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After COVID-19, what’s next for social enterprises?

The coronavirus pandemic has dealt a devastating blow to businesses around the world including those known as social enterprises which tackle problems from homelessness and hunger to discrimination and domestic violence.

Social entrepreneurs aren’t afraid to roll up their sleeves and help in a time of crisis, indeed, some are set up to do just that.

But plummeting revenues threaten thousands of these new-style businesses that seek to make profit and address issues like poverty and pollution.

The Thomson Reuters Foundation asked Emma Lange, Programmes Director at one of Britain’s biggest start-up incubators – the London-based Impact Hub King’s Cross – how businesses for good can adapt to COVID-19 in the years ahead.

Give us a sense of the kind of companies you support and how they have adapted to the crisis.

We support entrepreneurs across different sectors, however, one of our main themes is startups that are trying to tackle issues within the UK’s food system.

The ones that have done the best are quite resilient and have the ability to adapt.

Migrateful, a social enterprise that runs cookery classes taught by refugees, were able to transition to online classes fairly seamlessly. Through this, they were able to reach many more people, which was a positive unintended outcome for them.

An entrepreneur on our Feeding the City Start Up programme, Sara, runs a cookery school and a community kitchen up in Stirling in Scotland.

She saw individuals didn’t have access to enough food so she became like a food distribution hub. They went around and gathered all the surplus food from supermarkets and distributed it to individuals in their community who were in need.

We also supported this family-run business called Fruits of the Forage, who make preserves, chutneys, cordials from wild UK fruits and vegetables.

They noticed that within their community there was a need for healthy food and the supermarkets were depleted. So working with local farmers, they started a Veg Box scheme.

They were able to couple their products with it. This pivot worked to their favour as they were able to couple the two strands of the business, creating a new market for their preserves.

What are the biggest challenges posed by COVID-19?

Entrepreneurship can be a tough journey and social entrepreneurs often experience additional stress and worry because of the beneficiaries who rely on them.

For instance, one of the companies on our Accelerator programme for ethical food businesses employs refugees in their production.

I remember the founder expressing concern about a lack of demand, because ‘without demand, I don’t have a role for my staff and these individuals rely on me.’

While all entrepreneurs are likely to lie awake at night thinking about their bottom line or cashflow, social entrepreneurs often have an added layer of worrying about their ability to achieve impact.

We always tell (social enterprises) they should be married to the problem, not the solution, because your solution might have to change.

It could be that suddenly you can’t trade anymore because of regulations or a pandemic. It doesn’t matter why, you’re going to have to always be creative and agile.

Have the needs of social enterprises changed as a result of the pandemic?

There is a greater need for entrepreneurs to focus on their wellbeing and resilience. Everyone fails, whether it is due to the fault of their own or an external factor.

However, there’s a trend in the sector of ‘heropreneuship’ whereby everyone shares their successes without showing their vulnerabilities and mistakes.

It can be extremely harmful to their resilience and wellbeing when entrepreneurs feel they have to uphold themselves to this unrealistic expectation because it makes their failures seem so much more significant.

For hard skills, keep a watchful eye over cash flow. Cash is king but it becomes even more important in times like this. There’s also a need for flexible and patient finance options from finance providers.

I’m an entrepreneur that wants to start a new business. What should I consider?

Flexibility. We suggest starting lean – making as little investment of time, money and resources as possible – to develop a working prototype. From there, test the idea and demand for it and develop it further.

Identify a real need that isn’t being solved or being solved in the right way currently. This will ensure there is demand for your product or service. Think about longevity – is this a need that will disappear after the pandemic or will the need persist?

Involve your beneficiary group in designing your solution. They will have the best insights into their needs.

Build diverse revenue streams so your business is less susceptible to shocks.

What’s the future of social enterprises?

I don’t think anyone really knows… but I remain hopeful. Maybe this is in my circle, but I’ve noticed people are trying their best to think about supporting more independent, impactful and local businesses throughout the pandemic.

I also think entrepreneurship has shone pretty brightly.

Throughout the pandemic, there’s been lots of cases where it’s solving problems the government isn’t or filling gaps within the system, such as Sara up in Sterling acting as a food distributor.

And you’d think there’s fear about starting a business in these uncertain times but some are really motivated to find solutions to cracks in the system COVID-19 has revealed. For some who have lost their jobs, it’s the only option they have and a lot more people now are thinking about freelancing and they need support to transition into operating as a proper business.

So I think there is still the desire to start businesses. We’ve seen a lot more demand for our support.

This interview has been edited and condensed for clarity.

 

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