Enterprising Communities

How much does it cost, and how long does it take to get a new social enterprise started?

Introduction

During 2004 - 2006 Enterprising Communities delivered a support programme for new social enterprises as part of a Cumbria-wide business start-up programme managed by Business Link. Emerging social enterprises received support in group development, business planning, legal structures and governance. Those that completed the programme, produced a satisfactory business plan and became legally incorporated were then eligible for a start-up grant of £1,000.

We carefully documented the time we invested in each new start social enterprise*. We found major variations in the time they received - from 41 hours to nearly 250 hours.  Likewise the cost ranged from £2,840 - £11,200 per start up. These results are explained in more detail below.

The programme

The programme was made up of the following activities:

• Initial contact (either meetings or phone calls) with people with a new social enterprise idea
• Group development and business planning workshops (3-4)
• Process support (for instance telephone advice, e-mail correspondence) in between the workshops.
• Follow-up support after legal incorporation

For more details about this process take a look at the Guide to Group Development Workshops and Business Planning for social enterprises in the tools section.

Time taken

Even though these emerging social enterprises were going through a similar process to reach start-up, the time they took to get there varied considerably - from 5 months to 27 months. Correspondingly the staff time needed to support these new social enterprises ranged from 41 hours of staff time to nearly 250 hours.

Reasons for the variation

In our view, the main reasons for variations between these emerging social enterprises were:

• The level of skills of the groups going through the process – the more skilled the initial committee (e.g. whether they had business people, accountants, solicitors etc on board, and also the level of familiarity with the language and processes for securing grant funding), the quicker the social enterprise got started
• The developmental status of the group, including how well established they were before undertaking this activity. Groups that were continuing broadly what they had done before (e.g. moving from an organisation run by volunteers to using paid staff) completed the process in a shorter time
• The size and complexity of the new social enterprise itself. In particular, factors around legislation and requirement for large capital funding had a major effect on extending the time taken to reach start-up

Actual costs of the support

• Average cost of staff time to get the 27  emerging social enterprise to legal incorporation, business plan and follow-up support (average 4 hours) was £3,641**
• In addition, all these social enterprises received  £200 of legal expertise and £1,000 start up grant
• Total average cost for the 27 participating social enterprises was £4,841 (range £2,840 - £11,200)