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Mapping Report


The UK Social Firm
   Sector 2010
CONTENTS

EXECUTIVE SUMMARY……………………………………………………………………………………2

ACKNOWLEDGEMENTS ………………………………………………………………………………….3

INTRODUCTION……………………………………………………………………………………………. 4

AIMS AND OBJECTIVES………………………………………………………………………………….. 5

METHODOLOGY…………………………………………………………………………………………… 5
     Mapping Meetings
     Mapping via Telephone Conversations
     Mapping via Email
     Shared Mapping Issues
     Other Means of Obtaining Information

CHANGES AND DEVELOPMENTS IN THE SOCIAL FIRM SECTOR………………………………..6
Numbers and Sector Growth……………………………………………………………………………...6
        Comparison with 2006
        Businesses that have exited the sector
        Identifying New Entrants to the Social Firm Sector
The Current State of the Social Firm Sector…………………………………………………………...9
        Legal Form
Size, Spread and Focus…………………………………………………………………………………. 10
        Size and Spread
        Movement within the Social Firm sector
        Target Employee Groups
        Employee Numbers
        Service Users
        Trainees
        Volunteers
Businesses – Trading Sectors…………………………………………………………………………..15
        Trading Sectors and Income
        National Products and Services
        Higher Earning Trading Sectors
Businesses – Income……………………………………………………………………………………. 17
        Commercial Income
        Non-commercial Income
Businesses – Management, Support and Quality …………………………………………………. 20
        Business Management
        Financial Management
        Staff Support
        Quality

CONCLUSION……………………………………………………………………………………………...23


APPENDICES………………………………………………………………………………………...........24
Appendix 1  Businesses in the Social Firm sect
Appendix 2  Businesses that have exited the sector
Appendix 3  Target Employee Groups
Appendix 4  Employment Figures
Appendix 5  Income and Employment in the Social Firm Sector
Appendix 6  Trading in the Social Firm Sector
Appendix 7  The top 20 Income Earners in the Social Firm Sector
Appendix 8  Responses to questions on Business Management 2010
Appendix 9  Responses to questions on Financial Management
Appendix 10 Responses to questions on Staff Support
Appendix 11 Responses to questions on Change
Appendix 12 Responses to questions on Significant Issues for the Future




                                                                          1
EXECUTIVE SUMMARY

This report, the first detailed one since 2006, seeks to provide a picture of the Social Firm sector in
2010 and examine some of the changes to the sector in the last four years in the UK. Since the last
report the sector has widened its focus to include other disadvantaged groups such as ex-offenders,
homeless people and those who have previously been involved in substance abuse.

This report comes as a result of ongoing work to map the sector and is therefore not based on a
snapshot in time but rather information gathered over time. As such it cannot be fully up to date:
something that should be borne in mind when being read. Some of the collected data is incomplete
(e.g. employment figures) and so the actual information collected has been used to inform sensible
and realistic projections which may be of assistance but are therefore not completely accurate. The
purpose of this mapping report is to provide as factual a picture as possible on the Social Firm sector:
its size (people employed, turnover), growth and the issues faced in expanding, structure (legal form,
industry sectors, geographical spread), its successes and thoughts on future challenges.

Some Mapping Highlights

   •   The sector has grown by 32% since 2006

   •   There are now 99 Social Firms and 82 emerging Social Firms

   •   Company Limited by Guarantee is the most favoured legal structure

   •   In England, Yorkshire & Humberside has the highest number of enterprises in the

       Social Firm sector (22) whilst the Eastern region has the highest growth rate at 150%

   •   Supporting people with mental health needs remains the largest target employee group

   •   The sector now includes employment for ex-offenders, the homeless and ex-substance

       abusers

   •   1064 severely disadvantaged people have found paid employment within the sector –

       58% of its total workforce

   •   Projected increase in employment of 62% across the sector since 2006

   •   Top three business sectors are Catering, Recycling and Horticulture

   •   Just seven business sectors represents 83% of Social Firms’ trading activities

   •   74% of Social Firms earn 75% or more of their income from trade

   •   Double the amount of Social Firms trade nationally compared with the social enterprise

       sector as a whole

   •   87% of Social Firms have an earned income of up to £500k

   •   The top 4 income earners all started out as supported factories




                                                                                                      2
ACKNOWLEDGEMENTS


          We can only report on what we know and what people share with us.
              Obtaining information from busy people is not always easy.
  Running a Social Firm is hard work and managers rarely, if ever, really have the time to
                             provide the information we seek.

 But information is knowledge. The information that managers and CEOs provide forms an
essential part of the tools we need to work and lobby on behalf of the Social Firm sector - the
                        businesses and the people that work within them.

 We are very grateful to all who have generously given their time to provide information on
                   their business and its development as a Social Firm.




                                     Thank you




                                                                                              3
INTRODUCTION

Since the last full mapping report in 2006 the Social Firm landscape has changed. The focus has
broadened to include other disadvantaged groups such as ex-offenders, homeless people and those
who have previously been involved in substance abuse. The sector has grown; the last full mapping
survey identified 137 businesses in the Social Firm sector, now we are aware of 181 that are
definitely part of the sector. This report will examine the growth and changes since 2006 and present
a view of the current state of the Social Firm sector.

We know that the wider social enterprise sector is an increasingly important part of the business
landscape in the UK1. This report provides an insight into the Social Firm sector within that landscape,
the increases in the sector (in scale and complexity) and the issues it faces in expanding.

Some enterprises that are mapped go out of business. This is no different to the SME sector and the
time we spend gathering detailed information on these businesses is never wasted as there are
always lessons to be learnt.

For those new to Social Firms it is perhaps useful to look at why we believe mapping of the sector to
be so important. In 2004 there was no real overview of the Social Firms sector, its growth or the
quality of the firms within it. Although Social Firms UK had a clear view of what should be defined as
a Social Firm and what would constitute an emerging Social Firm2 it didn’t have;

•      any in depth knowledge of the extent to which this was understood by and worked towards by
       businesses in the sector;
•      an overall methodology for identifying the level of development of individual Social Firms and
       emerging Social Firms;
•      a way of finding out about the quality of enterprises in the sector; or
•      a system for identifying new entrants to the sector.

It was decided that a programme of mapping for the sector would start to address these gaps. It was
hoped that mapping would also create another opportunity for dialogue with Social Firms, increasing
the two way flow of information about what is needed to support Social Firms and the development of
the sector as a whole.

This is the second detailed mapping report. We have probably not come across all of those out there
(usually categorised as ‘social enterprises’) that are Social Firms and even if we had it would not be
possible to fully map every one of them; however, we are confident that this report is based on good,
sound data and information. The tables and charts shown in this report provide the base number from
which the information and any conclusions are drawn.

We hope it provides a good insight into the sector and the information you are seeking. Let us know
what you think and what additions you would like next time - and if you know of an enterprise that you
think might be in the Social Firm sector, please do tell us.




1
    State of Social Enterprise Survey 2009. Published by the Social Enterprise Coalition.
2
  Briefly a Social Firm was described as; a market led enterprise whose social mission was the creation of good quality employment, within
the enterprise, for disabled people (including mental ill health and learning disability) who are furthest from the labour market. At least 25% of
the workforce would be drawn from the target disability group(s), more than 50% of the income would come from trade and any profits were
principally reinvested to grow the enterprise.

An emerging Social Firm was an enterprise committed to becoming a Social Firm. It would be working to a business plan that illustrated how
they were going to achieve their goal and usually in the early stages of trading. Often less than 25% of the staff would have come from the
target disability group(s) and/or income from trade was less than 50%.



                                                                                                                                                4
AIMS AND OBJECTIVES

The aim of this report is to provide an overview of the Social Firm sector. Objectives will include such
standard reporting as the numbers of known Social Firms and emerging Social Firms; their regional
and national spread; the industry sectors represented; the types of legal form used; employee
numbers and the percentage of commercial income. In addition the information gathered is used to
gauge the size of the sector as a whole. The report will also be used as an opportunity to examine the
growth of the sector and the issues affecting growth. In so doing it acknowledges that some firms are
no longer trading or not trading as Social Firms and seeks to learn from the knowledge gained.


                                                            METHODOLOGY

Since the last mapping report the way information is collected has changed slightly. Mapping in
Scotland, for instance, is the responsibility of Social Firms Scotland which undertakes it a little
differently. Using the base data collected, the information and views on the mapping methodology set
out here are those of Social Firms UK.

Many social enterprises can, from the outside, look like Social Firms3. Before starting to fully map an
organisation, time is spent obtaining more information. This always includes checking the company
website and often following this up with some enquiries. Once it has been established that the
enterprise is likely to be in the Social Firm sector, or close enough to be interested in becoming a
Social Firm, we seek to map the enterprise.

The collection of mapping information is carried out in a variety of ways but a mapping questionnaire
is a major tool. This is essentially the same as in 2006. The one real change is the inclusion of some
more detailed questions on self employment within the Social Firm sector. As previously the
questionnaire can be divided into the objective questions – employee numbers, legal form etc and
obtaining more subjective information e.g. position on such things as access to financial advice,
health and safety and the emphasis placed on training and learning.

Mapping Meetings

Using the mapping questionnaire in a face to face meeting is by far the most effective way to obtain
good rich responses to subjective questions. Meetings facilitate a really positive exchange of
information and offer an opportunity for people to give some time to consider the quality and
development of their Social Firm away from the day to day rush and responsibility of running a Social
Firm. Although responding to the mapping questionnaire in this way takes more time the discussions
that follow are seen as beneficial to the enterprise.

Mapping via Telephone Conversations

Time and geography mean that meetings are limited and completing questionnaires over the phone is
the next best option. Responses to the more subjective questions given over the phone tend to be
‘first thoughts’ and are not normally discussed in any detail. There is no perceived benefit to
enterprises from ‘telephone mapping’. As a result the information is often limited to updating details
on industry sectors, employee numbers and income.

Mapping via Email

Sometimes questionnaires are emailed to people but return rates are very low. Responses are
always limited to obtaining objective information.



3
    Social enterprises are businesses that trade for a social or environmental purpose, and their profits are reinvested back into the company to
     help them achieve this purpose. There are many types of social enterprise. Probably one of the best known is the Eden Project whose aim
     is regeneration and conservation. Social Firms are another type of social enterprise. Social Firms can be identified by their social mission.
     This is to create jobs for people who find it hardest to get them. For more information go to: www.socialfirmsuk.co.uk



                                                                                                                                                5
Shared Mapping Issues

Regardless of whether mapping information is collected face to face or over the ‘phone, responses
obtaining detailed information on employee hours if the workforce is higher than around 10-15 can
take time4. Some firms will provide information on the percentage of commercial income but are
reluctant to disclose the actual income levels.

Other Means of Obtaining Information

As previously mentioned other methods are used to collect information e.g. company websites,
applications to become or retain Star Social Firm5 status and projects. Some projects, for example, a
recent social enterprise survey undertaken for the Romanian government provided some useful
updated mapping information.

                        CHANGES AND DEVELOPMENTS IN THE SOCIAL FIRM SECTOR

Numbers and Sector Growth

As with the wider social enterprise sector Social Firms vary widely in their size, the scope of their
operations and turnover. In this respect Social Firms (like the social enterprise sector as a whole)
mirror the SME business6 sector. At present all the enterprises in the Social Firm sector are also
SMEs with just one (The Pluss Organisation7 with a turnover in the region of £23 million and staff of
over 400) on the very upper limit of the SME sector. In this section the developments in the number of
Social Firms, employee numbers, income, geographical spread etc will be examined.

Comparison with 2006

This first section compares the number of Social Firms and emerging Social Firms since the last
mapping in 2006. More in-depth information on the growth and change in the sector can be seen in
Table 1 overleaf. Some of this increase can be attributed to the broadening of the definition of Social
Firms to include other disadvantaged groups such as ex-offenders, homeless people and ex-
substance abusers, rather than only disabled people (this changed at the end of 2006).


                                                    There are now 181 businesses in the Social Firm sector

                                                                          The sector is made up of:-
                                                                                99 Social Firms &
                                                                            82 emerging Social Firms

                                                            This is an overall increase of 32% since 2006

                                                The balance between Social Firms and emerging Social Firms
                                                  has changed slightly, with Social Firms increasing from
                                                                        51% to 56%

4
    The percentage of employees in Social Firms is calculated on the FTE (full-time equivalent) numbers to obtain an accurate picture. Where
    some people work just three hours per week and others may be working 12 or 16 hours obtaining this information can take some time and
    people are, understandably reluctant to spare the time to find the information requested.
5
    The Star Social Firm is a quality standard that is awarded to Social Firms that have proved the quality of their business and the employment
     they provide for severely disadvantaged people. Visit www.starsocialfirms.co.uk for more information.
6
    In its report, “ Small and Medium sized Enterprise (SME) Statistics for the UK and Regions 2008” the SME sector was defined by the
     Department for Business, Innovation and Skills as ‘businesses with a turnover of under £25 million and fewer than 250 employees.

7 The Pluss Organisation is one of a number of Social Firms that began life as a supported factory. Historically supported factories were
  provided with a great deal of support via government programmes. This enabled firms to develop and invest in expensive manufacturing
  equipment and is the reason why income levels are, in the main, higher than other Social Firms. Pluss, like other Social Firms that started
  out as a supported business, have developed into ones in which the workforce is actively empowered and the company works to the
  Social Firms UK Values-Based Checklist and, indeed, Pluss has recently been re-approved as a Star Social Firm.



                                                                                                                                              6
The last mapping report showed that between 2005 and 2006 there was an increase of 15% in the
number of firms known to us in the Social Firm sector. Since 2006 the overall growth level is 32%, an
average of 8% per year. These figures clearly show a slowdown in growth and the recession must
play a part in this. However, a comparison between growth over 1 year and over 4 years is likely to be
misleading. With hindsight we now know that the numbers of firms identified between 2005 and 2006
were not sustainable over the longer term. This suggests that taking a measure over a short period is
likely to be less accurate and not a good predictor of longer term growth.

                        Overview of Numbers Enterprises in the Social Firm Sector in 2006 and 2010
                            2006                               2010                       Percentage changes
     All              Social   Emerging   Total   Social     Emerging    Total   Increase/d   Increase/d   Total overall
     Nations          Firms     Social            Firms       Social               ecrease    ecrease in   increase/de
     and                        Firms                         Firms               emerging      Social       crease
     Regions                                                                        Social       Firm
                                                                                     Firm      numbers
                                                                                  numbers
     East Mids
                        1          6        7          0           1         1     -83%         -100%         -86%
     Eastern
                        5          1        6          7           8      15       700%         40%           150%
     London
                        7          8       15       12             9      21       13%          71%            40%
     North East
                        2          2        4          4           1         5     -50%         100%           25%
     North West
                        1          4        5          4           1         5     -75%         300%           0%
     South East
                       13          4       17       10             4      14        0%          -23%          -18%
     South
     West               2          4        6          5           3         8     -25%         150%           33%
     West Mids
                        8          17      25       10             8      18       -53%         25%           -28%
     Yorks     &
     Humber             7          11      18       17             5      22       -55%         143%           22%
     N Ireland
                        3          2        5          4           3         7     50%          33%            40%
     Wales
                        2          7        9          7           9      16       29%          250%           78%
     Scotland
                       13          7       20       20             29     49       314%         54%           145%
     Total
                       64          73     137      100             81     181      11%          56%            32%


                            2006                               2010                       Percentage changes
                      Social   Emerging   Total   Social     Emerging    Total   Increase/d   Increase/d   Total overall
                      Firms     Social            Firms       Social               ecrease    ecrease in   increase/de
                                Firms                         Firms               emerging      Social       crease
      English                                                                       Social       Firm
      regions                                                                        Firm      numbers
     combined                                                                     numbers

                       46          57     103      69              40     109      -30%         50%            6%


                            2006                               2010                       Percentage changes
      Nations         Social   Emerging   Total   Soc      Emerging     Total    Increase/d   Increase/d      Total
                      Firms     Social             ial      Social                 ecrease    ecrease in     overall
                                Firms             Fir       Firms                 emerging      Social     increase/de
                                                  ms                                Social       Firm        crease
                                                                                     Firm      numbers
                                                                                  numbers
     N Ireland
     Subtotal
                        3          2       5       4          3          7         50%          33%            40%
     Scotland
     Subtotal
                       13          7       20     20          29         49        314%         54%           145%
     Wales
     Subtotal           2          7       9       6          10         16        43%          200%           78%
     Total        -
     three
     nations           18          16      34     30         42          72        163%         67%           112%

     Table 1


See Appendix 1 for a complete list of the businesses currently known of in the Social Firm sector.


                                                                                                                           7
Businesses that have exited the sector

The slower growth is thought, in part, to be a result of businesses that have either not survived, or
converted to other types of social enterprise. This section looks briefly at organisations that have
come and gone and seeks to learn from our knowledge of why this has happened.

Losses are never welcome but they need to be seen in their wider context. Social Firms are a part of
the SME (small and medium enterprise) sector; a sector that in the UK houses around 3.6 million
enterprises most of which (99.5%) employ less than 2508 people. More particularly of the 175,000
business that register for VAT each year most will survive their first year but, by the end of the third
year around one third will have ceased trading. Previous research has suggested that the closure of
Social Firm businesses is certainly no worse and probably slightly better than that for the SME sector
as a whole.

For a variety of reasons (not all related to the economic downturn) we know of around 50 enterprises
that were in the Social Firm sector that have either ceased trading or have been absorbed into other
enterprises or are trading as social enterprises but not as a part of the Social Firm sector. Of the fifty
around thirty have ceased trading.

It’s always hard to know whether an organisation goes down because it is a victim of the recession
and whether there were other contributory factors. It does seem fair to say that several of the Social
Firms would probably have gone under anyway. This might be, for example, because they were
underfunded or did not have sufficiently robust financial control systems in place. A few found
themselves in the wrong marketplace, encountering declining demand or being in the wrong location.
This suggests that there is room for improvement in the financial and business management within
the sector and perhaps points to a need for greater support in these areas (although this is not borne
out by the responses to questions on business management shown later in this report). One factor is
very clear: the most significant losses to the sector have been where the number of firms has
multiplied fast under one umbrella organisation.

Of equal note are the enterprises that although still operating are no longer seeking to attain or
maintain the minimum 25% of severely disadvantaged employees and are therefore no longer
considered to be a part of the Social Firm sector. These are firms that are in sympathy with the Social
Firm model but have concluded they are not able to maintain either sufficient business focus or the
level of employment of those furthest from the labour market. See Appendix 2 for information on the
spread of losses to the sector.

Whilst this fallout is significant it is thought that we now have a sector that is much more grounded;
one that fully understands what it is to be a Social Firm and has significantly developed its ability to
trade at commercial rates and to develop and grow.

Identifying new entrants to the Social Firm sector

Although there are inevitably losses there are Social Firms yet to be discovered. We are constantly
learning of social enterprises that we believe to be a part of the Social Firm sector. Across the UK
there are over forty enterprises on our radar with whom we need to do more work to establish that
they are indeed part of the Social Firm sector. This does suggest that growth is happening faster than
we are currently able to track it. These enterprises do not include supported factories which we are
confident will, increasingly, want to move forward and work to become Social Firms.

If just 50% of the organisations that we have logged are confirmed as being in the Social Firm sector
we would break through the 200 barrier. Working to engage with the enterprises we have already
identified and building links with supported factories that want to become Social Firms is a priority for
Social Firms UK.



8
    The numbers vary in the different definitions.



                                                                                                        8
The Current State of the Social Firm Sector

This section begins by giving an overview of the current sector – legal forms, regional spread,
employee focus, business focus. It will then look at the changes since 2006.

Legal Form

Since 2006 changes to the Companies Act means that understanding what is and is not a social
enterprise in terms of their legal form has become a little more complex. It is now possible to have a
variety of legal forms enhanced by an ‘entrenchment provision’. Since the content of the
entrenchment provision is not prescriptive each will need to be taken on its merit. Within the Social
Firm sector the ‘provisions’ would need to meet the Social Firm values as set out in the Values-Based
Checklist.




               Chart 1


At present there are two Social Firms with a legal structure enhanced by an entrenchment provision
included in the ‘other’ in Chart 1. Other ‘others’ include enterprises that are an integral part of the
parent organisation (rather than a subsidiary).


             Comparison of Main Legal Form in the Social Firm Sector 2006 and 2010
                                                                      Percentage of Whole

                                                               2006                         2010

Company Limited by Guarantee and a registered charity          35%                          18%

                                                                                            20%
Company Limited by Guarantee                                   17%


Company Limited by Share                                       13%                          8%


Statutory Organisations                                        13%                          8%


CIC(Ltd by guarantee & Share combined)                          9%                          11%


Subsidiary of Charity/Other parent organisation                 9%                          9%

Table 2


As can be seen from Chart 1 and Table 2 there appears to be a reduction in Companies Limited by
Guarantee and that are also registered charities. It also appears that, after the first enthusiastic flurry,
interest in the Community Interest Company (CIC) model has waned.



                                                                                                          9
Size, Spread and Focus

A little complicated but taking Tables 1 and 3 with Charts 2 and 3 together does provide an overview
of the size, spread and focus the Social Firm sector in 2010.

       •    Table 1 give information on the spread of Social Firms and changes since 2006.
       •    Chart 2 provides information on the numbers of Social Firm businesses and their
            regional/national spread.
       •    Chart 3 and Table 3 gives the breakdown of employee focus in the sector.

As previously noted the sector as a whole has increased by 32% since 2006.

Size and Spread

The extreme changes within regions and nations and the spread of Social Firms throughout the UK
are uneven and there is no perceived pattern. Comparisons between nations and regions are not
necessarily valid but, it seems no surprise to find that Scotland, which has the support of Social Firms
Scotland, has the largest number of firms (49) whilst the East Midlands which no longer has a Social
Firm champion shows a decrease of 83% in its Social Firm presence. It is also perhaps relevant to
know that the RBS SE100 report found the East Midlands to be the worst performing, region with
social enterprise income growth of only 15%9.




Chart 2



In the English regions the South East and West Midlands both show an overall reduction in the
number of enterprises in the Social Firm sector whilst the Eastern region has an impressive high
growth rate of 150%. The very varied level of change has resulted in an overall increase of just 6% in
the English regions.




9
    The RBS SE100 growth rate is measured over the last year whereas the growth of the Social Firm sector in this report is measured over
     four years.



                                                                                                                                     10
Movement within the Social Firm Sector

Looking at the movement within the sector – numbers of enterprises that were known in 2006 and are
still trading, the numbers that have developed from emerging to Social Firm etc provides some insight
into the way the sector has developed and grown.
Mapping has shown that the number of:

   A.    Social Firms operating in 2006 and still in sector = 35
   B.    Emerging Social Firms operating in 2006 and still in sector as emerging businesses = 17
   C.    Emerging Social Firms operating in 2006 and that are now Social Firms = 19
   D.    New Social Firms identified since 2006 and still operating = 43
   E.    New Emerging Social Firms identified since 2006 = 67

Of these, figure B is surprising. It is well known that it takes time to establish a Social Firm but the
numbers that were around as emerging Social Firm in 2006 and are still ‘emerging’ is perhaps
something that needs attention.

Target Employee Groups

Chart 3 indicates that some 86% (155) firms have
some level of focus on supporting people with
mental health needs. This does not include those
with a focus on ex-offenders, homeless people or
those with substance abuse issues although it is
known that people in these target groups do also
have mental health problems.

Taken together this shows that the sector still has a
strong focus on supporting people with mental
health needs - as it did in 2006.

Again, as in 2006, the second largest target employee group is people with learning disabilities. 15%
of firms focus purely on supporting people with a learning disability. Adding together all those that
have some level of focus on learning disability the total number that employ people with learning
disabilities is 141 (77%). As with mental health numbers of people with a learning disability are also
ex-offenders, homeless or have problems with substance abuse.


                       Target Employee Groups by Number in the Social Firms Sector

                                                                                             Ex
              Mental   Learning     MH & LD       Physical     Sensory          Ex                       Homeles
   All                                                                                    Substance                    BEM
              Health   Disability   Combined      Disability    Loss        Offenders                       s
                                                                                           Misuse


    41         51         37           63            21           15             7             2             8           5


   Please note: Due to the variations in the target employee groups the numbers shown here add up to more than the numbers of
   known firms in the sector.
   Table 3.


Whilst support for people with mental health needs or learning disability are clearly the two highest
groups it should be noted that since many firms focus on more than one group the numbers shown in
Table 3 are greater than the number of businesses in the sector (and therefore the numbers of firms
cited as supporting people with mental health needs or learning disabilities is higher than the reality).

Further information on target groups by regions and nations can be found in Appendix 3.




                                                                                                                                11
Employee Numbers

In 2006 the sector employed more than 1600 FTE (Full Time Equivalent) staff with 860 of them being
people who were employed as being furthest from the labour market. Nearly 21% of disadvantaged
people worked less than 16 hours per week.
Chart 4 and the figures below are taken from analysis of the firms that supplied full staffing
information for the 2010 mapping. On these alone the sector has nearly 1900 staff. This can be
broken down as follows:
STAFF NUMBERS
 •    All Staff: 1886
 •    Severely disadvantaged (SD) staff: 1064. Plus there are 9 known self employed staff
 •    Full Time Equivalent (FTE) staff: 1751
 •    FTE SD staff: 1009
 •    Percentage of FTE staff who are severely disadvantaged: 58%

FULL TIME POSTS
 •    Full time posts:1344
 •    SD staff in full time posts: 624
 •    Percentage of SD who are in full time posts: 46%

PART TIME POSTS
 •    Part time posts: 542
 •    SD staff in part time posts: 440
 •    Percentage of SD who are in part time posts: 81%
 •    SD staff working less than 16 hours a week: 210 - just under half the part time posts




Chart 4




                                                                                               12
Taking into account both full time and part time employment for severely disadvantaged staff the
percentage of staff working less than 16 hours a week across the sector reduces to 20% - almost
identical to 2006.

Projected Real Rize of the Sector

Using information obtained it is possible to make projections as to the real size of the sector in 2010.

Real Trading Value
It is estimated that the real trading value of the known sector is
over £83 million

Employee Numbers
It is estimated that across the 181 firms there are:
     • 2600 staff employed
     • 2451 full time equivalent staff employed
     • 1798 people in full time posts - of these 857 are filled by
         severely disadvantaged people
     • 645 part time posts filled by severely disadvantaged people
     • Actual increase in employment in the sector since 2006 is 62%


Using the information obtained it is also possible to calculate that across the sector:

•   the average number of staff per business is 14
•   the average number of FTE staff per business is 13.5
•   the average number of FTE staff per business that are severely disadvantaged is 8
•   the median number of FTE staff is 4.5

Appendices 4 and 5 contain some more detailed information on staffing and income.

Service Users

‘Service users’ is an emotive term and we are conscious that is one that is not liked. Unfortunately an
easily understood alternative has not yet been found. It is used here to differentiate a group who are
not in paid employment and for whom the Social Firm provides work related training paid for by
organisations such as health or social services. As in 2006 some Social Firms have contracts to offer
work training/experience. Others do not. Mapping suggests a reduction in the numbers of Social
Firms that have such contracts. Table 4, below, shows that only 17% of businesses have service
users and that where they do the main focus is people with learning disabilities.

              Summary of Businesses in the Social Firm Sector With Service Users 2010

                                                                                   No of Firms that     % of Firms
                        Number of     Total No. of   Average No.   % of l Firms
           Number of                                                              Focus on Service     Focusing on
                        Firms that      Service       of Service    that Take
             Firms                                                                  Users with a      Service Users
                       Have Service    Users per      Users per      Service
            Mapped                                                                    Learning        with a learning
                          Users          Week            Firm         Users
                                                                                      Disability         Disability

England       94            7            175             25            7%                4                 57%
Northern
Ireland
              4             1             35             35           25%                1                100%

Scotland      33           12            145             12           36%                4                 33%
Wales         15            5             72             14           33%                5                100%

Total        146           25            427             17           17%                14                56%
Table 4




                                                                                                                    13
Trainees

     Table 5 shows that only 23% of businesses have trainees. It is thought that these figures will probably
     exclude many of those recently taken on under the Future Jobs Fund and who are working to some
     level of formal training. When mapping there is often some confusion over the difference between a
     trainee and a service user and it is possible that the numbers are sometimes counted twice.

     Conversations with Social Firms would suggest that the number of people who are really trainees on
     time limited training leading to a qualification (not permanent employees and not also service users)
     is very low and in reality is likely to be lower than the number of service users attending for work
     experience.


                       Summary of Trainees per Week (average number) in Social Firm Businesses 2010

                                                       Number of Firms      Total No. of
                                  Number of                                                      Average No. of       % of Firms that
                                                          that Take         Trainees per
                                Firms Mapped                                                    Trainees per Firm     Take Trainees
                                                          Trainees             Week

           All     English
           Regions                      94                    23                428                    19                  24%
           Northern
           Ireland                       4                    3                   41                   14                  75%
           Scotland                     33                    7                 104                    15                  21%
           Wales                        15                    1                   9                    9                      7%
           Total                        146                  34                 582                    17                 23%
           Table 5




     Volunteers

     The number of firms that have volunteers, at just 27%, is slightly less than those claiming to take
     trainees. The focus of volunteering is split roughly 50/50 between people with mental health needs
     and those with learning disabilities.

     The later section on staff support indicates that most firms have volunteer agreements in place and
     there was a clear distinction made between the roles and responsibilities of workers and volunteers,
     as required by legislation.

                       Summary of Businesses in the Social Firm Sector that have Disadvantaged People
                                              Attending as Volunteers 2010
             Number          Number          Total No. of   Average No.      % of         No. of       % of Firms    No. of Firms   % of Firms
             of Firms        of Firms        volunteers          of       Firms that     Social         that have     that focus     that have
             Mapped         that have         per Week       volunteers      have      Firms that      volunteers    on learning    volunteers
                            volunteer                         per Firm    volunteer     focus on       with mental     disability       with
                                 s                                            s          mental           health       and have       learning
                                                                                       health and         needs       volunteers    disabilities
                                                                                          have
                                                                                       volunteers

England         94             26               166                6        28%            8                32%          11             42%
Northern
Ireland            4           1                  3                3        25%            1                100%          1             100%
Scotland        33             10               136               14        30%            7                70%           6             60%

Wales           15             2                  6                3        13%            1                50%           1             50%

Total          146             39               311                8        27%            17               44%          19             49%
Table 6




                                                                                                                                         14
Businesses – Trading Sectors

Since 2006 there has been little change in the type of products and services offered and their level of
representation in the sector. In 2006 catering represented nearly 23% of the sector whilst recycling,
horticulture and training were all around 10%.

Catering continues to be the largest trading sector (numbers of firms) but the percentage share has
reduced and now accounts for 19% of all businesses or parts of businesses.

Recycling (waste, wood, electrical, furniture, white goods and IT), which was marginally below
horticultural, is now ahead with 10% of the firms working in recycling. Within the ‘horticulture’ label
(7% of firms) the emphasis is now very much on contract gardening and maintenance services and,
as can be seen in Chart 5 below, this sector is now shown as grounds/garden
maintenance/horticulture.




Trading Sectors and Income

Of the businesses in the Social Firm sector, 83% are in just seven trading sectors. These are shown
in Table 7 overleaf. This table also illustrates the changes in numbers within these groupings since
2006.

Training is shown as up by a huge 113%. This ‘jump’ is likely to be due to firms that carried out
training previously but where it wasn’t counted as an income earner. This is possibly because the
income was at a low level and it wasn’t considered as income. However, it is more likely that either
the training was previously gained without a competitive tender and/or disadvantaged staff were not
fully involved in providing that training. If so this was not counted as a trading income.

These seven trading sectors between them generate in the region of £20 million in trading income per
year. More information on businesses and their trading sectors can be found in Appendix 6.




                                                                                                    15
Business Focus - the seven most popular business types in 2010
                                                                            Percentage
                                  Numbers                                                            Percentage of the sector
                                                  Numbers 2010        increase/decrease since
                                    2006                                                                     in 2010
                                                                                2006

      Total of whole sector          137               181                      32%

               Catering              35                37                        6%                            21%
               Training              15                32                      113%                            18%
           All recycling             16                20                       25%                            11%
                Retail               12                19                       58%                            11%
     Grounds maintenance,
     gardening & horticulture        15                14                        -7%                            8%

         Packaging, mail
            fulfilment               11                12                        9%                             7%
      Printing/print finishing        4                12                      200%
                                                                                                                7%
          Total of top 7            108                146                      35%                            83%
      Percentage of whole           79%               83%

     Please note: The majority of firms are not single focus e.g. furniture recycling companies have retail sales and so will be
     counted twice. Similarly many firms also have training as part of their commercial income.

     Table 7




National Products and Services

Since the last full mapping the number of nationally available products and services has grown and
there are now 41 enterprises in the Social Firm sector that sell nationally. This is almost 23% of the
sector as a whole in comparison to the wider social enterprise sector where just over 10% of
enterprises offer goods and services nationally. Of the national firms:

•   26 are in England regions (63%)
•   11 are in Scotland (27%)
•   4 are in Wales (10%)

Higher earning Trading Sectors

Another way to look at the businesses in the sector is to view the top 20 earners. These firms all
operate within one or more of the following ten trading sectors:

    1. Light engineering
    2. Equipment provision repair and maintenance
    3. Manufacturing
    4. Recycling - white goods, furniture, retail, IT, waste
    5. Fulfilment, mailing, storage, packaging
    6. Retail
    7. Furniture manufacture
    8. Facilities management (includes office management, conference and catering)
    9. Contract grounds maintenance, horticulture, gardening
    10. IT services and training




                                                                                                                                   16
Just under half of the top 20 earners (which are considered further in the following section) are
business that began as supported factories. More information on supported factories can be found at
the end of Appendices 1, 4 and 6.


Growth Rates

Bikeworks
   • Founded in 2007 and a 2009 Social Enterprise Award winner
   • In its first year Bikeworks had a trading income of £175,000
   • This rose to £512,000 in 2008 - a growth rate of 193%

The Soap Co (Keswick)
   • Began trading in 2007 - had a first year income of £18,000
   • This rose to £83,000 in 2009 - a growth rate of 361%

The RBS SE100 Data Report published growth rates on three Social Firms:-

Mow & Grow - began trading June 2006, have had a growth rate of an extraordinary 710%
Brighter Future Workshop - trading began 2005 & has an excellent growth rate of nearly 83%
Oxford Wood Recycling - trading began 2005 & also has a very impressive growth rate of 76%


Businesses – Income

Income in the Social Firm sector, as for the wider social enterprise sector, can be a combination of
commercial (earned) and non-commercial (grants etc). Both are considered in this section. Chart 6,
shown a little further on, shows the breakdown of commercial and non-commercial income by regions
and nations and very clearly demonstrates the emphasis on earned income.

Although a number of enterprises are reluctant to provide financial information which is regarded as
commercially sensitive, mapping has collected some solid financial information from which the value
of the sector as a whole can be calculated.

Commercial Income

Mapping suggests that 91% of the total income to the sector is earned and that

  1. within emerging Social Firms:
      • 71% of their total income comes from trade
      • 47% earn all their income from trade
      • 66% earn more than 50% of their income from trade

  2. within Social Firms:
     • 92% of their total income comes from trade
     • 49% earn all their income from trade
     • 74% of businesses earn 75% or more of their income from trade

  3. across the sector as a whole:
     • 9% of businesses earn 100% of their income from trade
     • 74% of businesses earn 75% or more of their income from trade


The income figures for emerging Social Firms (shown in 1. above) would seem to suggest that
organisations are now being more cautious and seeking to grow the levels of income before taking on
more disadvantaged staff. However the percentages given for income from trade should be treated
with real caution. Given that other costs, e.g. overheads, staff support and premises are often not
factored in it is known that the overall percentage of income from trade will be lower than shown. The

                                                                                                   17
figures given for the sector overall will, of course, be affected by the likely inaccuracies within the
percentages given for emerging Social Firms.

The top 20 earners in the top ten trading groups (mentioned above) earned just over £48 million
between them in 2009. Although almost half of this was earned by The Pluss Organisation (in the
South West) the other sectors together still contribute significantly to the earnings of the Social Firm
sector.

From Table 8 it can be seen that:

    •   75% of businesses in the sector have commercial income of under £250,000
    •   87% of the sector is made up of businesses that earn up to £500,000
    •   11 businesses earn between £500K and £5m and just one earns over £5m

Analysis also suggests that:

    •   the average earned income per business is just under £329k; and
    •   the median figure for earned income per business is £175k.



               Commercial Income by Bands for Social Firms & Emerging Social Firms 2010

                                           Northern
                               England                 Scotland     Wales        Total    Percentage
                                            Ireland
    Commercial Income:
    Under £250K                  52           3          18           7           81        75%
    Over £250K under £500K          9         0           4           0           13        12%
    Over £500K under £1m            6         0           0           1           7          7%
    Over £1m under £5m              3         0           1           2           6          6%
    Over £5m                        1         0           0           0           1          1%
                                                                                 107        100%
    Table 8




Commercial Income and Staffing

Analysis indicates that:

•   within emerging Social Firms the commercial income per each full time equivalent employee is
    just over £15,750;

•   within Social Firms the commercial income per each full time equivalent employee is a fraction
    under £39,000; and

•   across the sector as a whole the commercial income per each full time equivalent employee is
    approx £36,000.




                                                                                                       18
Chart 6


Chart 6 above shows the relationship between earned and non-earned income in the Social Firms
sector by regions and nations.

Non-Commercial Income

Information from respondents indicates that just 9% of the total income in the Social Firm sector is
non-commercial. The focus for non–commercial income is within emerging Social Firms where this is
just over 29%. As shown in Chart 6 the areas with most non-commercial income are London and
Scotland.

Information on the types of non-commercial income received are shown in Table 9 below which also
suggest that only 33% of businesses in the Social Firm sector receive non commercial income. Other
information collected on income suggests that 49% of firms receive some level of non-commercial
income. This latter figure is thought to be a more realistic representation – certainly for emerging
Social Firms.

Firms that do have non-commercial income tend to receive this from more than one source.

                    Sources of Non Commercial Income Within the Social Firms Sector 2010

                                                Northern
                                England                         Scotland         Wales   Total
                                                 Ireland
          Charity                    5               0               4             3      12
          Grant        Giving
                                    11              1                9             3      24
          Trust
          Health                     1              2                8             3      14
          Other                      6              0                3             0       9
          SLA                        8              1               10             1      20
          Social Services            2              0                3             3      8
          Base: of 146 respondents 48 said they received non-commercial income
          Table 9




                                                                                                 19
Whilst this relatively low reliance on non-commercial income appears very positive this information
does need to be tempered with the knowledge that firms, and in particular, emerging Social Firms,
receive support from their parent organisation. The support provided is often with the cost of premises
and staff support. Given that these costs are often not factored in the level of non-commercial income
is likely to be higher, and perhaps significantly so, within emerging Social Firms.

Mapping suggests:

   1. Within emerging Social Firms;
      • the non-commercial income received for every FTE is in the region of £6,500

   2. Within Social Firms;
      • the non commercial income received for every FTE is in the region of £3,400

   3. Across the sector as a whole that;
      • the non commercial income received for every full time equivalent employee is in the
         region of £3,700.

Businesses - Management, Support and Quality

The subjective mapping questions can be roughly divided into three areas – business, finance and
staff support. Tables 10, 11 and 12 below provide information on the percentage of respondents that
strongly agreed or agreed with the statements and compares this (where possible) with response in
2006. Fuller details of the responses can be found in Appendices 8, 9 and 10.

Business Management

                                              Business Management


    Using a five point ‘Strongly Agree to Strongly Disagree scale’ respondents were asked to grade the
    following statements.

                                Statement                              Percentage that       In 2006
                                                                       strongly agreed   percentage that
                                                                          or agreed      agreed with the
                                                                                           statement
    Our constitution demonstrates a strong commitment to the
                                                                            90%
    employment of severely disadvantaged people within our business.

    Our Business Plan is in place, up to date and actively used.            73%               11%

    Our Marketing Plan is in place, up to date and actively used.           57%               30%

    There is a management structure that supports trading as the
                                                                            93%               60%
    primary means of achieving our social purpose.
    Our Board fully understands the Social Firm model and fully
                                                                            71%
    supports our development as a Social Firm.
    Base 73
    Table 10



With regards to business management the really big change since 2006, and a most welcome one, is
the jump in the percentage of respondents who now have a business plan that is in place, up to date
and actively used. The rise in the number of firms having a marketing plan is not so dramatic
nevertheless it is a very positive development. There is certainly much more focus given on marketing
now – something that five or six years ago was rare.

In addition discussions with CEOs and managers of Social Firms clearly showed that although
businesses still find it hard to attract board members, board governance is not the issue it once was.




                                                                                                           20
Financial Management

The responses to the questions on finance would seem to suggest the sector now feels more
comfortable with financial management and has made strides in developing its ability to access good
financial information and expertise. However, the issues around business planning and management
of financial resources (as previously discussed) certainly played a part in businesses closing and the
clear development of good focused business systems is welcomed.

                                                Financial Management


    Using a five point ‘Strongly Agree to Strongly Disagree scale’ respondents were asked to grade the
    following statements.
                                                                           Percentage that     Percentage that
                                  Statement                                strongly agreed     agreed with the
                                                                              or agreed       statement in 2006
    Our Contracts/ Service Level Agreements recover all costs and
                                                                                39%
    generates a surplus

    Our cash flow situation is healthy.                                         61%                 40%

    Our financial situation is healthy.                                         61%                 17%

    We have excellent access to accurate & timely financial information.        97%                 75%

    We have excellent access to financial expertise to assist us in
                                                                                79%                 55%
    growing our business.
    Base 73
    Table 10


Staff Support

A number of mapping questions sought to find out more about the quality of the support systems that
are in place. It is perhaps not surprising that with the strong emphasis on support in the Social Firms
sector scores were generally high in this section. The response to the statement on equal
opportunities which, scored relatively low does seem a little out of place. This may well be because
Social Firms can tend towards ‘walking the walk’ without being able to spend the time ensuring
polices are written down.

                                                     Staff Support


     Using a five point ‘Strongly Agree to Strongly Disagree scale’ respondents were asked to grade the
     following statements.
                                                                            Percentage that     Percentage that
                                   Statement                                strongly agreed     agreed with the
                                                                               or agreed       statement in 2006
     Our staff support systems are excellent.                                     79%

     The emphasis placed on training is excellent.                               85%

     We have good Volunteer Agreements in place.                                 79%

     Our Health and Safety policy and implementation is excellent.               99%

     Our policies and procedures on environmental sustainability are             94%
     excellent.

     Base 48
     Table 12




                                                                                                                   21
The high score given to the question on environmental sustainability is also of note.

Some Social Firms have clearly given a great deal of thought and put a lot of time and effort into
being an environmentally responsible company. For others the will is there but actions are limited by
a variety of outside influences and an agreement that everything is being done may be set within the
confines of what is allowable by others.

Quality

The consolidation of Social Firms, as evidenced by the increased number of Social Firms (rather than
emerging Social Firms), is thought to go hand in hand with the development of quality in the sector.

There are quite a few Social Firms that would like to prove this quality by becoming Star Social Firms.
The reality of running and growing a Social Firm means that too often time cannot be spared for ‘non-
essentials’ such as proving quality by becoming a Star Social Firm.

That said firms are increasingly recognising the link between being able to confirm quality to their staff
(increasing commitment) and customers (increasing sales) and a number of Star Social Firm
applications are in progress.



                                       Social Impact
                                       The RBS SE100 Report 2010 showed that 3 Social Firms:-

                                           -   Bookdonors CIC,
                                           -   Frame of Mind CIC, and
                                           -   Mow and Grow

                                       and two organisations that run Social Firms:-

                                           -   Broomby and
                                           -   The Create Foundation CIC,

                                       were featured in the section on measuring and
                                       communicating their social impact…

                                       …each scored 4/5 out of a possible 5/5.


It is clear that the Social Firm sector is maturing and that the businesses within it are gaining a
reputation for successfully balancing the needs of the business and the needs of the staff within them.
Numbers of Social Firms and emerging Social Firms either have good social accounting systems in
place; e.g. NMC Design+Print, or are bringing them in; e.g. wood@aldingbourne and Decoda.

The quality of Social Firms was recognised with Pack-IT, Bikeworks and Brighter Future Workshop
winning three of the four categories in the 2009 Social Enterprise Awards.

Quality is a broad church and responses to the two mapping questions, shown in the box on the next
page, tend to reinforce the view that both development and planning are gaining in quality. A
representative selection of the responses can be found in Appendices 11 (Change) and 12
(Significant Issues in Expanding).




                                                                                                       22
Mapping Questions on Change and Significant Issues for the Future
        1. What was the greatest change in your business in the last year?

        2. What are the two most significant issues you face in expanding your enterprise?




Responses to such questions are inevitably going to come under three main areas:

       1. People
       2. Development
       3. Finance

These areas are, of course, closely interlinked and whether looking back or looking forward will
predominate. It was found both emerging Social Firms and Social Firms when considering their
greatest change, had an essentially positive message i.e. that in spite of the difficult economic climate
they are developing and growing with increased income and more (and more engaged) staff.

Looking forward, unsurprisingly the greatest issue being faced is finance. The top financial concern is
funding/obtaining finance; to get into new ventures and to move to new premises for capital growth.10
Concerns were voiced over cash flow and finding ways to increase the level of sales to stay in
business. People and finance were closely linked with concerns about getting in more money to
employ more, much needed, staff. Marketing is now firmly on the agenda.

Taken overall responses do indicate that the sector has done a lot of growing up in the last four
years. In doing so has become a sector where the quality of the businesses is much more evident.
Staff support and the eternal question of how to support people to come off benefits remains vital.
What is new is more emphasis on obtaining finance for growth, the more strategic outlook, the
acknowledgement that marketing has an important part to play and real evidence of a sector that is
balancing business and staff needs not just with care, but also with professionalism.




10
     The work that Social Firms UK has been carrying out with Remploy under the TEP scheme is relevant to this concern. More than 10
     disabled people have currently benefitted by working in Social Firms under this scheme the cost of which has averaged around £3,000 per
     year for three years. More information on the actions being taken by Social Firms UK can be found in their Manifesto Business Changing
     Lives. . Go to www.socialfirmsuk.co.uk.



                                                                                                                                        23
CONCLUSION

Whilst Social Firms seem to be holding up well in the recession (as does the wider social enterprise
sector11) growth of the sector across the UK as a whole is modest. This is not entirely unexpected,
given the harsh economic conditions in recent years for business generally; the emphasis has been
on survival rather than growth in existing Social Firms and new starts have been appearing at a lower
rate than previous years. There is a recognition that growth in the Social Firm sector should be
through scaling out (more) rather than scaling up (size) so continued emphasis on start-up Social
Firm businesses is more important than ever. The Social Firm sector remains positive despite the
above factors and the 2010 mapping statistics reflect its achievements which are all the more
impressive because of the difficult trading conditions of recent times.

From this mapping report it can be concluded that:

•       Although growth is uneven and a little slow the sector remains positive with more firms starting
        up, creating more employment opportunities.
•       There have been losses to the sector but these are within the expectations of the SME sector as
        a whole. Multiple firms that grow quickly under one umbrella do seem to be more vulnerable.
•       There is a more solid base of Social Firms that have been around for a long time.
•       The Social Firm sector is one that really does seek to ‘earn its keep’.
•       The sector has made significant strides with evidence of a greater professionalism and more
        emphasis on becoming quality businesses. This is evidenced by the greater emphasis on sound
        financial systems businesses planning, marketing and good governance.

For continuation of the mapping process itself, ways to improve knowledge of possible new entrants
to the Social Firm sector need to be explored. Social Firms UK actively uses social media platforms to
contribute to online conversations, trying to capture content regarding possible emerging Social Firms
and/or social enterprises which are focused on job creation, though this is only one channel and
others need to be mined. Referrals from other support agencies in the wider sector need to be
generated as they may well be the first local port of call with regards to business support.

Whilst the future remains uncertain for UK business, the new Coalition Government’s ownership of
‘Big Society’ and what that represents could be good news for the Social Firm sector. As the
government wants everyone to do more for less, this could open up trade opportunities as the private
and public sector seek to establish civil society credentials via social impact clauses and support for
the sector generally. It will be increasingly important for Social Firms to hone how they use social
impact measurement in both the tendering process and across their marketing activity as a whole.

Capitalising on this political agenda is key to the sector’s growth over the next few years and we are
working hard to ensure that our members are represented at a national level. How this
decentralisation is translated at a local or regional level has yet to be defined though will invariably
mean a lot more activity and contact for already stretched business owners and managers.

Commercial interest in the sector is becoming more evident and some good individual examples have
been well established for many years. Private company engagement as a whole though remains both
time-consuming and unscientific. Sharing best practice case studies are one way of exploring what
has worked for others and examining approaches which may have a broader application.

The wholesale commitment to quality across the Social Firm sector bodes well for the active
promotion of trade activity and future sustainability; though good contract stories need to be shared
and co-promoted by the sector as a whole. A more collective approach to business opportunities

11
     State of Social Enterprise Survey 2009. Published by the Social Enterprise Coalition.



                                                                                                      24
makes both financial and time-management sense, though how these approaches could be
coordinated presents a challenge to the sector. We are currently looking at how Social Firms UK can
facilitate group-wide trade and will continue to develop relationships which could realise these
opportunities.

Financial stability remains the most pressing concern for Social Firm managers and it is unclear how
the Big Society Bank launched recently by the Coalition could alleviate this situation. The use of
dormant bank accounts coupled with private capital to support and enable the growth of social
projects sounds like it should directly benefit the sector; though it will invariably mean more
engagement and possibly a repackaging to meet requirements.

Finally, the overall conclusion from this most recent mapping information is that the sector has moved
on. Although there are concerns, and emerging Social Firms in particular do need support, the sector
can congratulate itself on the progress made. Businesses are much more aware of the challenges
they face. They have a positive approach, are open to new ideas and seek new ways to expand via
new markets.. We feel confident that the sector is poised to use the development and business
knowledge gained for the next stage in growing strong, successful and quality businesses in the
Social Firm sector, with ultimate benefit and value to people with severe disadvantages in the labour
market, the economy and society as a whole.

In 2006 the estimated cost savings of the Social Firm sector to the state were £30m in benefit costs,
£8.5m in health costs and around £1m in Social Services spend. This data will now be updated using
the 2010 mapping information contained in this important report - which could not have been
produced at a better time than this when the country is having to make significant savings and
scrutinise the value of all its work-related programmes. Social Firms UK has invested in undertaking
this mapping exercise since 2003 and its value at a national level is immense; we are certain that its
contents will assist in the continued policy lobbying for recognition of support of the Social Firm model
which will, in turn, be beneficial to the businesses on the ground actually creating these much needed
jobs for people otherwise excluded from the labour market through disability or disadvantage.

The Social Firm model makes sense; this mapping report reflects the reality of that.




                                                                                                      25
Appendix 1

                        Businesses in the Social Firm Sector 2010


 Region/Nation            Name of business                     Social Firm Status

                                                        Social Firm   Emerging Social Firm
E Mids           Rumbles At The Lawn                                  Emerging Social Firm
Eastern          Furniture Link Bedford                 Social Firm
Eastern          Daily Bread Co-operative (Cambridge)   Social Firm
Eastern          MillRace IT                            Social Firm
Eastern          Mow & Grow Ltd (Norfolk)               Social Firm
Eastern          Norfolk Industries*                    Social Firm
Eastern          Screenreader.net CIC                   Social Firm
Eastern          Whitehouse Enterprises*                Social Firm
Eastern          Created 4 You*                                       Emerging Social Firm
Eastern          Café Libra (Felixstowe)*                             Emerging Social Firm
Eastern          Café Libra (Ipswich)*                                Emerging Social Firm
Eastern          Creative Sign Solutions*                             Emerging Social Firm
Eastern          Graphic Design & Print                               Emerging Social Firm
Eastern          Mow and Grow (Norwich City)                          Emerging Social Firm
Eastern          Mow and Grow(Suffolk)                                Emerging Social Firm
Eastern          Mow and Grow (Cambridgeshire,
                 recycling)                                           Emerging Social Firm
London           Access Print, Copy & Design                          Emerging Social Firm
London           Bikeworks CIC                          Social Firm
London           Blue Sky Development & Regeneration    Social Firm
London           Café Nova Interchange                  Social Firm
London           Catering2Order                         Social Firm
London           Core Landscapes                        Social Firm
London           CUC
                                                        Social Firm
London           First Fruit Furniture Warehouse        Social Firm
London           Groundswell UK                         Social Firm
London           GWB Products Ltd*                      Social Firm
London           Lambeth Accord                         Social Firm
London           Third Sector Mailing                   Social Firm
London           Newco Products*                        Social Firm
London           Clean Slate Distribution (London)                    Emerging Social Firm
London           Equals Training                                      Emerging Social Firm
London           Many Hands Painting, Decorating &
                 Home Maintenance Services                            Emerging Social Firm
London           Many Hands Office Services                           Emerging Social Firm
London           Meanwhile Wildlife Garden Landscape
                 and Garden Services                                  Emerging Social Firm
London           Meanwhile Wildlife Garden Plant and
                 Garden Supplies                                      Emerging Social Firm
London           Pearce Distribution Services Ltd                     Emerging Social Firm
London           Scotch Bonnet Catering                               Emerging Social Firm



                                                                                             26
N East      Ayresome Industries*                       Social Firm
N East      B2G Diner                                  Social Firm
N East      Busy Bodies                                Social Firm
N East      Addictions UK                              Social Firm
N East      Green Box                                                Emerging Social Firm
N Ireland   Acceptable Enterprises (Larne) Ltd         Social Firm
N Ireland   Daisies Café                               Social Firm
                             nd
N Ireland   Daisies Café (2 one to open)               Social Firm
N Ireland   Daisies Café (newly opened third)                        Emerging Social Firm
n Ireland   The Orchardville Company                   Social Firm
N Ireland   Edgecumbe Café                                           Emerging Social Firm
N Ireland   Edgecumbe Catering Services                              Emerging Social Firm
N West      Brighter Future Mobility & Training        Social Firm
N West      CREATE UK                                  Social Firm
N West      NMC Design & Print                         Social Firm
N West      The Soap Co. (Keswick)                     Social Firm
N West      Benchmark                                                Emerging Social Firm
S East      Able Types                                 Social Firm
S East      Netherne Printing Services                 Social Firm
S East      Oxford Wood Recycling                      Social Firm
S East      Riverside Centre                           Social Firm
S East      Travel Matters                             Social Firm
S East      Frame of Mind                              Social Firm
S East      Sector Mailing Services                    Social Firm
S East      Sunlight Design Print and Publishing
            (Parent Sunlight Social Enterprises CIC)   Social Firm

S East      Sunlight People (Parent Sunlight Social
            Enterprises CIC)                           Social Firm
S East      The Living Room (Parent Sunlight
            Social Enterprises CIC)                    Social Firm
S East      wood@aldingbourne                                        Emerging Social Firm
S East      Decoda                                                   Emerging Social Firm
S East      Furniture NOW!                                           Emerging Social Firm
S East      Sunlight Studios (Parent Sunlight Social
            Enterprises CIC)                                         Emerging Social Firm
S West      Hillcrest Branch                           Social Firm
S West      Aquamacs Devon & Cornwall                  Social Firm
S West      Clean Slate Distribution                   Social Firm
S West      The Pluss Organisation*                    Social Firm
S West      The Vassell Centre                         Social Firm
S West      Clean Slate Employment                                   Emerging Social Firm
S West      Clean Slate Training                                     Emerging Social Firm
S West      Green Machine                                            Emerging Social Firm
Scotland    Aberdeen Care & Repair                                   Emerging Social Firm
Scotland    At Work Scotland                                         Emerging Social Firm
Scotland    Bookdonors CIC                             Social Firm
Scotland    Candies Cuisine                            Social Firm



                                                                                            27
Scotland   Edinburgh Embroidery Services                Social Firm
Scotland   Erskine Furniture*                           Social Firm
Scotland   Erskine Print*                               Social Firm
Scotland   Green Tracks                                 Social Firm
Scotland   Haven Products Ltd*                          Social Firm
Scotland   LAMH Recycle                                 Social Firm   Emerging Social Firm
Scotland   Parkview Laundry                             Social Firm
Scotland   RSB(Royal     Strathclyde       Blindcraft
           Industries)*                                 Social Firm
Scotland   Shetland Soap Company                        Social Firm
Scotland   Six Mary's Place Guest House                 Social Firm
Scotland   Solstice Nurseries                           Social Firm
Scotland   Spoon Café                                   Social Firm
Scotland   The Soap Co. (Edinburgh)                     Social Firm
Scotland   Touchwood Recycling Ltd                      Social Firm
Scotland   Unity Dinner                                 Social Firm
Scotland   Upkeep                                       Social Firm
Scotland   Watch Us Grow In The Community               Social Firm
Scotland   With People                                  Social Firm
Scotland   CFINE                                                      Emerging Social Firm
Scotland   Computer Health Centre                                     Emerging Social Firm
Scotland   Erskine Garden Centre                                      Emerging Social Firm
Scotland   FBS Enterprises                                            Emerging Social Firm
Scotland   Foyer Works                                                Emerging Social Firm
Scotland   Furniture Plus Fife                                        Emerging Social Firm
Scotland   Gallery on the Corner                                      Emerging Social Firm
Scotland   Grangemouth Industries*                                    Emerging Social Firm
Scotland   Grean                                                      Emerging Social Firm
Scotland   Hebridean Chocolate                                        Emerging Social Firm
Scotland   Home Improvement Project                                   Emerging Social Firm
Scotland   Kingsmeadow Catering                                       Emerging Social Firm
Scotland   Ness Soaps                                                 Emerging Social Firm
Scotland   Nursery Needs @ Watch Us Grow                              Emerging Social Firm
Scotland   Rag Tag N Textile                                          Emerging Social Firm
Scotland   Raploch Community Enterprise                               Emerging Social Firm
Scotland   Reid     Macewan         Training    and
           Conference Centre                                          Emerging Social Firm
Scotland   Restart Orkney                                             Emerging Social Firm
Scotland   Rosie's Café                                               Emerging Social Firm
Scotland   Send-it Fulfilment Solutions                               Emerging Social Firm
Scotland   Shetland Coffee Company                                    Emerging Social Firm
Scotland   Short Cut                                                  Emerging Social Firm
Scotland   the bread maker                                            Emerging Social Firm
Scotland   The Community Warehouse                                    Emerging Social Firm
Scotland   TimberWORKS!                                               Emerging Social Firm
Scotland   Vanishing Willows Cafe                                     Emerging Social Firm
Scotland   VIP Partners                                               Emerging Social Firm
W Mids     Four Seasons Function Room                                 Emerging Social Firm


                                                                                             28
West Mids        All Formats: Sign Making                  Social Firm
West Mids        All Formats: Transcription Services       Social Firm
West Mids        Concept Conference Centre                 Social Firm
West Mids        Green     Horizons       (Pathways    -
                 Shropshire) Ltd                           Social Firm
West Mids        icycle                                    Social Firm
West Mids        Manufacturing Link*                       Social Firm
West Mids        Pack-IT Hereford                          Social Firm
West Mids        Packaging Link*                           Social Firm
West Mids        The Frogmeadow Community Café
                 (Pathways - Shropshire Ltd)               Social Firm
West Mids        Top Bites*                                Social Firm
West Mids        Benedict's Coffee Room                                  Emerging Social Firm
West Mids        Cherry Orchard Gardening Service                        Emerging Social Firm
West Mids        Kings Hill Nurseries                                    Emerging Social Firm
West Mids        Mow and Grow (North Birmingham)                         Emerging Social Firm
West Mids        Newpath Contract Packers                                Emerging Social Firm
West Mids        Oak Farm Tea Rooms (Pathways
                 Shropshire Ltd)                                         Emerging Social Firm
West Mids        Textiles By St. Annes                                   Emerging Social Firm
Wales            Cae Post                                  Social Firm
Wales            MTIB*                                     Social Firm
Wales            Green Shoots Catering                     Social Firm
Wales            Pack-IT Promotions                        Social Firm
Wales            Pembrokeshire FRAME Ltd                   Social Firm
Wales            Suresprung Furnishings*                   Social Firm
Wales            Your Pets Warehouse Ltd                   Social Firm
Wales            Beacons Creative Wales Ltd                              Emerging Social Firm
Wales            Dee-Tex Project                                         Emerging Social Firm
Wales            EB's Coffee Shop                                        Emerging Social Firm
Wales            Green Horizons Merthyr Ltd                              Emerging Social Firm
Wales            Morphious Ltd                                           Emerging Social Firm
Wales            Mow and Grow (Wales)                                    Emerging Social Firm
Wales            Park View Café                                          Emerging Social Firm
Wales            Not Just Nuts                                           Emerging Social Firm
Wales            Ten Green Bottles Powys CIC                             Emerging Social Firm
Yorks & Humber   Buster's Café (Doncaster)                 Social Firm
Yorks & Humber   Buster's Café (Becklin Centre)            Social Firm
Yorks & Humber   Buster's Coffee Merchants                 Social Firm
Yorks & Humber   Create Café Create (Boar Lane)            Social Firm
Yorks & Humber   Create Cafe (Leeds Parish Church)         Social Firm
Yorks & Humber   Create Food                               Social Firm
Yorks & Humber   Create Housekeeping                       Social Firm
Yorks & Humber   Cream Catering                            Social Firm
Yorks & Humber   Electroville                              Social Firm
Yorks & Humber   just coffee people                        Social Firm
Yorks & Humber   Lippy People CIC                          Social Firm
Yorks & Humber   People Matters (Leeds) CIC                Social Firm


                                                                                                29
Yorks & Humber     Pugney's Waterpark Café                    Social Firm
Yorks & Humber     Rerun                                      Social Firm
Yorks & Humber     Speakup                                    Social Firm
Yorks & Humber     Viewpoint Sheffield Branch)                Social Firm
Yorks & Humber     Viewpoint (Leeds Branch)                   Social Firm
Yorks & Humber     Catering Plus Ltd                                           Emerging Social Firm
Yorks & Humber     Mow and Grow (Grimsby)                                      Emerging Social Firm
Yorks & Humber     Friendly Resource Company                                   Emerging Social Firm
Yorks & Humber     Friendly Training Company                                   Emerging Social Firm
Yorks & Humber     Friendly Information Company                                Emerging Social Firm

Please Note: Those firms marked with an * are either ones that started life as a supported factory or are more
recent developments of the parent firm e.g. Created 4 You, Creative Sign Solutions and the two Café Libra are
all more recent enterprises started by Whitehouse Enterprises. The information on which firms in Scotland
started as supported factories has not been fully verified.

Historically supported factories were provided with a great deal of support via government programmes. This
enabled firms to develop and invest in expensive manufacturing equipment and is the reason why their income
levels are, in the main, higher than other Social Firms. All these businesses have developed into ones in which
the workforce is actively empowered and the company works to the Social Firms UK Values-Based Checklist.




                                                                                                            30
Appendix 2


          Numbers of enterprises that have are no longer a part of the
                              Social Firm sector
               Region       Ceased      Social enterprise but   Total
                            Trading      not in Social Firm
                                               sector

       East Midlands           1                 5                6

       Eastern                 1                 2                3

       London                  1                 4                5

       North East              1                 1                2

       North West              2                 2                4

       N Ireland               0                 0                0

       Scotland                3                 0                3

       South East              2                 1                3

       South West              0                 0                0

       Wales                   1                 1                2

       West Midlands           4                 2                5

       Yorkshire & Humber      1                 1                2

       Total                  17                 19              35




                                                                         31
Appendix 3




                                             Summary of Target Employee Groups by Region 2010


                 Employ from                                                                                  Ex
                                               Learning     MH & LD    Physical     Sensory
                  all target Mental Health                                                    Ex Offenders Substance   Homeless   BEM
                                               Disability   Combined   Disability    Loss
                   groups                                                                                   Misuse

East Mids            0             0               1           1           0          0           0           0           0        0
Eastern              3             2               3           5           1          2           0           0           0        0
London               1             3               7          10           5          5           1                       3        1
N East               3             1               1           2                      0           0           1           0        0
N West               1             2                           2           1          0           0           0           0        0
S East               2             5               2           7           0          0           0           0           0        0
S West               1             2               1           3           1          1           0           0           1        0
West Mids            1             7               7          14           6          10          1           3           0        3
Yorks & Humber
                     3            2                3           5           1          1           3           3           4        0
England              3            2                4           6           1          2           0           0           0        0
N Ireland            0            1                3           4           0          0           0           0           0        0
Wales                1            9                7          16           5          3           0           2           0        2
Scotland             5            16               9          25           6          3           2           1           0        0
Grand Total
                     18           26              29          55          16          21          5           7           8        4




                                                                                                                                        32
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010
Social Firm Sector Mapping 2010

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Social Firm Sector Mapping 2010

  • 1. Mapping Report The UK Social Firm Sector 2010
  • 2. CONTENTS EXECUTIVE SUMMARY……………………………………………………………………………………2 ACKNOWLEDGEMENTS ………………………………………………………………………………….3 INTRODUCTION……………………………………………………………………………………………. 4 AIMS AND OBJECTIVES………………………………………………………………………………….. 5 METHODOLOGY…………………………………………………………………………………………… 5 Mapping Meetings Mapping via Telephone Conversations Mapping via Email Shared Mapping Issues Other Means of Obtaining Information CHANGES AND DEVELOPMENTS IN THE SOCIAL FIRM SECTOR………………………………..6 Numbers and Sector Growth……………………………………………………………………………...6 Comparison with 2006 Businesses that have exited the sector Identifying New Entrants to the Social Firm Sector The Current State of the Social Firm Sector…………………………………………………………...9 Legal Form Size, Spread and Focus…………………………………………………………………………………. 10 Size and Spread Movement within the Social Firm sector Target Employee Groups Employee Numbers Service Users Trainees Volunteers Businesses – Trading Sectors…………………………………………………………………………..15 Trading Sectors and Income National Products and Services Higher Earning Trading Sectors Businesses – Income……………………………………………………………………………………. 17 Commercial Income Non-commercial Income Businesses – Management, Support and Quality …………………………………………………. 20 Business Management Financial Management Staff Support Quality CONCLUSION……………………………………………………………………………………………...23 APPENDICES………………………………………………………………………………………...........24 Appendix 1 Businesses in the Social Firm sect Appendix 2 Businesses that have exited the sector Appendix 3 Target Employee Groups Appendix 4 Employment Figures Appendix 5 Income and Employment in the Social Firm Sector Appendix 6 Trading in the Social Firm Sector Appendix 7 The top 20 Income Earners in the Social Firm Sector Appendix 8 Responses to questions on Business Management 2010 Appendix 9 Responses to questions on Financial Management Appendix 10 Responses to questions on Staff Support Appendix 11 Responses to questions on Change Appendix 12 Responses to questions on Significant Issues for the Future 1
  • 3. EXECUTIVE SUMMARY This report, the first detailed one since 2006, seeks to provide a picture of the Social Firm sector in 2010 and examine some of the changes to the sector in the last four years in the UK. Since the last report the sector has widened its focus to include other disadvantaged groups such as ex-offenders, homeless people and those who have previously been involved in substance abuse. This report comes as a result of ongoing work to map the sector and is therefore not based on a snapshot in time but rather information gathered over time. As such it cannot be fully up to date: something that should be borne in mind when being read. Some of the collected data is incomplete (e.g. employment figures) and so the actual information collected has been used to inform sensible and realistic projections which may be of assistance but are therefore not completely accurate. The purpose of this mapping report is to provide as factual a picture as possible on the Social Firm sector: its size (people employed, turnover), growth and the issues faced in expanding, structure (legal form, industry sectors, geographical spread), its successes and thoughts on future challenges. Some Mapping Highlights • The sector has grown by 32% since 2006 • There are now 99 Social Firms and 82 emerging Social Firms • Company Limited by Guarantee is the most favoured legal structure • In England, Yorkshire & Humberside has the highest number of enterprises in the Social Firm sector (22) whilst the Eastern region has the highest growth rate at 150% • Supporting people with mental health needs remains the largest target employee group • The sector now includes employment for ex-offenders, the homeless and ex-substance abusers • 1064 severely disadvantaged people have found paid employment within the sector – 58% of its total workforce • Projected increase in employment of 62% across the sector since 2006 • Top three business sectors are Catering, Recycling and Horticulture • Just seven business sectors represents 83% of Social Firms’ trading activities • 74% of Social Firms earn 75% or more of their income from trade • Double the amount of Social Firms trade nationally compared with the social enterprise sector as a whole • 87% of Social Firms have an earned income of up to £500k • The top 4 income earners all started out as supported factories 2
  • 4. ACKNOWLEDGEMENTS We can only report on what we know and what people share with us. Obtaining information from busy people is not always easy. Running a Social Firm is hard work and managers rarely, if ever, really have the time to provide the information we seek. But information is knowledge. The information that managers and CEOs provide forms an essential part of the tools we need to work and lobby on behalf of the Social Firm sector - the businesses and the people that work within them. We are very grateful to all who have generously given their time to provide information on their business and its development as a Social Firm. Thank you 3
  • 5. INTRODUCTION Since the last full mapping report in 2006 the Social Firm landscape has changed. The focus has broadened to include other disadvantaged groups such as ex-offenders, homeless people and those who have previously been involved in substance abuse. The sector has grown; the last full mapping survey identified 137 businesses in the Social Firm sector, now we are aware of 181 that are definitely part of the sector. This report will examine the growth and changes since 2006 and present a view of the current state of the Social Firm sector. We know that the wider social enterprise sector is an increasingly important part of the business landscape in the UK1. This report provides an insight into the Social Firm sector within that landscape, the increases in the sector (in scale and complexity) and the issues it faces in expanding. Some enterprises that are mapped go out of business. This is no different to the SME sector and the time we spend gathering detailed information on these businesses is never wasted as there are always lessons to be learnt. For those new to Social Firms it is perhaps useful to look at why we believe mapping of the sector to be so important. In 2004 there was no real overview of the Social Firms sector, its growth or the quality of the firms within it. Although Social Firms UK had a clear view of what should be defined as a Social Firm and what would constitute an emerging Social Firm2 it didn’t have; • any in depth knowledge of the extent to which this was understood by and worked towards by businesses in the sector; • an overall methodology for identifying the level of development of individual Social Firms and emerging Social Firms; • a way of finding out about the quality of enterprises in the sector; or • a system for identifying new entrants to the sector. It was decided that a programme of mapping for the sector would start to address these gaps. It was hoped that mapping would also create another opportunity for dialogue with Social Firms, increasing the two way flow of information about what is needed to support Social Firms and the development of the sector as a whole. This is the second detailed mapping report. We have probably not come across all of those out there (usually categorised as ‘social enterprises’) that are Social Firms and even if we had it would not be possible to fully map every one of them; however, we are confident that this report is based on good, sound data and information. The tables and charts shown in this report provide the base number from which the information and any conclusions are drawn. We hope it provides a good insight into the sector and the information you are seeking. Let us know what you think and what additions you would like next time - and if you know of an enterprise that you think might be in the Social Firm sector, please do tell us. 1 State of Social Enterprise Survey 2009. Published by the Social Enterprise Coalition. 2 Briefly a Social Firm was described as; a market led enterprise whose social mission was the creation of good quality employment, within the enterprise, for disabled people (including mental ill health and learning disability) who are furthest from the labour market. At least 25% of the workforce would be drawn from the target disability group(s), more than 50% of the income would come from trade and any profits were principally reinvested to grow the enterprise. An emerging Social Firm was an enterprise committed to becoming a Social Firm. It would be working to a business plan that illustrated how they were going to achieve their goal and usually in the early stages of trading. Often less than 25% of the staff would have come from the target disability group(s) and/or income from trade was less than 50%. 4
  • 6. AIMS AND OBJECTIVES The aim of this report is to provide an overview of the Social Firm sector. Objectives will include such standard reporting as the numbers of known Social Firms and emerging Social Firms; their regional and national spread; the industry sectors represented; the types of legal form used; employee numbers and the percentage of commercial income. In addition the information gathered is used to gauge the size of the sector as a whole. The report will also be used as an opportunity to examine the growth of the sector and the issues affecting growth. In so doing it acknowledges that some firms are no longer trading or not trading as Social Firms and seeks to learn from the knowledge gained. METHODOLOGY Since the last mapping report the way information is collected has changed slightly. Mapping in Scotland, for instance, is the responsibility of Social Firms Scotland which undertakes it a little differently. Using the base data collected, the information and views on the mapping methodology set out here are those of Social Firms UK. Many social enterprises can, from the outside, look like Social Firms3. Before starting to fully map an organisation, time is spent obtaining more information. This always includes checking the company website and often following this up with some enquiries. Once it has been established that the enterprise is likely to be in the Social Firm sector, or close enough to be interested in becoming a Social Firm, we seek to map the enterprise. The collection of mapping information is carried out in a variety of ways but a mapping questionnaire is a major tool. This is essentially the same as in 2006. The one real change is the inclusion of some more detailed questions on self employment within the Social Firm sector. As previously the questionnaire can be divided into the objective questions – employee numbers, legal form etc and obtaining more subjective information e.g. position on such things as access to financial advice, health and safety and the emphasis placed on training and learning. Mapping Meetings Using the mapping questionnaire in a face to face meeting is by far the most effective way to obtain good rich responses to subjective questions. Meetings facilitate a really positive exchange of information and offer an opportunity for people to give some time to consider the quality and development of their Social Firm away from the day to day rush and responsibility of running a Social Firm. Although responding to the mapping questionnaire in this way takes more time the discussions that follow are seen as beneficial to the enterprise. Mapping via Telephone Conversations Time and geography mean that meetings are limited and completing questionnaires over the phone is the next best option. Responses to the more subjective questions given over the phone tend to be ‘first thoughts’ and are not normally discussed in any detail. There is no perceived benefit to enterprises from ‘telephone mapping’. As a result the information is often limited to updating details on industry sectors, employee numbers and income. Mapping via Email Sometimes questionnaires are emailed to people but return rates are very low. Responses are always limited to obtaining objective information. 3 Social enterprises are businesses that trade for a social or environmental purpose, and their profits are reinvested back into the company to help them achieve this purpose. There are many types of social enterprise. Probably one of the best known is the Eden Project whose aim is regeneration and conservation. Social Firms are another type of social enterprise. Social Firms can be identified by their social mission. This is to create jobs for people who find it hardest to get them. For more information go to: www.socialfirmsuk.co.uk 5
  • 7. Shared Mapping Issues Regardless of whether mapping information is collected face to face or over the ‘phone, responses obtaining detailed information on employee hours if the workforce is higher than around 10-15 can take time4. Some firms will provide information on the percentage of commercial income but are reluctant to disclose the actual income levels. Other Means of Obtaining Information As previously mentioned other methods are used to collect information e.g. company websites, applications to become or retain Star Social Firm5 status and projects. Some projects, for example, a recent social enterprise survey undertaken for the Romanian government provided some useful updated mapping information. CHANGES AND DEVELOPMENTS IN THE SOCIAL FIRM SECTOR Numbers and Sector Growth As with the wider social enterprise sector Social Firms vary widely in their size, the scope of their operations and turnover. In this respect Social Firms (like the social enterprise sector as a whole) mirror the SME business6 sector. At present all the enterprises in the Social Firm sector are also SMEs with just one (The Pluss Organisation7 with a turnover in the region of £23 million and staff of over 400) on the very upper limit of the SME sector. In this section the developments in the number of Social Firms, employee numbers, income, geographical spread etc will be examined. Comparison with 2006 This first section compares the number of Social Firms and emerging Social Firms since the last mapping in 2006. More in-depth information on the growth and change in the sector can be seen in Table 1 overleaf. Some of this increase can be attributed to the broadening of the definition of Social Firms to include other disadvantaged groups such as ex-offenders, homeless people and ex- substance abusers, rather than only disabled people (this changed at the end of 2006). There are now 181 businesses in the Social Firm sector The sector is made up of:- 99 Social Firms & 82 emerging Social Firms This is an overall increase of 32% since 2006 The balance between Social Firms and emerging Social Firms has changed slightly, with Social Firms increasing from 51% to 56% 4 The percentage of employees in Social Firms is calculated on the FTE (full-time equivalent) numbers to obtain an accurate picture. Where some people work just three hours per week and others may be working 12 or 16 hours obtaining this information can take some time and people are, understandably reluctant to spare the time to find the information requested. 5 The Star Social Firm is a quality standard that is awarded to Social Firms that have proved the quality of their business and the employment they provide for severely disadvantaged people. Visit www.starsocialfirms.co.uk for more information. 6 In its report, “ Small and Medium sized Enterprise (SME) Statistics for the UK and Regions 2008” the SME sector was defined by the Department for Business, Innovation and Skills as ‘businesses with a turnover of under £25 million and fewer than 250 employees. 7 The Pluss Organisation is one of a number of Social Firms that began life as a supported factory. Historically supported factories were provided with a great deal of support via government programmes. This enabled firms to develop and invest in expensive manufacturing equipment and is the reason why income levels are, in the main, higher than other Social Firms. Pluss, like other Social Firms that started out as a supported business, have developed into ones in which the workforce is actively empowered and the company works to the Social Firms UK Values-Based Checklist and, indeed, Pluss has recently been re-approved as a Star Social Firm. 6
  • 8. The last mapping report showed that between 2005 and 2006 there was an increase of 15% in the number of firms known to us in the Social Firm sector. Since 2006 the overall growth level is 32%, an average of 8% per year. These figures clearly show a slowdown in growth and the recession must play a part in this. However, a comparison between growth over 1 year and over 4 years is likely to be misleading. With hindsight we now know that the numbers of firms identified between 2005 and 2006 were not sustainable over the longer term. This suggests that taking a measure over a short period is likely to be less accurate and not a good predictor of longer term growth. Overview of Numbers Enterprises in the Social Firm Sector in 2006 and 2010 2006 2010 Percentage changes All Social Emerging Total Social Emerging Total Increase/d Increase/d Total overall Nations Firms Social Firms Social ecrease ecrease in increase/de and Firms Firms emerging Social crease Regions Social Firm Firm numbers numbers East Mids 1 6 7 0 1 1 -83% -100% -86% Eastern 5 1 6 7 8 15 700% 40% 150% London 7 8 15 12 9 21 13% 71% 40% North East 2 2 4 4 1 5 -50% 100% 25% North West 1 4 5 4 1 5 -75% 300% 0% South East 13 4 17 10 4 14 0% -23% -18% South West 2 4 6 5 3 8 -25% 150% 33% West Mids 8 17 25 10 8 18 -53% 25% -28% Yorks & Humber 7 11 18 17 5 22 -55% 143% 22% N Ireland 3 2 5 4 3 7 50% 33% 40% Wales 2 7 9 7 9 16 29% 250% 78% Scotland 13 7 20 20 29 49 314% 54% 145% Total 64 73 137 100 81 181 11% 56% 32% 2006 2010 Percentage changes Social Emerging Total Social Emerging Total Increase/d Increase/d Total overall Firms Social Firms Social ecrease ecrease in increase/de Firms Firms emerging Social crease English Social Firm regions Firm numbers combined numbers 46 57 103 69 40 109 -30% 50% 6% 2006 2010 Percentage changes Nations Social Emerging Total Soc Emerging Total Increase/d Increase/d Total Firms Social ial Social ecrease ecrease in overall Firms Fir Firms emerging Social increase/de ms Social Firm crease Firm numbers numbers N Ireland Subtotal 3 2 5 4 3 7 50% 33% 40% Scotland Subtotal 13 7 20 20 29 49 314% 54% 145% Wales Subtotal 2 7 9 6 10 16 43% 200% 78% Total - three nations 18 16 34 30 42 72 163% 67% 112% Table 1 See Appendix 1 for a complete list of the businesses currently known of in the Social Firm sector. 7
  • 9. Businesses that have exited the sector The slower growth is thought, in part, to be a result of businesses that have either not survived, or converted to other types of social enterprise. This section looks briefly at organisations that have come and gone and seeks to learn from our knowledge of why this has happened. Losses are never welcome but they need to be seen in their wider context. Social Firms are a part of the SME (small and medium enterprise) sector; a sector that in the UK houses around 3.6 million enterprises most of which (99.5%) employ less than 2508 people. More particularly of the 175,000 business that register for VAT each year most will survive their first year but, by the end of the third year around one third will have ceased trading. Previous research has suggested that the closure of Social Firm businesses is certainly no worse and probably slightly better than that for the SME sector as a whole. For a variety of reasons (not all related to the economic downturn) we know of around 50 enterprises that were in the Social Firm sector that have either ceased trading or have been absorbed into other enterprises or are trading as social enterprises but not as a part of the Social Firm sector. Of the fifty around thirty have ceased trading. It’s always hard to know whether an organisation goes down because it is a victim of the recession and whether there were other contributory factors. It does seem fair to say that several of the Social Firms would probably have gone under anyway. This might be, for example, because they were underfunded or did not have sufficiently robust financial control systems in place. A few found themselves in the wrong marketplace, encountering declining demand or being in the wrong location. This suggests that there is room for improvement in the financial and business management within the sector and perhaps points to a need for greater support in these areas (although this is not borne out by the responses to questions on business management shown later in this report). One factor is very clear: the most significant losses to the sector have been where the number of firms has multiplied fast under one umbrella organisation. Of equal note are the enterprises that although still operating are no longer seeking to attain or maintain the minimum 25% of severely disadvantaged employees and are therefore no longer considered to be a part of the Social Firm sector. These are firms that are in sympathy with the Social Firm model but have concluded they are not able to maintain either sufficient business focus or the level of employment of those furthest from the labour market. See Appendix 2 for information on the spread of losses to the sector. Whilst this fallout is significant it is thought that we now have a sector that is much more grounded; one that fully understands what it is to be a Social Firm and has significantly developed its ability to trade at commercial rates and to develop and grow. Identifying new entrants to the Social Firm sector Although there are inevitably losses there are Social Firms yet to be discovered. We are constantly learning of social enterprises that we believe to be a part of the Social Firm sector. Across the UK there are over forty enterprises on our radar with whom we need to do more work to establish that they are indeed part of the Social Firm sector. This does suggest that growth is happening faster than we are currently able to track it. These enterprises do not include supported factories which we are confident will, increasingly, want to move forward and work to become Social Firms. If just 50% of the organisations that we have logged are confirmed as being in the Social Firm sector we would break through the 200 barrier. Working to engage with the enterprises we have already identified and building links with supported factories that want to become Social Firms is a priority for Social Firms UK. 8 The numbers vary in the different definitions. 8
  • 10. The Current State of the Social Firm Sector This section begins by giving an overview of the current sector – legal forms, regional spread, employee focus, business focus. It will then look at the changes since 2006. Legal Form Since 2006 changes to the Companies Act means that understanding what is and is not a social enterprise in terms of their legal form has become a little more complex. It is now possible to have a variety of legal forms enhanced by an ‘entrenchment provision’. Since the content of the entrenchment provision is not prescriptive each will need to be taken on its merit. Within the Social Firm sector the ‘provisions’ would need to meet the Social Firm values as set out in the Values-Based Checklist. Chart 1 At present there are two Social Firms with a legal structure enhanced by an entrenchment provision included in the ‘other’ in Chart 1. Other ‘others’ include enterprises that are an integral part of the parent organisation (rather than a subsidiary). Comparison of Main Legal Form in the Social Firm Sector 2006 and 2010 Percentage of Whole 2006 2010 Company Limited by Guarantee and a registered charity 35% 18% 20% Company Limited by Guarantee 17% Company Limited by Share 13% 8% Statutory Organisations 13% 8% CIC(Ltd by guarantee & Share combined) 9% 11% Subsidiary of Charity/Other parent organisation 9% 9% Table 2 As can be seen from Chart 1 and Table 2 there appears to be a reduction in Companies Limited by Guarantee and that are also registered charities. It also appears that, after the first enthusiastic flurry, interest in the Community Interest Company (CIC) model has waned. 9
  • 11. Size, Spread and Focus A little complicated but taking Tables 1 and 3 with Charts 2 and 3 together does provide an overview of the size, spread and focus the Social Firm sector in 2010. • Table 1 give information on the spread of Social Firms and changes since 2006. • Chart 2 provides information on the numbers of Social Firm businesses and their regional/national spread. • Chart 3 and Table 3 gives the breakdown of employee focus in the sector. As previously noted the sector as a whole has increased by 32% since 2006. Size and Spread The extreme changes within regions and nations and the spread of Social Firms throughout the UK are uneven and there is no perceived pattern. Comparisons between nations and regions are not necessarily valid but, it seems no surprise to find that Scotland, which has the support of Social Firms Scotland, has the largest number of firms (49) whilst the East Midlands which no longer has a Social Firm champion shows a decrease of 83% in its Social Firm presence. It is also perhaps relevant to know that the RBS SE100 report found the East Midlands to be the worst performing, region with social enterprise income growth of only 15%9. Chart 2 In the English regions the South East and West Midlands both show an overall reduction in the number of enterprises in the Social Firm sector whilst the Eastern region has an impressive high growth rate of 150%. The very varied level of change has resulted in an overall increase of just 6% in the English regions. 9 The RBS SE100 growth rate is measured over the last year whereas the growth of the Social Firm sector in this report is measured over four years. 10
  • 12. Movement within the Social Firm Sector Looking at the movement within the sector – numbers of enterprises that were known in 2006 and are still trading, the numbers that have developed from emerging to Social Firm etc provides some insight into the way the sector has developed and grown. Mapping has shown that the number of: A. Social Firms operating in 2006 and still in sector = 35 B. Emerging Social Firms operating in 2006 and still in sector as emerging businesses = 17 C. Emerging Social Firms operating in 2006 and that are now Social Firms = 19 D. New Social Firms identified since 2006 and still operating = 43 E. New Emerging Social Firms identified since 2006 = 67 Of these, figure B is surprising. It is well known that it takes time to establish a Social Firm but the numbers that were around as emerging Social Firm in 2006 and are still ‘emerging’ is perhaps something that needs attention. Target Employee Groups Chart 3 indicates that some 86% (155) firms have some level of focus on supporting people with mental health needs. This does not include those with a focus on ex-offenders, homeless people or those with substance abuse issues although it is known that people in these target groups do also have mental health problems. Taken together this shows that the sector still has a strong focus on supporting people with mental health needs - as it did in 2006. Again, as in 2006, the second largest target employee group is people with learning disabilities. 15% of firms focus purely on supporting people with a learning disability. Adding together all those that have some level of focus on learning disability the total number that employ people with learning disabilities is 141 (77%). As with mental health numbers of people with a learning disability are also ex-offenders, homeless or have problems with substance abuse. Target Employee Groups by Number in the Social Firms Sector Ex Mental Learning MH & LD Physical Sensory Ex Homeles All Substance BEM Health Disability Combined Disability Loss Offenders s Misuse 41 51 37 63 21 15 7 2 8 5 Please note: Due to the variations in the target employee groups the numbers shown here add up to more than the numbers of known firms in the sector. Table 3. Whilst support for people with mental health needs or learning disability are clearly the two highest groups it should be noted that since many firms focus on more than one group the numbers shown in Table 3 are greater than the number of businesses in the sector (and therefore the numbers of firms cited as supporting people with mental health needs or learning disabilities is higher than the reality). Further information on target groups by regions and nations can be found in Appendix 3. 11
  • 13. Employee Numbers In 2006 the sector employed more than 1600 FTE (Full Time Equivalent) staff with 860 of them being people who were employed as being furthest from the labour market. Nearly 21% of disadvantaged people worked less than 16 hours per week. Chart 4 and the figures below are taken from analysis of the firms that supplied full staffing information for the 2010 mapping. On these alone the sector has nearly 1900 staff. This can be broken down as follows: STAFF NUMBERS • All Staff: 1886 • Severely disadvantaged (SD) staff: 1064. Plus there are 9 known self employed staff • Full Time Equivalent (FTE) staff: 1751 • FTE SD staff: 1009 • Percentage of FTE staff who are severely disadvantaged: 58% FULL TIME POSTS • Full time posts:1344 • SD staff in full time posts: 624 • Percentage of SD who are in full time posts: 46% PART TIME POSTS • Part time posts: 542 • SD staff in part time posts: 440 • Percentage of SD who are in part time posts: 81% • SD staff working less than 16 hours a week: 210 - just under half the part time posts Chart 4 12
  • 14. Taking into account both full time and part time employment for severely disadvantaged staff the percentage of staff working less than 16 hours a week across the sector reduces to 20% - almost identical to 2006. Projected Real Rize of the Sector Using information obtained it is possible to make projections as to the real size of the sector in 2010. Real Trading Value It is estimated that the real trading value of the known sector is over £83 million Employee Numbers It is estimated that across the 181 firms there are: • 2600 staff employed • 2451 full time equivalent staff employed • 1798 people in full time posts - of these 857 are filled by severely disadvantaged people • 645 part time posts filled by severely disadvantaged people • Actual increase in employment in the sector since 2006 is 62% Using the information obtained it is also possible to calculate that across the sector: • the average number of staff per business is 14 • the average number of FTE staff per business is 13.5 • the average number of FTE staff per business that are severely disadvantaged is 8 • the median number of FTE staff is 4.5 Appendices 4 and 5 contain some more detailed information on staffing and income. Service Users ‘Service users’ is an emotive term and we are conscious that is one that is not liked. Unfortunately an easily understood alternative has not yet been found. It is used here to differentiate a group who are not in paid employment and for whom the Social Firm provides work related training paid for by organisations such as health or social services. As in 2006 some Social Firms have contracts to offer work training/experience. Others do not. Mapping suggests a reduction in the numbers of Social Firms that have such contracts. Table 4, below, shows that only 17% of businesses have service users and that where they do the main focus is people with learning disabilities. Summary of Businesses in the Social Firm Sector With Service Users 2010 No of Firms that % of Firms Number of Total No. of Average No. % of l Firms Number of Focus on Service Focusing on Firms that Service of Service that Take Firms Users with a Service Users Have Service Users per Users per Service Mapped Learning with a learning Users Week Firm Users Disability Disability England 94 7 175 25 7% 4 57% Northern Ireland 4 1 35 35 25% 1 100% Scotland 33 12 145 12 36% 4 33% Wales 15 5 72 14 33% 5 100% Total 146 25 427 17 17% 14 56% Table 4 13
  • 15. Trainees Table 5 shows that only 23% of businesses have trainees. It is thought that these figures will probably exclude many of those recently taken on under the Future Jobs Fund and who are working to some level of formal training. When mapping there is often some confusion over the difference between a trainee and a service user and it is possible that the numbers are sometimes counted twice. Conversations with Social Firms would suggest that the number of people who are really trainees on time limited training leading to a qualification (not permanent employees and not also service users) is very low and in reality is likely to be lower than the number of service users attending for work experience. Summary of Trainees per Week (average number) in Social Firm Businesses 2010 Number of Firms Total No. of Number of Average No. of % of Firms that that Take Trainees per Firms Mapped Trainees per Firm Take Trainees Trainees Week All English Regions 94 23 428 19 24% Northern Ireland 4 3 41 14 75% Scotland 33 7 104 15 21% Wales 15 1 9 9 7% Total 146 34 582 17 23% Table 5 Volunteers The number of firms that have volunteers, at just 27%, is slightly less than those claiming to take trainees. The focus of volunteering is split roughly 50/50 between people with mental health needs and those with learning disabilities. The later section on staff support indicates that most firms have volunteer agreements in place and there was a clear distinction made between the roles and responsibilities of workers and volunteers, as required by legislation. Summary of Businesses in the Social Firm Sector that have Disadvantaged People Attending as Volunteers 2010 Number Number Total No. of Average No. % of No. of % of Firms No. of Firms % of Firms of Firms of Firms volunteers of Firms that Social that have that focus that have Mapped that have per Week volunteers have Firms that volunteers on learning volunteers volunteer per Firm volunteer focus on with mental disability with s s mental health and have learning health and needs volunteers disabilities have volunteers England 94 26 166 6 28% 8 32% 11 42% Northern Ireland 4 1 3 3 25% 1 100% 1 100% Scotland 33 10 136 14 30% 7 70% 6 60% Wales 15 2 6 3 13% 1 50% 1 50% Total 146 39 311 8 27% 17 44% 19 49% Table 6 14
  • 16. Businesses – Trading Sectors Since 2006 there has been little change in the type of products and services offered and their level of representation in the sector. In 2006 catering represented nearly 23% of the sector whilst recycling, horticulture and training were all around 10%. Catering continues to be the largest trading sector (numbers of firms) but the percentage share has reduced and now accounts for 19% of all businesses or parts of businesses. Recycling (waste, wood, electrical, furniture, white goods and IT), which was marginally below horticultural, is now ahead with 10% of the firms working in recycling. Within the ‘horticulture’ label (7% of firms) the emphasis is now very much on contract gardening and maintenance services and, as can be seen in Chart 5 below, this sector is now shown as grounds/garden maintenance/horticulture. Trading Sectors and Income Of the businesses in the Social Firm sector, 83% are in just seven trading sectors. These are shown in Table 7 overleaf. This table also illustrates the changes in numbers within these groupings since 2006. Training is shown as up by a huge 113%. This ‘jump’ is likely to be due to firms that carried out training previously but where it wasn’t counted as an income earner. This is possibly because the income was at a low level and it wasn’t considered as income. However, it is more likely that either the training was previously gained without a competitive tender and/or disadvantaged staff were not fully involved in providing that training. If so this was not counted as a trading income. These seven trading sectors between them generate in the region of £20 million in trading income per year. More information on businesses and their trading sectors can be found in Appendix 6. 15
  • 17. Business Focus - the seven most popular business types in 2010 Percentage Numbers Percentage of the sector Numbers 2010 increase/decrease since 2006 in 2010 2006 Total of whole sector 137 181 32% Catering 35 37 6% 21% Training 15 32 113% 18% All recycling 16 20 25% 11% Retail 12 19 58% 11% Grounds maintenance, gardening & horticulture 15 14 -7% 8% Packaging, mail fulfilment 11 12 9% 7% Printing/print finishing 4 12 200% 7% Total of top 7 108 146 35% 83% Percentage of whole 79% 83% Please note: The majority of firms are not single focus e.g. furniture recycling companies have retail sales and so will be counted twice. Similarly many firms also have training as part of their commercial income. Table 7 National Products and Services Since the last full mapping the number of nationally available products and services has grown and there are now 41 enterprises in the Social Firm sector that sell nationally. This is almost 23% of the sector as a whole in comparison to the wider social enterprise sector where just over 10% of enterprises offer goods and services nationally. Of the national firms: • 26 are in England regions (63%) • 11 are in Scotland (27%) • 4 are in Wales (10%) Higher earning Trading Sectors Another way to look at the businesses in the sector is to view the top 20 earners. These firms all operate within one or more of the following ten trading sectors: 1. Light engineering 2. Equipment provision repair and maintenance 3. Manufacturing 4. Recycling - white goods, furniture, retail, IT, waste 5. Fulfilment, mailing, storage, packaging 6. Retail 7. Furniture manufacture 8. Facilities management (includes office management, conference and catering) 9. Contract grounds maintenance, horticulture, gardening 10. IT services and training 16
  • 18. Just under half of the top 20 earners (which are considered further in the following section) are business that began as supported factories. More information on supported factories can be found at the end of Appendices 1, 4 and 6. Growth Rates Bikeworks • Founded in 2007 and a 2009 Social Enterprise Award winner • In its first year Bikeworks had a trading income of £175,000 • This rose to £512,000 in 2008 - a growth rate of 193% The Soap Co (Keswick) • Began trading in 2007 - had a first year income of £18,000 • This rose to £83,000 in 2009 - a growth rate of 361% The RBS SE100 Data Report published growth rates on three Social Firms:- Mow & Grow - began trading June 2006, have had a growth rate of an extraordinary 710% Brighter Future Workshop - trading began 2005 & has an excellent growth rate of nearly 83% Oxford Wood Recycling - trading began 2005 & also has a very impressive growth rate of 76% Businesses – Income Income in the Social Firm sector, as for the wider social enterprise sector, can be a combination of commercial (earned) and non-commercial (grants etc). Both are considered in this section. Chart 6, shown a little further on, shows the breakdown of commercial and non-commercial income by regions and nations and very clearly demonstrates the emphasis on earned income. Although a number of enterprises are reluctant to provide financial information which is regarded as commercially sensitive, mapping has collected some solid financial information from which the value of the sector as a whole can be calculated. Commercial Income Mapping suggests that 91% of the total income to the sector is earned and that 1. within emerging Social Firms: • 71% of their total income comes from trade • 47% earn all their income from trade • 66% earn more than 50% of their income from trade 2. within Social Firms: • 92% of their total income comes from trade • 49% earn all their income from trade • 74% of businesses earn 75% or more of their income from trade 3. across the sector as a whole: • 9% of businesses earn 100% of their income from trade • 74% of businesses earn 75% or more of their income from trade The income figures for emerging Social Firms (shown in 1. above) would seem to suggest that organisations are now being more cautious and seeking to grow the levels of income before taking on more disadvantaged staff. However the percentages given for income from trade should be treated with real caution. Given that other costs, e.g. overheads, staff support and premises are often not factored in it is known that the overall percentage of income from trade will be lower than shown. The 17
  • 19. figures given for the sector overall will, of course, be affected by the likely inaccuracies within the percentages given for emerging Social Firms. The top 20 earners in the top ten trading groups (mentioned above) earned just over £48 million between them in 2009. Although almost half of this was earned by The Pluss Organisation (in the South West) the other sectors together still contribute significantly to the earnings of the Social Firm sector. From Table 8 it can be seen that: • 75% of businesses in the sector have commercial income of under £250,000 • 87% of the sector is made up of businesses that earn up to £500,000 • 11 businesses earn between £500K and £5m and just one earns over £5m Analysis also suggests that: • the average earned income per business is just under £329k; and • the median figure for earned income per business is £175k. Commercial Income by Bands for Social Firms & Emerging Social Firms 2010 Northern England Scotland Wales Total Percentage Ireland Commercial Income: Under £250K 52 3 18 7 81 75% Over £250K under £500K 9 0 4 0 13 12% Over £500K under £1m 6 0 0 1 7 7% Over £1m under £5m 3 0 1 2 6 6% Over £5m 1 0 0 0 1 1% 107 100% Table 8 Commercial Income and Staffing Analysis indicates that: • within emerging Social Firms the commercial income per each full time equivalent employee is just over £15,750; • within Social Firms the commercial income per each full time equivalent employee is a fraction under £39,000; and • across the sector as a whole the commercial income per each full time equivalent employee is approx £36,000. 18
  • 20. Chart 6 Chart 6 above shows the relationship between earned and non-earned income in the Social Firms sector by regions and nations. Non-Commercial Income Information from respondents indicates that just 9% of the total income in the Social Firm sector is non-commercial. The focus for non–commercial income is within emerging Social Firms where this is just over 29%. As shown in Chart 6 the areas with most non-commercial income are London and Scotland. Information on the types of non-commercial income received are shown in Table 9 below which also suggest that only 33% of businesses in the Social Firm sector receive non commercial income. Other information collected on income suggests that 49% of firms receive some level of non-commercial income. This latter figure is thought to be a more realistic representation – certainly for emerging Social Firms. Firms that do have non-commercial income tend to receive this from more than one source. Sources of Non Commercial Income Within the Social Firms Sector 2010 Northern England Scotland Wales Total Ireland Charity 5 0 4 3 12 Grant Giving 11 1 9 3 24 Trust Health 1 2 8 3 14 Other 6 0 3 0 9 SLA 8 1 10 1 20 Social Services 2 0 3 3 8 Base: of 146 respondents 48 said they received non-commercial income Table 9 19
  • 21. Whilst this relatively low reliance on non-commercial income appears very positive this information does need to be tempered with the knowledge that firms, and in particular, emerging Social Firms, receive support from their parent organisation. The support provided is often with the cost of premises and staff support. Given that these costs are often not factored in the level of non-commercial income is likely to be higher, and perhaps significantly so, within emerging Social Firms. Mapping suggests: 1. Within emerging Social Firms; • the non-commercial income received for every FTE is in the region of £6,500 2. Within Social Firms; • the non commercial income received for every FTE is in the region of £3,400 3. Across the sector as a whole that; • the non commercial income received for every full time equivalent employee is in the region of £3,700. Businesses - Management, Support and Quality The subjective mapping questions can be roughly divided into three areas – business, finance and staff support. Tables 10, 11 and 12 below provide information on the percentage of respondents that strongly agreed or agreed with the statements and compares this (where possible) with response in 2006. Fuller details of the responses can be found in Appendices 8, 9 and 10. Business Management Business Management Using a five point ‘Strongly Agree to Strongly Disagree scale’ respondents were asked to grade the following statements. Statement Percentage that In 2006 strongly agreed percentage that or agreed agreed with the statement Our constitution demonstrates a strong commitment to the 90% employment of severely disadvantaged people within our business. Our Business Plan is in place, up to date and actively used. 73% 11% Our Marketing Plan is in place, up to date and actively used. 57% 30% There is a management structure that supports trading as the 93% 60% primary means of achieving our social purpose. Our Board fully understands the Social Firm model and fully 71% supports our development as a Social Firm. Base 73 Table 10 With regards to business management the really big change since 2006, and a most welcome one, is the jump in the percentage of respondents who now have a business plan that is in place, up to date and actively used. The rise in the number of firms having a marketing plan is not so dramatic nevertheless it is a very positive development. There is certainly much more focus given on marketing now – something that five or six years ago was rare. In addition discussions with CEOs and managers of Social Firms clearly showed that although businesses still find it hard to attract board members, board governance is not the issue it once was. 20
  • 22. Financial Management The responses to the questions on finance would seem to suggest the sector now feels more comfortable with financial management and has made strides in developing its ability to access good financial information and expertise. However, the issues around business planning and management of financial resources (as previously discussed) certainly played a part in businesses closing and the clear development of good focused business systems is welcomed. Financial Management Using a five point ‘Strongly Agree to Strongly Disagree scale’ respondents were asked to grade the following statements. Percentage that Percentage that Statement strongly agreed agreed with the or agreed statement in 2006 Our Contracts/ Service Level Agreements recover all costs and 39% generates a surplus Our cash flow situation is healthy. 61% 40% Our financial situation is healthy. 61% 17% We have excellent access to accurate & timely financial information. 97% 75% We have excellent access to financial expertise to assist us in 79% 55% growing our business. Base 73 Table 10 Staff Support A number of mapping questions sought to find out more about the quality of the support systems that are in place. It is perhaps not surprising that with the strong emphasis on support in the Social Firms sector scores were generally high in this section. The response to the statement on equal opportunities which, scored relatively low does seem a little out of place. This may well be because Social Firms can tend towards ‘walking the walk’ without being able to spend the time ensuring polices are written down. Staff Support Using a five point ‘Strongly Agree to Strongly Disagree scale’ respondents were asked to grade the following statements. Percentage that Percentage that Statement strongly agreed agreed with the or agreed statement in 2006 Our staff support systems are excellent. 79% The emphasis placed on training is excellent. 85% We have good Volunteer Agreements in place. 79% Our Health and Safety policy and implementation is excellent. 99% Our policies and procedures on environmental sustainability are 94% excellent. Base 48 Table 12 21
  • 23. The high score given to the question on environmental sustainability is also of note. Some Social Firms have clearly given a great deal of thought and put a lot of time and effort into being an environmentally responsible company. For others the will is there but actions are limited by a variety of outside influences and an agreement that everything is being done may be set within the confines of what is allowable by others. Quality The consolidation of Social Firms, as evidenced by the increased number of Social Firms (rather than emerging Social Firms), is thought to go hand in hand with the development of quality in the sector. There are quite a few Social Firms that would like to prove this quality by becoming Star Social Firms. The reality of running and growing a Social Firm means that too often time cannot be spared for ‘non- essentials’ such as proving quality by becoming a Star Social Firm. That said firms are increasingly recognising the link between being able to confirm quality to their staff (increasing commitment) and customers (increasing sales) and a number of Star Social Firm applications are in progress. Social Impact The RBS SE100 Report 2010 showed that 3 Social Firms:- - Bookdonors CIC, - Frame of Mind CIC, and - Mow and Grow and two organisations that run Social Firms:- - Broomby and - The Create Foundation CIC, were featured in the section on measuring and communicating their social impact… …each scored 4/5 out of a possible 5/5. It is clear that the Social Firm sector is maturing and that the businesses within it are gaining a reputation for successfully balancing the needs of the business and the needs of the staff within them. Numbers of Social Firms and emerging Social Firms either have good social accounting systems in place; e.g. NMC Design+Print, or are bringing them in; e.g. wood@aldingbourne and Decoda. The quality of Social Firms was recognised with Pack-IT, Bikeworks and Brighter Future Workshop winning three of the four categories in the 2009 Social Enterprise Awards. Quality is a broad church and responses to the two mapping questions, shown in the box on the next page, tend to reinforce the view that both development and planning are gaining in quality. A representative selection of the responses can be found in Appendices 11 (Change) and 12 (Significant Issues in Expanding). 22
  • 24. Mapping Questions on Change and Significant Issues for the Future 1. What was the greatest change in your business in the last year? 2. What are the two most significant issues you face in expanding your enterprise? Responses to such questions are inevitably going to come under three main areas: 1. People 2. Development 3. Finance These areas are, of course, closely interlinked and whether looking back or looking forward will predominate. It was found both emerging Social Firms and Social Firms when considering their greatest change, had an essentially positive message i.e. that in spite of the difficult economic climate they are developing and growing with increased income and more (and more engaged) staff. Looking forward, unsurprisingly the greatest issue being faced is finance. The top financial concern is funding/obtaining finance; to get into new ventures and to move to new premises for capital growth.10 Concerns were voiced over cash flow and finding ways to increase the level of sales to stay in business. People and finance were closely linked with concerns about getting in more money to employ more, much needed, staff. Marketing is now firmly on the agenda. Taken overall responses do indicate that the sector has done a lot of growing up in the last four years. In doing so has become a sector where the quality of the businesses is much more evident. Staff support and the eternal question of how to support people to come off benefits remains vital. What is new is more emphasis on obtaining finance for growth, the more strategic outlook, the acknowledgement that marketing has an important part to play and real evidence of a sector that is balancing business and staff needs not just with care, but also with professionalism. 10 The work that Social Firms UK has been carrying out with Remploy under the TEP scheme is relevant to this concern. More than 10 disabled people have currently benefitted by working in Social Firms under this scheme the cost of which has averaged around £3,000 per year for three years. More information on the actions being taken by Social Firms UK can be found in their Manifesto Business Changing Lives. . Go to www.socialfirmsuk.co.uk. 23
  • 25. CONCLUSION Whilst Social Firms seem to be holding up well in the recession (as does the wider social enterprise sector11) growth of the sector across the UK as a whole is modest. This is not entirely unexpected, given the harsh economic conditions in recent years for business generally; the emphasis has been on survival rather than growth in existing Social Firms and new starts have been appearing at a lower rate than previous years. There is a recognition that growth in the Social Firm sector should be through scaling out (more) rather than scaling up (size) so continued emphasis on start-up Social Firm businesses is more important than ever. The Social Firm sector remains positive despite the above factors and the 2010 mapping statistics reflect its achievements which are all the more impressive because of the difficult trading conditions of recent times. From this mapping report it can be concluded that: • Although growth is uneven and a little slow the sector remains positive with more firms starting up, creating more employment opportunities. • There have been losses to the sector but these are within the expectations of the SME sector as a whole. Multiple firms that grow quickly under one umbrella do seem to be more vulnerable. • There is a more solid base of Social Firms that have been around for a long time. • The Social Firm sector is one that really does seek to ‘earn its keep’. • The sector has made significant strides with evidence of a greater professionalism and more emphasis on becoming quality businesses. This is evidenced by the greater emphasis on sound financial systems businesses planning, marketing and good governance. For continuation of the mapping process itself, ways to improve knowledge of possible new entrants to the Social Firm sector need to be explored. Social Firms UK actively uses social media platforms to contribute to online conversations, trying to capture content regarding possible emerging Social Firms and/or social enterprises which are focused on job creation, though this is only one channel and others need to be mined. Referrals from other support agencies in the wider sector need to be generated as they may well be the first local port of call with regards to business support. Whilst the future remains uncertain for UK business, the new Coalition Government’s ownership of ‘Big Society’ and what that represents could be good news for the Social Firm sector. As the government wants everyone to do more for less, this could open up trade opportunities as the private and public sector seek to establish civil society credentials via social impact clauses and support for the sector generally. It will be increasingly important for Social Firms to hone how they use social impact measurement in both the tendering process and across their marketing activity as a whole. Capitalising on this political agenda is key to the sector’s growth over the next few years and we are working hard to ensure that our members are represented at a national level. How this decentralisation is translated at a local or regional level has yet to be defined though will invariably mean a lot more activity and contact for already stretched business owners and managers. Commercial interest in the sector is becoming more evident and some good individual examples have been well established for many years. Private company engagement as a whole though remains both time-consuming and unscientific. Sharing best practice case studies are one way of exploring what has worked for others and examining approaches which may have a broader application. The wholesale commitment to quality across the Social Firm sector bodes well for the active promotion of trade activity and future sustainability; though good contract stories need to be shared and co-promoted by the sector as a whole. A more collective approach to business opportunities 11 State of Social Enterprise Survey 2009. Published by the Social Enterprise Coalition. 24
  • 26. makes both financial and time-management sense, though how these approaches could be coordinated presents a challenge to the sector. We are currently looking at how Social Firms UK can facilitate group-wide trade and will continue to develop relationships which could realise these opportunities. Financial stability remains the most pressing concern for Social Firm managers and it is unclear how the Big Society Bank launched recently by the Coalition could alleviate this situation. The use of dormant bank accounts coupled with private capital to support and enable the growth of social projects sounds like it should directly benefit the sector; though it will invariably mean more engagement and possibly a repackaging to meet requirements. Finally, the overall conclusion from this most recent mapping information is that the sector has moved on. Although there are concerns, and emerging Social Firms in particular do need support, the sector can congratulate itself on the progress made. Businesses are much more aware of the challenges they face. They have a positive approach, are open to new ideas and seek new ways to expand via new markets.. We feel confident that the sector is poised to use the development and business knowledge gained for the next stage in growing strong, successful and quality businesses in the Social Firm sector, with ultimate benefit and value to people with severe disadvantages in the labour market, the economy and society as a whole. In 2006 the estimated cost savings of the Social Firm sector to the state were £30m in benefit costs, £8.5m in health costs and around £1m in Social Services spend. This data will now be updated using the 2010 mapping information contained in this important report - which could not have been produced at a better time than this when the country is having to make significant savings and scrutinise the value of all its work-related programmes. Social Firms UK has invested in undertaking this mapping exercise since 2003 and its value at a national level is immense; we are certain that its contents will assist in the continued policy lobbying for recognition of support of the Social Firm model which will, in turn, be beneficial to the businesses on the ground actually creating these much needed jobs for people otherwise excluded from the labour market through disability or disadvantage. The Social Firm model makes sense; this mapping report reflects the reality of that. 25
  • 27. Appendix 1 Businesses in the Social Firm Sector 2010 Region/Nation Name of business Social Firm Status Social Firm Emerging Social Firm E Mids Rumbles At The Lawn Emerging Social Firm Eastern Furniture Link Bedford Social Firm Eastern Daily Bread Co-operative (Cambridge) Social Firm Eastern MillRace IT Social Firm Eastern Mow & Grow Ltd (Norfolk) Social Firm Eastern Norfolk Industries* Social Firm Eastern Screenreader.net CIC Social Firm Eastern Whitehouse Enterprises* Social Firm Eastern Created 4 You* Emerging Social Firm Eastern Café Libra (Felixstowe)* Emerging Social Firm Eastern Café Libra (Ipswich)* Emerging Social Firm Eastern Creative Sign Solutions* Emerging Social Firm Eastern Graphic Design & Print Emerging Social Firm Eastern Mow and Grow (Norwich City) Emerging Social Firm Eastern Mow and Grow(Suffolk) Emerging Social Firm Eastern Mow and Grow (Cambridgeshire, recycling) Emerging Social Firm London Access Print, Copy & Design Emerging Social Firm London Bikeworks CIC Social Firm London Blue Sky Development & Regeneration Social Firm London Café Nova Interchange Social Firm London Catering2Order Social Firm London Core Landscapes Social Firm London CUC Social Firm London First Fruit Furniture Warehouse Social Firm London Groundswell UK Social Firm London GWB Products Ltd* Social Firm London Lambeth Accord Social Firm London Third Sector Mailing Social Firm London Newco Products* Social Firm London Clean Slate Distribution (London) Emerging Social Firm London Equals Training Emerging Social Firm London Many Hands Painting, Decorating & Home Maintenance Services Emerging Social Firm London Many Hands Office Services Emerging Social Firm London Meanwhile Wildlife Garden Landscape and Garden Services Emerging Social Firm London Meanwhile Wildlife Garden Plant and Garden Supplies Emerging Social Firm London Pearce Distribution Services Ltd Emerging Social Firm London Scotch Bonnet Catering Emerging Social Firm 26
  • 28. N East Ayresome Industries* Social Firm N East B2G Diner Social Firm N East Busy Bodies Social Firm N East Addictions UK Social Firm N East Green Box Emerging Social Firm N Ireland Acceptable Enterprises (Larne) Ltd Social Firm N Ireland Daisies Café Social Firm nd N Ireland Daisies Café (2 one to open) Social Firm N Ireland Daisies Café (newly opened third) Emerging Social Firm n Ireland The Orchardville Company Social Firm N Ireland Edgecumbe Café Emerging Social Firm N Ireland Edgecumbe Catering Services Emerging Social Firm N West Brighter Future Mobility & Training Social Firm N West CREATE UK Social Firm N West NMC Design & Print Social Firm N West The Soap Co. (Keswick) Social Firm N West Benchmark Emerging Social Firm S East Able Types Social Firm S East Netherne Printing Services Social Firm S East Oxford Wood Recycling Social Firm S East Riverside Centre Social Firm S East Travel Matters Social Firm S East Frame of Mind Social Firm S East Sector Mailing Services Social Firm S East Sunlight Design Print and Publishing (Parent Sunlight Social Enterprises CIC) Social Firm S East Sunlight People (Parent Sunlight Social Enterprises CIC) Social Firm S East The Living Room (Parent Sunlight Social Enterprises CIC) Social Firm S East wood@aldingbourne Emerging Social Firm S East Decoda Emerging Social Firm S East Furniture NOW! Emerging Social Firm S East Sunlight Studios (Parent Sunlight Social Enterprises CIC) Emerging Social Firm S West Hillcrest Branch Social Firm S West Aquamacs Devon & Cornwall Social Firm S West Clean Slate Distribution Social Firm S West The Pluss Organisation* Social Firm S West The Vassell Centre Social Firm S West Clean Slate Employment Emerging Social Firm S West Clean Slate Training Emerging Social Firm S West Green Machine Emerging Social Firm Scotland Aberdeen Care & Repair Emerging Social Firm Scotland At Work Scotland Emerging Social Firm Scotland Bookdonors CIC Social Firm Scotland Candies Cuisine Social Firm 27
  • 29. Scotland Edinburgh Embroidery Services Social Firm Scotland Erskine Furniture* Social Firm Scotland Erskine Print* Social Firm Scotland Green Tracks Social Firm Scotland Haven Products Ltd* Social Firm Scotland LAMH Recycle Social Firm Emerging Social Firm Scotland Parkview Laundry Social Firm Scotland RSB(Royal Strathclyde Blindcraft Industries)* Social Firm Scotland Shetland Soap Company Social Firm Scotland Six Mary's Place Guest House Social Firm Scotland Solstice Nurseries Social Firm Scotland Spoon Café Social Firm Scotland The Soap Co. (Edinburgh) Social Firm Scotland Touchwood Recycling Ltd Social Firm Scotland Unity Dinner Social Firm Scotland Upkeep Social Firm Scotland Watch Us Grow In The Community Social Firm Scotland With People Social Firm Scotland CFINE Emerging Social Firm Scotland Computer Health Centre Emerging Social Firm Scotland Erskine Garden Centre Emerging Social Firm Scotland FBS Enterprises Emerging Social Firm Scotland Foyer Works Emerging Social Firm Scotland Furniture Plus Fife Emerging Social Firm Scotland Gallery on the Corner Emerging Social Firm Scotland Grangemouth Industries* Emerging Social Firm Scotland Grean Emerging Social Firm Scotland Hebridean Chocolate Emerging Social Firm Scotland Home Improvement Project Emerging Social Firm Scotland Kingsmeadow Catering Emerging Social Firm Scotland Ness Soaps Emerging Social Firm Scotland Nursery Needs @ Watch Us Grow Emerging Social Firm Scotland Rag Tag N Textile Emerging Social Firm Scotland Raploch Community Enterprise Emerging Social Firm Scotland Reid Macewan Training and Conference Centre Emerging Social Firm Scotland Restart Orkney Emerging Social Firm Scotland Rosie's Café Emerging Social Firm Scotland Send-it Fulfilment Solutions Emerging Social Firm Scotland Shetland Coffee Company Emerging Social Firm Scotland Short Cut Emerging Social Firm Scotland the bread maker Emerging Social Firm Scotland The Community Warehouse Emerging Social Firm Scotland TimberWORKS! Emerging Social Firm Scotland Vanishing Willows Cafe Emerging Social Firm Scotland VIP Partners Emerging Social Firm W Mids Four Seasons Function Room Emerging Social Firm 28
  • 30. West Mids All Formats: Sign Making Social Firm West Mids All Formats: Transcription Services Social Firm West Mids Concept Conference Centre Social Firm West Mids Green Horizons (Pathways - Shropshire) Ltd Social Firm West Mids icycle Social Firm West Mids Manufacturing Link* Social Firm West Mids Pack-IT Hereford Social Firm West Mids Packaging Link* Social Firm West Mids The Frogmeadow Community Café (Pathways - Shropshire Ltd) Social Firm West Mids Top Bites* Social Firm West Mids Benedict's Coffee Room Emerging Social Firm West Mids Cherry Orchard Gardening Service Emerging Social Firm West Mids Kings Hill Nurseries Emerging Social Firm West Mids Mow and Grow (North Birmingham) Emerging Social Firm West Mids Newpath Contract Packers Emerging Social Firm West Mids Oak Farm Tea Rooms (Pathways Shropshire Ltd) Emerging Social Firm West Mids Textiles By St. Annes Emerging Social Firm Wales Cae Post Social Firm Wales MTIB* Social Firm Wales Green Shoots Catering Social Firm Wales Pack-IT Promotions Social Firm Wales Pembrokeshire FRAME Ltd Social Firm Wales Suresprung Furnishings* Social Firm Wales Your Pets Warehouse Ltd Social Firm Wales Beacons Creative Wales Ltd Emerging Social Firm Wales Dee-Tex Project Emerging Social Firm Wales EB's Coffee Shop Emerging Social Firm Wales Green Horizons Merthyr Ltd Emerging Social Firm Wales Morphious Ltd Emerging Social Firm Wales Mow and Grow (Wales) Emerging Social Firm Wales Park View Café Emerging Social Firm Wales Not Just Nuts Emerging Social Firm Wales Ten Green Bottles Powys CIC Emerging Social Firm Yorks & Humber Buster's Café (Doncaster) Social Firm Yorks & Humber Buster's Café (Becklin Centre) Social Firm Yorks & Humber Buster's Coffee Merchants Social Firm Yorks & Humber Create Café Create (Boar Lane) Social Firm Yorks & Humber Create Cafe (Leeds Parish Church) Social Firm Yorks & Humber Create Food Social Firm Yorks & Humber Create Housekeeping Social Firm Yorks & Humber Cream Catering Social Firm Yorks & Humber Electroville Social Firm Yorks & Humber just coffee people Social Firm Yorks & Humber Lippy People CIC Social Firm Yorks & Humber People Matters (Leeds) CIC Social Firm 29
  • 31. Yorks & Humber Pugney's Waterpark Café Social Firm Yorks & Humber Rerun Social Firm Yorks & Humber Speakup Social Firm Yorks & Humber Viewpoint Sheffield Branch) Social Firm Yorks & Humber Viewpoint (Leeds Branch) Social Firm Yorks & Humber Catering Plus Ltd Emerging Social Firm Yorks & Humber Mow and Grow (Grimsby) Emerging Social Firm Yorks & Humber Friendly Resource Company Emerging Social Firm Yorks & Humber Friendly Training Company Emerging Social Firm Yorks & Humber Friendly Information Company Emerging Social Firm Please Note: Those firms marked with an * are either ones that started life as a supported factory or are more recent developments of the parent firm e.g. Created 4 You, Creative Sign Solutions and the two Café Libra are all more recent enterprises started by Whitehouse Enterprises. The information on which firms in Scotland started as supported factories has not been fully verified. Historically supported factories were provided with a great deal of support via government programmes. This enabled firms to develop and invest in expensive manufacturing equipment and is the reason why their income levels are, in the main, higher than other Social Firms. All these businesses have developed into ones in which the workforce is actively empowered and the company works to the Social Firms UK Values-Based Checklist. 30
  • 32. Appendix 2 Numbers of enterprises that have are no longer a part of the Social Firm sector Region Ceased Social enterprise but Total Trading not in Social Firm sector East Midlands 1 5 6 Eastern 1 2 3 London 1 4 5 North East 1 1 2 North West 2 2 4 N Ireland 0 0 0 Scotland 3 0 3 South East 2 1 3 South West 0 0 0 Wales 1 1 2 West Midlands 4 2 5 Yorkshire & Humber 1 1 2 Total 17 19 35 31
  • 33. Appendix 3 Summary of Target Employee Groups by Region 2010 Employ from Ex Learning MH & LD Physical Sensory all target Mental Health Ex Offenders Substance Homeless BEM Disability Combined Disability Loss groups Misuse East Mids 0 0 1 1 0 0 0 0 0 0 Eastern 3 2 3 5 1 2 0 0 0 0 London 1 3 7 10 5 5 1 3 1 N East 3 1 1 2 0 0 1 0 0 N West 1 2 2 1 0 0 0 0 0 S East 2 5 2 7 0 0 0 0 0 0 S West 1 2 1 3 1 1 0 0 1 0 West Mids 1 7 7 14 6 10 1 3 0 3 Yorks & Humber 3 2 3 5 1 1 3 3 4 0 England 3 2 4 6 1 2 0 0 0 0 N Ireland 0 1 3 4 0 0 0 0 0 0 Wales 1 9 7 16 5 3 0 2 0 2 Scotland 5 16 9 25 6 3 2 1 0 0 Grand Total 18 26 29 55 16 21 5 7 8 4 32