Social enterprises were more financially resilient than small businesses during the pandemic, according to research published this week.
The research report, No Going Back, released by Social Enterprise UK (SEUK), found that social enterprises were more likely to report higher turnover and less likely to have lost money during the crisis compared with small private sector firms.
The report also says that a record number of social enterprises were set up last year – 12,000 – and estimates that the sector is worth £60bn to the UK economy.
SEUK said that the success of social enterprise offered a “roadmap for our future”.
The report said: “Social enterprises are more optimistic about growth, more likely to be planning to hire staff, and more likely to be creating new products and services than the rest of business – and particularly likely to be achieving growth in the most deprived parts of the country.
“Compared to the rest of business, social enterprises have proved remarkably resilient throughout the crisis, with 44% reporting increased turnover and 35% reporting decreased turnover (compared to an 18% increase and 56% decrease for the rest of business).”
Leadership and environmental mission
No Going Back found that a third of social enterprises are led by someone from a black and ethnic minority background, and around half are led by women.
One in five were formed specifically to address the climate crisis, while two-thirds either include environmental action in their articles of association or plan to do so.
About one in six social enterprises – 16% – have an annual turnover of £1m or more, up from 11% in the previous survey in 2019.
However, median annual turnover at social enterprises has dropped from £150,000 to £100,000 in the same period, a result of the rising number of very small enterprises which earn less than £50,000 a year.
Meanwhile 47% of social enterprises were founded less than five years ago, compared with 10% of small businesses.
The report is based on publicly-available financial information as well as a survey of 890 social entrepreneurs conducted earlier this year.
‘No time to waste’
Peter Holbrook, the chief executive of SEUK, said: “The pandemic has been an enormous shock to our economy, and many have doubted whether social enterprises can survive when the going gets tough.
“This research has found that not only can social enterprises survive, they can thrive. Whether it is growing their business, hiring new staff, giving more opportunities to women or tackling the climate emergency, social enterprises are leading the way.
“Rather than dismissing social enterprises as a novelty or exception, we need politicians and investors to take these entrepreneurs seriously.
“They are showing a roadmap for our future where business tackles the multiple, overlapping challenges that our country faces. There is no time to waste.”