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CHAPTER 3 START-UP SUPPORT IN SCOTLAND
3.1 This chapter provides a broad overview of the current initiatives and support available to start-up social enterprises in Scotland from a variety of different sources. The discussion draws on evidence from existing documentation and from interviews and examines: specialist networks and partnerships; the enterprise networks; the Council for Voluntary Services ( CVS) network; intermediary organisations; specialist business services; learning providers; public authorities; funding bodies; and private sector providers. Data on the quality and effectiveness of each approach is not available. This chapter sets out to map current provision only.
Specialist Networks and Partnerships
3.2 There are now 30 Local Social Economy Partnerships ( LSEPs) that have been set up across the country to co-ordinate and strengthen local support for the social enterprise sector. While these have not explicitly been tasked with promoting start-ups, there are one or two notable examples of start-up initiatives that have emerged under the auspices of the LSEPs such as the Fife Social Enterprise Development Partnership described in Box 3.1.
Box 3.1: Fife Social Enterprise Development Partnership ( SEDP) |
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The Fife SEDP was a three-year European Social Fund ( ESF) supported social enterprise start-up initiative that commenced on 1 June 2003. The initiative promoted social enterprise locally, stimulated start-up ideas, and provided ongoing and intensive support to emerging ventures. Although not independently evaluated, the initiative is reported to have cost some £750K over three years, and resulted in the start-up of 17 new social enterprises, of which approximately 90% are still trading 12 months after the support. Source: FEAT Enterprises |
3.3 Related networks and representative bodies for the sector have also given rise to a number of initiatives that encourage new entrants to the sector. Senscot, for example, has developed a number of initiatives such as Social Enterprise Networks, the Exchange, and more recently First Port.
3.4 Likewise the work of the Scottish Social Enterprise Coalition (e.g. awards, events, publicity) is beginning to lay the groundwork for greater awareness of social enterprise as a way of doing business in Scotland.
The Enterprise Networks
3.5 Mainstream business support is provided by the Enterprise Networks. This incorporates two dictinct systems of start-up support.
3.6 In Lowland Scotland, Business Gateway does not currently 18 differentiate between start-up support to social and private businesses, or target social enterprises. Generic start-up information is available online to all, together with regular seminars and training. In-depth one-to-one advice is available to those start-ups likely to trade at or above the VAT registration threshold.
3.7 Evaluation work undertaken by the Training and Employment Research Unit ( TERU) 19 has highlighted significant variations in support to social enterprises. In some areas direct start-up support is not provided by Gateway, while in other areas such as Lanarkshire direct and specialist support has been established (see Box 3.2). The latest available figures from Scottish Enterprise, indicate that, during 2006/07, 18 social enterprises were assisted to start trading across seven LEC areas (compared to 25 start-ups in 2005/06).
Box 3.2: Lanarkshire Business Gateway Start-Up Support |
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Services to start-up social enterprises are provided by a specialist team in Lanarkshire Business Gateway, part-funded by the European Regional Development Fund. The team provides initial information and advice to all potential social enterprise start-ups, with intensive support then provided to 'High Growth' ventures. Where trading potential is less, a referral is made to the local CVS for initial capacity building support. Interventions are consistent with a support protocol established by the LSEP. Source: Lanarkshire Enterprise Services |
3.8 In the Highlands and Islands area, Highlands and Islands Enterprise ( HIE) also makes no distinction between social and private business, but has a long tradition of supporting social enterprise start-up activity. LECs now provide an initial point of contact for start-ups and put together a tailored package of support, potentially including one-to-one advice from business support contractor Development Partners - this process is described in Box 3.3. There is no monitoring/evaluation evidence available on the effectiveness of HIE support to social enterprises.
Box 3.3: HIE Orkney Start-Up Support |
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HIE Orkney provides a single point of contact for all enterprises (private and social) to all business support on the Orkney Islands. Following an initial diagnosis of needs, LEC Advisors can draw on various sources of advice, both internal (e.g. community land, assets, leadership) and external (primarily from Development Partners). Start-up funding can also be made available from a number of sources (e.g. business start-up grant, community enterprise loan, community economic development grants). Source: HIE Orkney |
The CVS Network
3.9 The Council for Voluntary Service Network ( CVS) consists of 55 independent organisations that provide services to the voluntary sector. Start-up support to new groups forms part of the Core Activities Framework 20 of the Network, and CVSs are often involved in forming new social enterprises or assisting voluntary groups to become more enterprising.
3.10 Differing levels of start-up support are evident, often based on the differing history, traditions, and capacity of CVSs, as well as the availability of existing specialist social enterprise advice locally. Common support includes help in forming a constitution, help in securing grant funding, and access to premises or other shared services (e.g. payroll, administration etc.). The SMART Incubator (see Box 3.4) is one such example.
Box 3.4: The SMART Incubator |
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The SMART Incubator is a three-year, Lottery-funded project hosted by CVS Hamilton/East Kilbride. The SMART Centre is based in Hamilton and provides office space, start-up information, advisor support, reception and administrative support to start-up social entrepreneurs and enterprises. In its first year it has provided incubation space to six start-up ventures and structured development support to 14 organisations. Demand exceeds availability and there is now a waiting list for accommodation. Source: CVS Hamilton/East Kilbride |
3.11 At present, there is no agreed approach to CVS engagement with emerging social enterprises, and no evaluation has been made of the quality and relevance of services provided specifically to social enterprises.
Intermediary Organisations
3.12 Various intermediaries have become established to represent and support particular types of social enterprise. The scope and depth of start-up help offered by these varies and has often been delivered as part of time-limited start-up or business development initiatives.
3.13 Some intermediaries have been set up to promote specific business models - for example Co-operative Development Scotland, Social Firms Scotland, and Development Trusts Association Scotland (see Box 3.5). The level and type of capacity building and start-up support provided by these intermediaries is based on the characteristics of each distinct business model.
Box 3.5: Development Trusts Association Scotland ( DTAS) |
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DTAS was set up in the summer of 2003 to encourage the spread of Development Trusts throughout the country. It has promoted the model widely and now generates some 100 enquiries each year from those interested in setting up a Trust. With three staff initially in post it has offered limited information/advisory support throughout the often lengthy gestation period (2-3 years) of new Trusts. It has also managed the successful Enterprise Accelerator programme, which provided brokered business support to 'hothouse' the potential of a group of 10 Trusts. Source: Development Trust Scotland
Evaluation: DTAS, Evaluation of the Enterprise Accelerator Programme, May 2007 |
3.14 Other intermediaries have emerged to support particular market sectors (e.g. Community Recycling Network Scotland) and client groups (e.g. the Council for Ethnic Minority Voluntary Organisations described in Box 3.6). The emphasis on start-up, and role of each organisation, again depends on the characteristics and needs of their constituencies.
Box 3.6: The CEMVO Social Enterprise Capacity building Pilot |
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Recognising that there were no established ethnic minority-led social enterprises in Scotland, CEMVO initiated a two-year pilot project with one part-time staff member. Its aim is to unlock the social entrepreneurship within minority communities and to help build the social enterprise potential of minority-led groups and organisations. In its first year the project: provided awareness-raising training to 38 people; provided hands on support to ten social enterprises; and assisted in the design of 22 new trading activities. Source: Council for Ethnic Minority Voluntary Organisations ( CEMVO) |
3.15 Most recently, First Port (see Box 3.7) has been established. It is focused specifically on supporting social entrepreneurs and start-up social enterprises throughout Scotland. Its programme of activity and fit within the current publicly funded support landscape is still being developed.
Box 3.7: First Port |
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First Port was established during early 2007 to: broker support through the Exchange service to the social enterprise sector; work with UnLtd to distribute funds to new social entrepreneurs in Scotland; and offer support for new and emerging social enterprises/entrepreneurs. Further proposed initiatives include short residential breaks to cultivate new start ideas and the development of a network of local 'agents' throughout Scotland to promote and support social entrepreneurship. Source: First Port |
3.16 There is limited evidence available to demonstrate the impact of these intermediaries on the start-up and survival of new social enterprises. This is not to say that these intermediaries do not have an impact - simply, that this has not yet been established or the evidence made available.
Specialist Business Services
3.17 A number of publicly-funded social enterprise business support providers have emerged in Scotland over the last two decades. These typically operate as social enterprises themselves.
3.18 In some cases these have been established as regional providers of support services - for example, Community Enterprise Ltd (east), CEiS (west), and Hi SEZ (north). These assist social enterprises at all stages of development, but increasingly focus on scaling-up existing enterprises rather than starting new ones. As described in Box 3.8, however, the work of these intermediaries does impact on new or fledgling enterprises.
Box 3.8: Trading Up |
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Community Enterprise Ltd is a specialist support provider to the social economy. During 2006/07 it delivered Trading Up, an EQUAL funded business support programme. Over the year it witnessed substantial demand and supported 84 organisations from east central Scotland with business advice, training, and technical support. An estimated 80% of clients were new or fledgling social enterprises. During the short programme over one-third of participants reported income growth (mainly from trading) and two-thirds reporting growing confidence. Source: Community Enterprise Ltd Evaluation: Community Enterprise, Evaluation of the Trading Up Pilot, May 2007 |
3.19 Some mature social enterprises are themselves beginning to offer support services. These are now trading on their substantial expertise in setting-up and running successful social enterprises, and have an explicit focus on start-up support. Forth Sector is a prime example of this (see Box 3.9).
Box 3.9: Forth Sector Development |
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Forth Sector Development is a new trading subsidiary of Forth Sector which provides business support and training throughout Scotland to those interested in developing a social enterprise. As part of the Social Enterprise Edinburgh ( SEE) initiative it can offer free one-to-one support, networking opportunities, training, signposting and information to social entrepreneurs and emerging social enterprises. It charges market rates for the business development support elsewhere. Source: Forth Sector |
3.20 Other publicly-funded services operate on a more local scale. These offer a varying level and depth of support for start-ups. The regeneration agencies in Glasgow (formerly the Local Development Company Network) are a noteworthy example.
3.21 The impact of these specialist business support services specifically on start-up social enterprises is not usually tracked or reported on.
Learning Providers
3.22 A variety of providers (including some of those already discussed above) offer learning opportunities that support the creation of start-up ventures.
3.23 The School for Social Entrepreneurs (Fife) is a particularly focused approach to training and support for social entrepreneurs (see Box 3.10). Although relatively small-scale and intensive in nature, this has been shown to be a powerful tool to support start-up social enterprises.
Box 3.10: Fife School for Social Entrepreneurs ( SSE) |
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The School for Social Entrepreneurs (Fife) was been developed by Brag Enterprises, a local development agency based in Crosshill, Lochgelly. It provides an integrated learning programme (based on the national SSE framework), development support, networking, and incubation space for up to 12 social entrepreneurs each year. The Fife School reports impressive results, with around 80% of students having developed trading social enterprises after 12 months of support and around 60% still trading after a further year. Source: Brag Enterprises |
3.24 The Social Enterprise Academy (Box 3.11) provides an important source of ILM (Institute of Leadership & Management) accredited training that is unique for the social enterprise sector in Scotland, and which early evidence suggests is highly effective in supporting the start-up process.
Box 3.11: Social Enterprise Academy |
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Among a range of other programmes the Academy offers the ILM Endorsed Award in 'Starting Your Social Business', which equips social entrepreneurs with business start-up knowledge, tools and skills to create a social enterprise. It also offers bespoke and action-based learning programmes designed to stimulate social enterprise activity locally. Early evaluation evidence from the Academy's 'Get into Social Business' programme shows that 7 in 9 new social enterprises are trading within a year of training and that every £1 invested in training yields an increase of £4 in the annual turnover of assisted enterprises. Source: Social Enterprise Academy
Evaluation: Social Enterprise Academy, Social Return on Investment Report, 2005 |
3.25 1Mainstream education providers can also play a role. At present, examples of 'Social Enterprise in Education' schemes are few and far between even though, as in the case of Inverness High School, these seem to prove effective (see Box 3.12).
Box 3.12: Inverness High School: REALCIC |
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Inverness High School is one of five secondary schools serving the fast growing city of Inverness. In 2003 a group of people involved in education, business and the social sector worked with pupils to plan a viable programme of social enterprise education and activity in the school. By spring 2006 the school had established the REAL (Real Education Active Lives) Community Interest Company ( CIC). Under this company three social enterprises are being developed on the campus, in the areas of food production, IT, and workspace. Source: Senscot Project profile |
3.26 Likewise, the further education sector is currently geared up to deliver generic and mainstream business skills programmes. Social enterprise is not yet put forward as a specific offering.
3.27 There are tentative signs that the higher education sector is recognising its role in encouraging the social enterprise sector. Heriott Watt University, for example, has set up the Social Enterprise Institute to assist in the creation of more and better social enterprises in Scotland.
Public Authorities
3.28 Public bodies can promote social enterprise start-ups in a variety of ways - as a funder of new ventures, by opening up public procurement markets, and by offering direct development support. These authorities may also be a source of new social enterprise formation themselves (e.g. by externalising services and setting up trading subsidiaries).
3.29 Although often overlooked, there are a number of examples of direct involvement, mainly by local authorities, in the delivery of start-up support. This form of intervention has typically emerged through the traditional role of local authorities in community economic development - Fife Council is one such example (see Box 3.13).
Box 3.13: Fife Council |
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Fife Council's Economic Regeneration and Partnerships Team provide a key source of start-up support for social enterprises in Fife. The team's focus is on creating viable social enterprises that will contribute to Fife's regeneration. Over the last three years the team has provided social enterprise support under the auspices of Business Gateway, and staff are Premier Advisor accredited. Financial assistance can be offered to start-up enterprises via a discretionary Social Economy Development Fund. Source: Fife Council |
3.30 Beyond local authorities, the involvement of other statutory bodies in start-up provision is more limited. Nonetheless, bodies such as health boards are becoming more interested in promoting the social enterprise model.
Funding Bodies
3.31 An array of funding bodies has supported social enterprises during their formative stages (e.g. EU funds, Lottery Funds, Community Regeneration Fund, grant-making trusts etc.). However, social enterprise start-up in itself is not usually an explicit priority for these funders, and funding tends to be awarded on the basis of specified project outcomes rather than as flexible investment towards set-up costs.
3.32 The Futurebuilders Scotland funding programme directed Seedcorn grant investment towards aspiring social enterprise activity. While the evidence available 21 indicates that the main Seedcorn Fund was used mainly by established organisations to build trading potential, as described in Box 3.14, the ring-fenced Social Entrepreneurs Fund has been used to good effect to assist start-ups.
Box 3.14: Futurebuilders Social Entrepreneurs Fund |
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The Social Entrepreneurs Fund was set up to provide grants of up to £5,000 to individuals with promising ideas for new social enterprises. Managed by Scotland UnLtd, the Fund made 220 awards totalling £392,500. At its close in July 2006, a survey by UnLtd indicated that: 90% of awardees were able to keep their project going after their grant was spent; just under half created a trading enterprise; and 40% created a job for themselves. One year later, evaluation evidence suggests that most of the benefits from the Fund have been sustained. Source: Scotland Unltd
Evaluation: EKOS, Evaluation of Futurebuilders Scotland (2008) |
3.33 The Social Entrepreneurs Fund (see box 3.15) was modelled on the Level 1 awards scheme from Scotland UnLtd (now managed by First Port in Scotland). This offers a national source of funding for social entrepreneurs and start-ups. Despite reported success, the funding programme remains heavily oversubscribed.
Box 3.15: Scotland Unltd |
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Scotland Unltd was set up to invest funding and development support in individuals with entrepreneurial solutions to social problems. It makes awards from the UnLtd Award Scheme (see Section 6 for further information). Level 1 grants of up to £5K are made to finance personal and project development, and act as a catalyst for the development of an array of bright ideas. Level 2 funding of up to £20K is more limited in availability (only 3-4 awards can be made this year) and can be used to scale up promising pilot ventures. Source: Scotland Unltd |
3.34 In addition, a small number of EU-supported Key Funds still operate in areas such as Glasgow 22 and Lanarkshire. These have been used as start-up funding for social enterprises within areas of deprivation. The future of these initiatives is unclear in the next round of EU structural funding for Scotland.
3.35 It is also important not to overlook the availability of loan funding. Regional CDFIs (Community Development Financial Institutions) offer small-scale loan funding to emerging or developing social enterprises. Take up of this funding by start-ups appears to have been slow, and the lending operations of Social Investment Scotland and the CDFIs are currently under review.
Private Sector Providers
3.36 Finally, the private sector remains a key provider of support to start-up social enterprises. Often start-ups are particularly reliant on some form of specialist support (e.g. solicitors to advise on regulation, constitutions etc.).
3.37 There are many sole traders and companies that offer specialist business support and technical services to the sector (e.g. marketing, HR, legal, accounting etc.).
3.38 While these are typically accessed through market forces, Senscot has developed a mechanism to help select and broker the input of specialist advisors and consultants (see Box 3.16). Likewise, the Professional Firms Network operated by Scottish Business in the Community brokers pro bono support to social enterprises.
Box 3.16: The Exchange |
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The Exchange (now part of First Port) was set up to broker information/support to social entrepreneurs and new-start enterprises. It provides online information, a personal response to enquiries and signposting to appropriate support, and more active support where required . It makes available a Consultants' Directory that lists in excess of 100 private advisors specialising in the sector. It also draws on pro bono support from the private sector where possible, drawing for example on links with Scottish Business in the Community and others. Source: Senscot |
3.39 At this stage there is no way to assess or assure the quality or relevance of these services to start-ups.
Key Points
3.40 A number of main observations can be made from the overview provided:
- there is a large and growing number of public, private, and not-for-profit providers that are promoting, encouraging, and supporting the formation of new social enterprises;
- there is little differentiation between pre-start capacity building support and the later business support required at the start-up and post-start stages;
- support during the start-up phase is often not distinguished within a general offering to the sector, and First Port has emerged as the only support intermediary focusing primarily on start-ups;
- there is a broad array and mix of support initiatives currently available at the pre-start, start-up and post-start stages; and
- there is limited evidence available to demonstrate the quality, relevance and effectiveness of existing provision for start-up groups or their impact on social enterprise formation.
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