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Study increases number of UK social enterprises to 232,000 from 62,000

12 March 2010

'There is no need to compromise growth or profitability for the sake of doing something to make a difference'

 

Dr Rebecca Harding, managing director of Delta Economics,

The UK could be home to 232,000 social enterprises and not the official figure of 62,000, new research shows.

A study by economics consultancy Delta Economics and market researchers IFF Research revealed that a fifth of 2,121 entrepreneurs interviewed run businesses that could be ‘hidden social enterprises'. These are classed as for-profit companies with a social, environmental or job creation purposes and reinvest their profits or surpluses to achieve this goal. Those asked have been running their business for more than two years, but fewer than ten have annual turnovers greater than £200,000.

The 62,000 figure, released by government last summer, is based on the Annual Small Business Survey (ASBS) figures from 2005 to 2007. It is the figure used on all promotional material by the Cabinet Office and leading social enterprise networks, including the Social Enterprise Coalition.

The study also found that ‘making society a better place' was an important factor in their business, with 43 per cent of that half (21 per cent of the total) claiming it was the primary reason.

The research also found that:

  • Hidden social enterprises experience similar growth patterns to mainstream business, showing that profitability and altruism are not mutually exclusive. They also create nine jobs on average, compared with six for the average enterprise
  • Women were more than twice as likely as men to have set up a hidden social enterprise
  • Black and minority ethnic groups run more hidden social enterprises than mainstream businesses, accounting for 10.9 per cent of the former but only 7.6 per cent of the latter.

Dr Rebecca Harding, managing director of Delta Economics, said these businesses ‘are not social enterprises by the accepted definition'.

However, she added: ‘This research places entrepreneurs exactly where they should be - at the centre of the debate on the way business moves forward after the financial crisis.

‘Hidden social enterprises have wealth and value creation potential that is similar to mainstream businesses - there is no need to compromise growth or profitability for the sake of doing something to make a difference. Entrepreneurs really are the world's change agents.'

Steve Lomax, director of IFF Research, said: ‘An analysis of the true extent of social enterprise is crucial in understanding the make-up of UK business, where government support should be focused and what motivates business people to succeed. This is the first major study to do that and the results challenge conventional thinking around the role social enterprise plays in our economy.'

Hidden Social Enterprises and case studies can be found at www.deltaeconomics.com

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