Sophi Tranchell, managing director of Divine Chocolate, shares her tips for starting a social enterprise that will not only survive, but also prosper in a global market.
When we originally pitched our concept of a delicious fair trade chocolate owned in part by Ghanaian cocoa producers, many people told us it was a wonderful idea but unlikely to ‘have commercial legs’.
Luckily we persevered and set about challenging the commonly held misconceptions about social enterprises – that they are socially responsible, but not commercially viable. Years later, I’m enormously proud to say that we’ve not only achieved our original goals, but have moved many steps further.
Starting a social enterprise is now favoured by about 15% of the UK’s small firms and as a nation we’re leading the way in supporting better prices, decent working conditions, local sustainability and fair terms of trade for producers in the developing world.
These principles formed the bedrock of Divine’s original mission, in partnership with 80,000 cocoa farmers in Ghana, who have benefitted not only from the fair trade premium on sale of their beans, but also their 45% share of Divine’s distributed profits and 2% of its annual turnover.
With the right plan and confidence that things can change, many businesses can fly as a social enterprise. It’s important to articulate and reinforce your mission statement in everything you do. The central purpose of your organisation needs to be at the core of all your business materials, internal and external conversations and any media or advertising work you do. By doing this, your staff, suppliers and customers will better understand and appreciate the ethos of the company, which will provide a sound platform for growth.
Getting the right financial support is another key factor in creating a successful social enterprise. You must bring in people and organisations that share your mission and values. We attracted investment from Body Shop, Christian Aid and Comic Relief. We also secured a £400,000 loan guarantee from the Department for International Development. Do as much research as possible into all potential avenues for funding and take opportunities that come your way – but make sure they complement your business philosophy.
Also take advantage of the range of support that is available from both the public and private sector. Currently I’m involved in the ‘Business is GREAT Britain’ campaign, which aims to build confidence among small businesses and encourage them to plan, hire and export.
One element of support my business got involved with was the Knowledge Transfer Partnerships scheme, which gives businesses access to expertise within UK universities. Liverpool John Moores University helped us with our new product development. We were also able to access export markets through attending UK Trade & Investment food trade fairs. This has been incredibly valuable for us and has helped us to enhance the skills and reach of our business.
If, like us, you have plans for global expansion, you must do your homework on your product(s) and territories in which you plan to sell. Make sure your product is a ‘good fit’ for all of the markets you’re looking to enter.
We were conscious that tastes vary from country to country, so we needed to consider if our product would sell well in places where dairy is not commonly eaten, for example. You’ve also got to think about whether your product is named appropriately. On a practical level, we had to consider whether our product was suitable for hotter climates – and how this impacted on countries we would export to.
Finally, people are what really makes social enterprises successful. You need employees with knowledge, energy and – above all – passion. Passion and vision are two things you’ll need as leader of your social enterprise, however, you can’t just rely on these alone. You’ll also need the right mix of business skills, and with planning, advice from third parties and a strong team around you, you’ll be better placed to succeed. A social enterprise may exist to benefit the world around it, but it is still a business that needs a sound strategy if it is to succeed.
As a newly fledged social entrepreneur who needed a constituted organisation, but who was also a headstrong and independent sole trader, having to think about boards of directors, reports, red tape, being told what to do and how to do, well, it was never going to be easy.
Previously, as a consultant, I’d seen far too many boards of directors and trustees who, rather than operate for the good of the organisation and its aims, were more about personal aggrandisement, power, status and a belief that turning up to meetings was enough (oh, and if they didn’t like the founder, they’d simply get rid of them).
So to even consider going into something that would possibly end up being the very means of my being sacked from my own project did not look that brilliant. Nevertheless, the pressure was mounting to become a robust trading vehicle for a social enterprise, something “proper” with which we could raise funds.
The whole point of any enterprise is to be a successful and viable business, and with the “social” aspect, the income then becomes a vital energy resource for helping to achieve the social purpose, not an end in itself.
Faced with the tangle of options, I began to find out more about community interest companies (CICs), charities, not-for-profits, limited companies, mutuals, co-ops and how they differed. In the end, making the decision was easy.
A CIC allowed me to be a sole director and be a paid member of the working team. This gave me a voice on the board, which is difficult for paid employees of a charity. This would help me to remain in control of things, while the locked assets offered security for the future. By law, when running a CIC all profit must go back into serving the community and the social purpose defined in the CIC’s Memorandum and Articles. It was the perfect structure and said on the packet what we were.
But to be able to apply for funding I needed another director and so began the quest to find people who would advise more than direct. The complexity was that the wonderful people alongside me were by law responsible for the financial and legal integrity of the organisation and therefore had a right to their opinion about how the company should be run. I found that really difficult and learned a great deal about myself and about how the label of “director” changes the dynamic of meetings.
I have put that learning to good effect in constituting Music For All Zimbabwe as a CIC. We have only two directors, Fidelis Mherembi, whose vision it is, and me. Whilst allowing Fidelis free reign in his visionary decisions, this structure also secures the purpose of the company, which will continue to serve its community even if Fidelis and I both 'snuff it'. Any locked assets by law remain in service to the social purpose and cannot be sold to line the pockets of the next directors. That security of the future and the freedom in the present makes it a solid foundation from which to build.
CICs are becoming increasingly popular for many reasons and it will not be long before there are 10,000 of them in the UK. The influence of this dedicated social enterprise vehicle being adopted will be interesting to watch over the next few years.
Blog provided by June Burrough, founder and former director of the Pierian Centre, which opened in Bristol in 2002 as a centre for training and self-development and became a CIC in 2008, before closing in December 2011, and co-director of Music For All Zimbabwe.
During Global Entrepreneurship Week, at Pickwell Manor in North Devon, a group of students on the CMS Pioneer Leadership Course will learn how to apply models of social enterprise to ideas that seek to enhance the lives of people and communities. The five-day residential is hosted by the Church Mission Society and students are encouraged to come along with a business idea to work on during the week. They will attend sessions on formulating a mission statement, devising a business plan, accessing different sources of funding and evaluating success. In addition, they will hear stories of social enterprises that are already thriving and get the opportunity to quiz their owners to discover the secrets of their success.
One example of good practice to be shared is Global SeeSaw, a company that sells wholesale, online and through their shop goods made by women who have been exploited through global trafficking. Run as a social enterprise, all profits are reinvested into the business to create more jobs. This gives vulnerable women, who are disproportionately affected by poverty, greater freedom.
Mark Wakeling, the entrepreneur behind Global SeeSaw, explains: “We’re committed to finding quality products that not only impress with their contemporary design, but also use recycled materials in their manufacture. While many fair trade companies pay just wages and don’t use child labour, we go a step further and ensure that all our manufacturing partners also reinvest their profits. We measure success in human lives changed, rather than wealth generated.”
Course leader, Jonny Baker, says of this unique learning opportunity: “To be sustainable, we must embrace the practices of social enterprise and seek to make a difference, while generating finances where appropriate. For too long business principles have been seen as incompatible with social action, but if we are to be relevant and innovative in the longer term, creative ways of demonstrating our faith need to be self-supporting as well as transformative. We have created this module to begin to address this and we’re encouraging our students to pursue activities that will not need to be wholly dependent on charitable funding.”
For more information on this venture see the CMS website.
This week, Doug Richard, former Dragons’ Den investor and founder of the School for Startups hosted a ‘bootcamp’ for social enterprises in London. Much of the day focused on comparing businesses run to generate profit for shareholders with those run to create a social impact. Just how “business-y” should a social enterprise be?This week, Doug Richard, former Dragons’ Den investor and founder of the School for Startups hosted a ‘bootcamp’ for social enterprises in London. Much of the day focused on comparing businesses run to generate profit for shareholders with those run to create a social impact. Just how “business-y” should a social enterprise be? Richard attempted to answer the question by focusing on the realities of running a social enterprise in a competitive marketplace. Here are eight lessons that every social entrepreneur would do well to bear in mind:
Simon Wicks, BHP Information Solutions