U.K.’s Social Enterprises Face Funding Challenges despite a Strong Sales Performance

(3BL Media/Justmeans) - Social enterprises in the U.K. appear to be outshining the mainstream businesses, indicating a new era of success for the social enterprise model. A recent Social Enterprise U.K. (SEUK) report has revealed how a wide range of social enterprises are scoring a march over the regular profit-motivated small and medium businesses.

SEUK conducted an online and telephonic survey of leading figures in social enterprises, which showed highly encouraging trends in demand for products and services offered by social enterprises. The survey indicates that 38 percent of social enterprises recorded a growth in sales turnover over the past year, while only 29 percent of SMEs recorded growth in the same period. In terms of innovation, 56 percent of social enterprises developed a new product or service, compared to 43 percent of SMEs.

Future growth outlook for social enterprises is extremely positive, with almost two-thirds of them expecting their turnover to grow over the next two to three years. This is almost double the number of SMEs expecting growth in the same period. The positive trends in the performance of the social enterprise sector have resulted in a three times higher start-up rate of social enterprises compared to that of mainstream SMEs.

Social enterprises in the U.K. appear to be making a significantly deeper socio-economic impact compared to the traditional SMEs. 38 percent of social enterprises operate in the most deprived communities of the U.K., compared to 12 percent of traditional SMEs. More than half of social enterprises actively employ people from disadvantaged backgrounds, including people with disabilities, ex-offenders, and the long-term unemployed.

However, access to finance continues to be the single largest barrier to growth and sustainability for social enterprises, according to the survey. 48 percent of social enterprises sought capital in the past one year, compared to just 24 percent of SMEs. There appears to be a clear need for smaller-scale lending that what is presently available to the sector from social investment sources.

Source: The Guardian

Photo Credit: ljleavell