Social Enterprises pursuing social aims are more deserving of support from funding bodies, their local communities and customers than are capitalist enterprises, which exist solely to make their owners rich.
But they have to demonstrate this worthiness by something more than simply saying that they are a social enterprise. They need to set social objectives, measure and report success by social auditing.
Social Enterprises need to be clear about their social and environmental objectives, otherwise they can be weak in the following areas:
What marks Social Enterprises out as special is their commitment to producing social as well as commercial outputs, but we have to define:
To answer these questions we need to take much the same approach as we do for our commercial objectives. That is, we should have:
For instance: to be profitable within two years, to have paid back start-up borrowing within five years, to be in a position to buy premises within ten years.
Objectives are the things we set ourselves to succeed in, to achieve those aims. For instance: turnover at £100,000 at the end of year 1, or marketing objective: sales conversion rate of 30% to produce 30 sales from 100 canvasses. It’s what reminds us what we are doing, focuses a team, gives us something to measure ourselves against and a sense of direction.
Objectives should be SMART:
These objectives should be turned into targets. Targets set numbers and dates as much as possible on those objectives, for example: we will have six employees by the end of year 2. They are easily measured.
Auditing is the process of looking at the historical data and analysing it to see how well we have really done. Audits can be internal (done by ourselves) or eternal (done by an independent outside expert). The former is cheaper; the latter can be more informative. So for instance, all enterprises have a financial audit each year to produce a profit and loss account and a balance sheet. These show how the enterprise has performed against generally accepted criteria such as:
It’s not just the financial performance that needs auditing. If an enterprise has social as well as financial objectives, it should find a way of measuring performance and comparing achievements with targets. This is called a social audit.
When an enterprise publishes its financial audit, it does so for an internal market (the members or shareholders) and an external market (the inland revenue, bankers, investors and potential investors, suppliers etc.) In this way, it accounts for itself to its stakeholders.
The internal market is interested in things like “did we hit the profit target and do I get my bonus?” The external market is interested in things like “how much corporation tax should be levied?” or “am I likely to get my account paid?” or “is my investment safe?”
When an enterprise reports against social targets it is seeking to answer similar questions from internal and external stakeholders like “did this enterprise that I have worked so hard for this year actually achieve any of the social objectives I signed up to support?” and “did this enterprise we gave a grant to actually do anything for our community?”
The social audit is a massively important marketing tool. It can be used to:
It is therefore important to have a dissemination strategy:
Decide your social aims. This is your social manifesto. It is what you use to rally the stakeholders internal and external to the cause.
Set objectives. Remember to be SMART about it.
Convert these to targets, numerical where possible, with dates.
Decide your strategy for achieving these targets. If you cannot do so, revise targets down to something you can achieve. This is a big element of your business plan.
Figure out a way of deciding if you have met the targets (how you will measure success) and how you will record these successes for audit later.
Set a process for audit. Who, when and how?
Set a process for reporting – disseminating the results to stakeholders, internal and external. This pre-supposes that you have figured out who the stakeholders are. For some enterprises it will be a significant number of people, even whole communities.
At least the following:
How good is our enterprise as:
A good employer
It’s fine being a good producer of social outputs but are we burning people out, destroying their health or driving them mad? We need to think through objectives like making our workers happy (how will we measure that?), improving their qualifications and skills and equipping them to participate in the democracy.
A producer of social outputs
What is it we actually do for society? What are our targets? It could be disabled people employed, children involved in arts projects, tons of fresh food supplied to housing estate food deserts, financial services provided to people without bank accounts.
An ecologically sustainable enterprise
It is fine making workers happy and giving disadvantaged people opportunities but are we destroying the ecosphere in the process. How good are we at re-using material, conserving energy etc.? How do we measure these things?
A provider of Equal opportunity
It is against the law to discriminate against a section of the population. For example, to not employ an individual who is the best candidate for a job, because of their age, colour or creed. Every organisation should have an equal opportunities policy.