google to do the research they need to launch their new ventures like the rest of us do?

So how do you actually start a social enterprise?

'Social enterprise' is a phrase that seems to be increasingly commonplace, and something that we're all being encouraged to start-up to if we think we have an idea for a new project or a business that might do some good in some way.

There's also a lot of 'stuff' about them out there: mapping by Social Enterprise UK; webinars on how they can best report their impact and how they're changing the world for the better by Social Value UK; offers of funding for how they can support local communities continue to recover from the impact of the pandemic; and such like...

But I'm often approached by people who want to know the answer to a much more basic question about social enterprises - how do I actually set one up?

Well, the good news if that I've been running seminars, boot camps, and webinars covering this for about the last 20 years, and hopefully will be able to distil them down into a few pithy bullet points in this blog to help you start to chart your adventure into the lands of social enterprise...

1) You'll already have a (social) idea, but is there actually the potential for a trading enterprise in it? 

Have you identified people or organisations who might be willing to pay you money (which is different to offering you philanthropic grants) for what you're going to be doing? 

2) How are you going to raise the money you need to get it started?

It's very rare than a start-up enterprise of any kind will have customers who line up in advance of it officially opening for business, to pay for the services and goods before they've even seen them. So have you thought about not only how you'll raise the cash you need for those early bills, but also where you'd be happy to seek it from?

3) Do you see yourself as a lone hero, or part of a 'Scooby gang'?

Creating any new enterprise is hard work and risky. Social enterprises even more so, because of the additional dimensions they have (balancing social mission with need to generate cash; trying to keep a set of values and ethics central in every decision made; feeling a responsibility to try and save the world...). So do you feel you can take it all on by yourself, or are you looking to recruit others to work with you in developing, leading, and managing it (and how will you ideally structure these relationships between you all)? 

And what measures can you think about putting in place to support yourself (after all, if you're supporting the birth of this exciting new social enterprise, whose looking out for you in return)?

The next steps in starting up a social enterprise flow from these, and may seem far more mundane in comparison, but are true for any enterprise thinking about starting up:

- create some budgets to help you manage costs and make sure you're going to be charging the right prices;

- pick a legal structure that will help you manifest and protect all of the above;

- register the enterprise with HMRC and whichever regulator is responsible for the legal structure you've picked, and open a bank account;

- do some marketing;

- Oh yes: and get out there to tell people you're now 'here' and so some selling!

Once these are in place, then everything else you come across out there about how social enterprises can thrive and prosper should start to make more sense.

But if you'd like to explore these steps in more detail, chat about how to tell if your idea really does have sufficient potential to be a trading enterprise, or would like to know about any other aspect of social enterprises, feel free to get in touch: I'm always happy to have an initial conversation by phone or video without charge or obligation.

start-up ecosystems need cold frames as well as green houses

Anyone involved in anyway in the world of start-ups and business growth will be familiar with the range of support models there are out there that make up the 'eco systems' of incubators, accelerators, investor networks, and such like.

And there are good arguments that we need a mix of different supports and types of models because no two start-ups are exactly alike, and different founders and entrepreneurs will respond better to different interventions at different times.

But it struck me recently when I was speaking with a programme manager for a foundation that is seeking to do more to encourage disruptive start-ups (yes Sam, that is you I'm talking about!), that there may be a missing link in all these ecosystems that entrepreneurs and founders can apply to - to use a gardening analogy: there's a lot of 'hot housing' going on out there already (things that help the seeds of a start-up sprout and start to grow more quickly than they would if we'd dropped the seed packet into a flower bed next to the lawn and hoped for the best); but any gardener will attest to this hot housing only being half of what's needed to ensure new plants thrive in the future. 

That's because hot houses are not the norm of the world - our gardens aren't covered and heated to higher temperatures than the British weather usually offers us all year round, so when we move these exciting new plants from their 'bubble' of an ideal world into the real world, it can be something of a shock... Which is why good gardeners will always have a cold frame lurking somewhere - a place that these specially nurtured new plants can best acclimatise, transition, and ultimately get used to the suddenly harder and harsher world that exists outside the hot house that they grew up in and came to rely on.

For our wider start-up ecosystems, where are these cold frames? 

The closest I can think of would be the peer networks amongst founders that they create informally by virtue of having shared the same hot house, but what else might be able to be offered by way of regular check-in, a phased 'moving on' from the hot house facility, and such like? 

Because if we don't have a way to move start-ups out of the hot house in ways that help best assure them on their future survival and success, then they'll get too comfortable, and take up space that other start-ups need if they're to have their opportunity to make it themselves as well? 

accelerating to 'Launch' speed...

I've always been a keen proponent of enterprise education in all its forms, and for all ages too - not just for the sake of encouraging more start-ups, but because I think it can offer genuine benefits in whatever we choose to (or find ourselves doing) in the future.

As part of this, I've always sought to work with Schools, Colleges, and Universities - one of which is Salford University, with whom I seem to have built something of a long-term relationship, as I'm now well into my 7th year of them asking me back to work with their subsequent intake cohorts of undergraduates.

The design of their offer to students who are interested in exploring and launching their own enterprises has changed over the years - including seeing more leaders of courses and schools within the university becoming more interested in 'exposing' their students to speakers like me to help them better understand 'the enterprise option'; (I've always especially liked it when the drama school asks for these as it means I can perform my 1-man startup show on a proper stage!).

But perhaps most excitingly, the university's enterprise team has recently launched a dedicated accelerator on campus, branded 'Launch'.

And rather than assume that just because they have a business school and an MBA programme they know what the best content to teach and offer through it would be, they've linked in with the Growth Hub, Santander, and others to offer students a more rounded, complete, and stronger support offer.

Fortunately for my own enterprise practice, they've asked me to reprise my role as a mentor and adviser to some of the latest cohort in the accelerator, to which end the University recently invited me to the launch of their latest Launch programme.

And it was at this launch that I was inspired to jot these thoughts down for my blog for 2 reasons - what undergraduate students want to get out of being part of an accelerator, and the key message that seemed to be being broadcast to them:

in contrast to what we seem to hear from other national and international accelerator programmes who laud themselves on the investment they help start-ups to gain, students motivations at Salford's Launch feel much more 'earthy' and 'real life':

- people are wanting better clarity over the future of their business

- people recognise that being part of a peer community can offer them the confidence and accountability structures they know they'll need to see their ideas through

- some people feel they's lost their mojo, and the accelerator is a good opportunity to find it again

And as for the key message to these start-ups: "be a sponge (of knowledge and ideas), rather than a sponger".

As to the journey that this cohort will be taking, and what their experiences of it will be - well, I'm going to be fortunate enough to walk alongside some of them over the next few months, so I'll try and check in later this year with some thoughts of what happens at the other end...

is 'responsible lending' starting to mean investing in private businesses more, and social enterprises less..?

Since what seems like forever, there has always been the provision of 'alternative finance' - people and communities coming together to support each other financially when either the banks said "no", or because they wanted better terms than mainstream lenders were offering them.

Over time, this has led to the creation of what's now named and recognised as 'alternative finance' - pioneered by early co-ops, community businesses, and charities through things like credit unions, the formation of the Charity Bank, and such like. And then attracting global interest through the rise and populism of 'micro finance'.

But this isn't a post about the history of this sector (although there are some good stories to tell - like what happens if Quakers set up a bank to offer a more ethical alternative in the 17th century, only to have it suffer 'mission drift': we know it as Barclays bank today. And what happens when all the studies and research starts to show that micro finance doesn't deliver on its promises to lift people of of poverty?).

Instead, this is about my wondering if the recent performance of alternative finance providers, as reported by the sector body, Responsible Finance, is showing that social enterprises are increasingly moving away from such ethical alternatives, and that we're seeing private businesses making better use of these lenders designed to step in when mainstream banks and lenders said 'no'. And in doing so, are we also starting to see an evidence base emerging that shows private businesses are better at creating social impact than social enterprises...?

As readers of previous posts like this may recall, I don't claim to use any statistically significant variance analyses - I try and take a simple layman's approach: looking at the data as it's been published, and sticking it into some simple charts.

To do this, I've drawn on 4 years of annual reports published by Responsible Finance, and also one of Social Enterprise UK's 'state of the sector' mapping reports too.

And to try and break the flow of this post, I've copied these charts below, with some summary observations further down:

Now, taking a 'layman's approach' - these charts seem to indicate some trends. Namely:

• social enterprises have been more volatile ('bust and boom') in their performance in comparison with private businesses ('slow and steady')
• the private sector offers better value for money in creating and sustaining jobs (but it's been argued elsewhere that this is because social enterprises tend to employ people with higher needs than a typical company would be willing to invest)
• responsible/alternative lenders don't seem very keen to lend to start-ups if they're a social enterprise, but are far more willing to do so if it's a private business

Now I mentioned having also looked at another data source - Social Enterprise UK's mapping of the sector. In 2017 this reported that nearly 1 in 4 of all social enterprises were actively seeking to take on a loan of some type (with 83% who applied to do so, receiving an investment = approximately 14,000 enterprises), and those that did were able to secure a median amount of £60,000. But against the comparable year from the responsible lenders, the average amount was £391,185, against 363 borrowers. Which suggests that most social enterprises are NOT going to alternative and social lenders to raise investment, and those that are, are far larger than the typical social enterprise is.

All of which seems to paint a picture of responsible/alternative finance being a good thing if you're a small private business looking to start up. And for these lenders themselves, private businesses would also seem to offer a more stable client base to build on in the future too. These private businesses would also be good to show to policy makers to boot, with their offering better apparent value in helping to create and protect jobs in the wider economy.

But there's lots of other data in these annual publications too, which suggest that there's other things going on around responsible/alternative finance too, not just this dichotomy in performance between social enterprise and private businesses who take loans: 

• the total number of borrowers has fallen by over 50% in the last 4 years 
• the average loan to a private business is up by nearly 90%; whilst to social enterprise borrowers it's only up by 5% over the same period

All of which makes me wonder if alternative finance has gotten too good at being 'alternative' - in evidencing to the wider marketplace of mainstream lenders and high street banks, that those enterprises and people who they previously said "no" to, can now be said "yes" to?

But this is a layman's take on annual reports published by industry bodies. As with my previous posts like this, my hope is that rather than start a revolution and change the system completely, is will instead provoke some further reflections and conversations, and help contribute to making sure that the support and services we offer to businesses (be they private or social), can remain most relevant and current in meeting their changing needs, and by association, the people they employ and the communities they serve.

All I've done here is what I don't see happening that often amongst policy makers and sector bodies - looking at trends over time, and starting to cross-reference other data sources to try and better understand the picture.

are community businesses starting to fail, or are we simply becoming more honest about the true nature of them..?

A few years ago, there was a jamboree around 'community businesses' - enterprises that are led by the community they're based in; operate and trade to meet the (social and health) needs of those local areas; and generally make that area a better place for everyone to live and work in it.

This was precipitated by the formation of Power to Change - a charitable trust whose remit is to nurture, encourage, and support the growth and impact of this sector of businesses.

Over the last 5 years since it's creation, Power to Change has initiated a range of programmes and support, which have, in turn (and to me at least), seemed to also catalyse a range of other good things starting to happen through other support bodies to the sector.

However, one of the things about Power to Change that's impressed me most, is its commitment to research, data, and openly sharing it's findings. I've drawn on some of these published findings in previous blog posts, in exploring what they can add to other researches and data from other bodies in seeking to better understand specific themes, but this time thought I'd look at their own data on the community businesses they exist to support, from a longitudinal perspective.

I've always thought that having more than a "this year vs. last year findings" is important in any context as it means you can better start to identify trends, blips, and other happenstance events (last time I did this it was on complaints received by the CIC Regulators against individual Community Interest Companies, the findings of which still cause shock amongst people I share it with...)

And when I look at the 4 years worth of 'State of the Community Business Market' reports that have been collated and published to date, I can't help but wonder if we shouldn't be making more noise about the general state of community businesses, and in particular, how the sector appears to be worsening...

As some who've read previous blogs of mine may recall, I don't claim that analyses like these are based on sophisticated or technical regression techniques and other sensitivity analyses in data sets, but merely what a regular lay-person might find if they were to apply some basic maths to the headline figures reported.

In this instance, I took the figures from the last 4 years of reports, and worked out the average (mean) figures of what a typical community business looks like from the headline figures in each - the charts highlight the story, but in summary:

1) there seems to be a general overall increase in the numbers of community businesses (up 2,000 over the last 4 years), but...

2) the average income of community businesses has fallen by nearly £20,000 (roughly 10%) over the same period;

3) the average value of assets they hold each has fallen by over £150,000 (roughly 60%);

4) they're employing 20% less people, and, before anyone points out that that's because they're making greater use of volunteers - the number of volunteers has also fallen too (by around 50%)...
5) they're also becoming more reliant upon grants over trading to help sustain themselves, and continue their activities into the future

Now, it may be that this is all easily explainable: in the reports themselves, Power to Change are very clear and open that each year the methodologies used to research and generate the data are changing - so there's a strong argument to debunk the above on the basis that I'm not comparing like-for-like. Except... for the figure about the overall number of community businesses which seems to be on an upward trend - if anything, this would suggest that the methodologies are actually getting more effective and precise in identifying and profiling community businesses. 

And if this is the case, then that surely means that a combination of things may be going on:

1) the strength and scope of community businesses, upon which national policy and investment programmes have been based, have been over-estimated, which means that the support now available isn't actually what's most needed...

2) Power to Change has been 'too successful' in inspiring a faster than historic growth in the sector of new community business start-ups, whose financial and operational standings will be far more immature (weaker) than their more established counterparts, and this is skewing the overall averages - although the age of community businesses isn't something that's closely monitored in these reports, parallel mapping by Social Enterprise UK highlights that most of the wider social enterprise sector (of which community businesses form a part), are disproportionately 'young' in comparison with private businesses).

So - all in all, a false alarm for community businesses after all?

Maybe, but as I pointed out earlier, I've done this rough analysis on the basis of how someone taking the headline figures from these annual reports might look at them (and perhaps be unwitting misled?)

And given that other national support initiatives, investment, support, and funding programmes usually take a year or two to 'roll out', in light of them being potentially based on flawed assumptions and data, will this mean that they 'miss their mark', unless they regularly pause to reflect on findings such as these about the wider sector that they're working in, and respond accordingly..?

oh, the places you'll go...

So many books on doing business and being an entrepreneur are filled with inspiring stories of what other people have achieved, and words of advice from people who haven't lived your life or faced the challenges, hopes and frustrations that you do.

Which is why I think 'oh! the places you'll go!' is the ideal book for any entrepreneur – it's presented from the view of a child: and children think that either everything is possible, or nothing is possible: a common mindset for entrepreneurs, freelancers, and the self-employed. And it’s also brutally honest that sometimes the best laid plans can come to naught despite our best efforts, but that somehow we'll manage to survive those tough times.

There are no complex mantras to remember, complex theories or tools to memorise, and it also comes with lots of fun pictures. For all those reasons and more, this is THE book that anyone launching their own enterprise should have by their bedside.

if you want support for your startup, you'll likely need to ignore your ethics...

I find myself in an unusual conundrum as an enterprise advisor who also has a pretty explicit set of values and ethics in how I approach the way I work:

Over the last few years, government has consistently reduced the amount of resource and support available to people who want to start up different types of businesses as a route to employment, generating jobs, changing the world in new ways, and such like. This has meant that the support that so many entrepreneurs of all types need and value is increasingly scarce.

At the same time, high street banks and financial services bodies seem to be moving into this business support space through creating startup grant funds, developing (free) incubators and workspace, and sponsoring national thematic enterprise support initiatives.

All seems pretty straightforward? And economists would probably point to this as an example of how market forces are creating responses that people and enterprises need, without the need for state intervention.

But here's the rub - a recent survey of the 'ethical-ness' of high street banks seems to suggest that those who are scored as 'most unethical' are the ones doing the most around these startup and social enterprise support initiatives. A case of 'buying your way out of a guilty conscience'? (http://www.thegoodshoppingguide.com/ethical-banks-and-building-societies)

And for the entrepreneurs accessing this support - some won't care where the money's coming from, but I see that people increasingly are interested in how that money has come to be on the basis of choices about where they choose to invest their own savings, suppliers they choose to procure from, and the places they try and recruit their staff from.

Market forces are all well and good, but remember that the market isn't a person - it doesn't have ethics or values like you or I. And that likely means that entrepreneurs' difficult choices will only be added to in the future when they start to weigh up the ethics of accepting the support that they know that their enterprise needs, but comes at a cost of having been raised from investing and trading in practices that they'd otherwise be very uncomfortable with...

on being professionally referred to as a 'tool'...

Throughout my professional life, I've been referred to as being/likened to all sorts of things: Darth Vader, Derren Brown, Shakespeare, a Guru, the A-Team, and even a 'neo-liberal stormtrooper'!

However, my most recent public naming was as a 'tool' in front of 50+ students (and twitter!) at Salford University's launch of their enterprise support programme for students and graduates.

I was there as a long-standing supporter of the University's enterprise support programmes and initiatives (although for the sake of some of my other clients, I should probably highlight that I do also work in a similar role within other universities and educational bodies...). The idea of the evening was to inspire and encourage a new intake of students to consider how enterprise could enhance their future options and opportunities, and to that end there were inspiration speakers, details about grant funding available, and pizza. My task was to get those people attending to have some practical experience of what 'being enterprising' might look and feel like in practice through quick activities and games.

However, what was probably the most important part of the event was the Q&A from students to us speakers - in preparing for what we delivered we could only try and second guess what might be most important and relevant to such a large and diverse group; but having time in the programme for open questions helped us to better understand what people's motivations and priorities were. And it was as part of this part of the event that there was a question about the role and value of advisers to a growing business. Jamil Khalil, the founder of Wakelet and keynote inspirational speaker, suggested that he viewed such advisers as 'tools' - in response, I openly wondered if he meant that in the context of a toolbox, or if it was a reflection of poor business support he'd received in the past...

Thankfully he clarified that it was the former, but it created an opportunity to highlight the importance to any enterprise or startup of needing to take multiple approaches: building your own toolbox of resources including professional advice being only part of what you need - there's also value in some of the startup and business planning processes, and my 'games' highlighted the critical need for both a good network of contacts and self-confidence.

So to my fellow advisers and enterprise supporters out there - let's celebrate and revel in being seen as 'tools' ;-)

the best national business support policy may be no policy at all...?

I recently found myself on an 'expert panel' at a forum convened by ISBE (the Institute of Small Business and Entrepreneurship) on the future of business support policy in the UK, as part of their ongoing conversation into informing and shaping what a new national policy should be.

(OK - to clarify, I was technically there as Leigh Sear of SFEDI and the IOEE, but as he'd been called away overseas, he asked me to fill in for him, hence the confusion of my having 2 names at the forum.)

And while I shared various stories and approaches to business support with those present, I thought it might also be useful to capture here some of the other speakers' arguments and discussions with those in the room that stuck with me, as well as some of what I took away that I'm still mulling over, and that will likely also inform my own ongoing activity in this field:

The definitions debate

With the almost fetishism of high growth in business support policy, it seems that the definition of what constitutes 'high growth' may be too exclusive in excluding many businesses who are seeing significant increases in revenues, but aren't matching this with creating lots of direct employment opportunities (such as software firms, and something that will be be increasingly the norm with the rise of the 'gig economy').

As a result, many businesses who have the potential to contribute greatly to our economy are being sidelined and overlooked - surely to our cost...?

Not a 'bottomless well' (of growth)

It also seems that business growth isn't something that can be sustained - various data sets shared by the ERC(https://www.enterpriseresearch.ac.uk/wp-content/uploads/2017/04/ERC-InsightPap-HartDanes.pdf) all indicate that firms can only experience grow for about their first 5 years, and then all mature and plateau; so if policy is to prioritise support for growth, we need to be more open and honest in recognising that businesses are only able to do so for a time limited period.

Measures of success

There seemed to be a general consensus that we need to use more that just financial measures to consider success in business growth - and that these should reflect the aspirations and motivations of the entrepreneurs and owners behind the businesses.

However, I've an idea that whatever these measures are should share the same characteristics as metrics in financial accounts: that they can be bench-marked externally to help us better consider how we compare and contrast with others to fully appreciate just how successful we really are, and that they can be aggregated to form data sets and evidence bases to allow us to better represent and lobby on their behalf.

Whose benefit is policy actually for?

Discussions around the different players active in the business support arena raised a question about who business support should be for, and who should be paying for it. Public policy should take a utilitarian approach, facilitating and enabling the most benefit for the most people, and in the real world, this means that the State can't appease everyone, or provide for all business types and needs (hence it's prioritising of high growth over sole traders as it believes this will create the most impact for more people).

However, we're seeing private firms starting to offer accelerator and incubator programmes, and also sponsor others' enterprise development and growth initiatives. So rather than try and create a single public policy that will encompass everyone, should we rather be taking an approach that uses simpler policy frameworks around different themes and types of enterprise/entrepreneur; better recognising that in some instances the private sector is better placed, and should be leading on elements of support?

The rationale (and risks) for enterprise education to be a recognised part of business support

There seemed to be agreement that any role Universities hold in delivering any policy around business support needs to include elements of enterprise education, and while there are good reasons for this, there are also some risks too - 

• teaching and encouraging entrepreneurship amongst students increases their future employability by developing skills that employers value
• degree apprenticeships creates opportunities for universities to capitalise on their role as a provider of learning, but there's no clear models for how Universities might best harness this new model (yet...)
• there's a risk that in some universities having linked their offer of enterprise support to that of national policy, many student startups are being 'lost' or 'fail to launch' as the University is too focused on encouraging high growth and Intellectual Property-based ventures
• with the rise of corporates taking active roles in offering business support (including where there may not be an immediately obvious business case for them to do so), there's a need for Universities to better co-ordinate their offer with these to capitalise on knowledge and expertise that both are developing - but tellingly, there was no presence from any such corporates at the Forum...

The holy grail: creating a pipeline of support for startup to high growth

Within any national policy that emerges, there will need be a recognition that encouraging new startups is just as important as supporting growth in existing businesses - but that its also difficult to ensure that this progression is smooth or able to be well managed. This is largely because of not only the sheer diversity of different business types and motivations, but also the plethora of support available to them at different stages and in different sectors.

In theory, Local Economic Partnerships should be well placed to better co-ordinate these support offers to maximise their potential for wider benefit, but the experience of many seems to be that owing to the governance models of LEPs not being inclusive or transparent enough, that such knowledge and co-ordination which could unlock the potential of many firms, isn't happening.

If we can only do one thing...

As a closing to the panel debate, a few straw polls were taken of people in the room, asking for shows of hands to gauge what the focus of national policy should be if it could only focus on one thing: more start-ups, or more scale-ups.

(Personally, I'm in favour of more start-ups: they create and encourage more diversity and choice in an ever-changing society; help us develop more resilience; and research shows that the larger firms tend not to stick around that long anyway - the FTSE100 has a churn rate of about 10% each year!)

Overwhelming the room voted in favour of more start-ups.

more time capsules from entrepreneurs

It seems to be that whenever I'm asked to be part of some business event where there's a panel of "successful entrepreneurs", questions from the audience tend to dry up very quickly and usually relate to either very specific/technical questions that are of limited interest to most people there, or are so general that most people would struggle to be able to relate to them...

However, as some readers of my blog may recall from previous posts, I've various 'standby' prompts for most instances, and in this one, its a question that entrepreneurs on any assembled panel seem to enjoy: "what one thing, with hindsight, would you want to impress upon your younger self when you were launching your enterprise?"

My most recent opportunity to wheel it out came as part of a startup bootcamp for students at the Univesity of Salford that I was supporting the delivery of. And the 'life lessons' that the panel of entrepreneurs had to share with these bright young startups of tommorow were:

• get better at managing time - things usually take longer than you think they will, and remember that you'll need to sleep at some point...
• spend more time at the start of a job agreeing the scope of work - it'll help with managing client relationships later...
• lock the door more (!) - working from home can be fraught with lots of distractions...
• breathe - don't forget to take time out to enjoy yourself (and watch netflix...)

'enterprise accelerators' - the blind leading the blind?

I've noticed a growing trend for 'enterprise accelerator' programmes over the last few months, and usually dismissed my curiosity to investigate further as they mostly seem to be based in London (I'm a Northern lad..)

However I recently had the opportunity to attend the opening workshops of one that's being delivered by an "international professional services firm" so thought it'd be a good idea to see what sort of support qualifies being labelled as 'accelerator', and from the private sector (as most of the enterprise support programmes I'm involved in have been publicly funded).

 

Sadly I was very disappointed and even shocked.

The opening workshops of this 'flagship scheme' explored basic marketing principles (understand what your customers are interested in, and be able to present the benefits of your service not just its features), and some initial basic concepts of good meeting skills.

Now, I'll agree that such basics are important for any start-up enterprise, but to form the basis for an 'accelerator' that's targeting aspiring high growth businesses in high value industries?

What made me more concerned was that of the start-up entrepreneurs present, none really had any aspirations to scale the enterprises they were thinking of setting up beyond their immediate community, but the cuts by government to enterprise support meant that they couldn't find any other type of free training or advice.

 

But what really stunned me were the 'expert presenters' of the workshops: a communications officer on temporary contract who introduced their subject using the phrase "I don't really know about these things myself, but I'm led to believe...", and another who closed with "...and these are all a few ideas based on my experience of internal meetings with colleagues."

So in actuality, the content of this flagship enterprise accelerator programme was more 'start-up101' than high-growth, and those leading the sessions had no real understanding or first-hand experience of either start-ups or high-growth ventures.

And yet there were glossy brochures and banner stands which make it appear professional and trustworthy.

 

 

If this is the future of enterprise support, I fear for the future of our economy and business communities.

 

the dirty secret about social franchising...

Most people tend to agree that social enterprise is generally a good thing because of all the positive impacts it can/does create, and that it would be great if that impact could be multiplied. Traditionally, the way social enterprise has done this is through ‘organic growth’ (slowly getting bigger, employing more people, selling more stuff, etc itself). But in more recent years, there’s been a growing interest in the concept of ‘social franchising’ as a way to grow impact more quickly.

It’s worth demystifying ‘social franchising’ at this point: it’s not the same as Costa, Subway, or McDonalds, but rather a more flexible way to replicate a model of social enterprise through either informal licensing agreements about sharing a brand to more formal ownership and shareholding agreements in each other. These guides from Social Enterprise UK (which I contributed to!) are good starting points:

http://www.socialenterprise.org.uk/advice-services/publications/social-franchising-manual

http://www.socialenterprise.org.uk/advice-services/publications/social-franchising-guide-for-franchisees  

But there’s a problem in the land of social franchising that few people seem willing to acknowledge or talk about: broken models. In the private sector, an enterprise model is replicated only when it’s had a few years of successful (profitable) trading to assure it and others that it’s sound. But in social enterprise land, there’s a push from the powers that be, sector bodies, government ministers, investors, etc to see more happen now... and that can create a problem.

As part of my support to enterprises, I’ve been involved insocial franchising in various ways, including researching several social franchises offers that groups were considering taking on. And you know what? Many didn’t work – looking at their finances, speaking with other groups who’d taken on franchises, etc showed that what was being offered wasn’t a ‘dead duck’ as such, but was being talked up a lot more than it was safe to...

Just as in other parts of the economy, enterprises fail. Market conditions change, people come and go, and legislation and copycats mean we can lose what was once our competitive edge.

It’s only recently that ‘failure’ in social enterprise is starting to be talked about more openly, but so far it’s only in relation to individual, stand-alone ventures. There’s a dirty secret at the heart of social franchising that not all of them actually work as business models, and that’s not something we seem to want to talk about, often to our (and our communities’) cost...