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CHAPTER 4 DELIVERING START-UP SUPPORT
4.1 This chapter outlines considerations in relation to the current social enterprise start-up provision in Scotland. It draws largely on the findings of interviews with representatives from each of the main support providers discussed in Chapter 3, supplemented where possible by documented evidence.
Leadership
4.2 A first and key issue emerging is the extent to which there is a clear agenda around which to promote and support social enterprise start-ups in Scotland.
4.3 At a national level, there is general agreement among support providers that the Social Enterprise Strategy (2007-08) and the enterprising third sector action plan are encouraging of new entrants to the sector. However, a clear set of objectives, targets, or outcomes in this respect have not been outlined.
4.4 At the local level, those representing the views of Local Social Economy Partnerships ( LSEPs) have recognised that local leadership on support arrangements (for new and growing social enterprises) is still maturing and under-resourced.
4.5 Not being formally tasked with considering start-up support to social enterprises, this issue has not widely emerged as a priority for LSEPs. Evidence from analysis of the 30 LSEP action plans available show that start-up support is stated as an explicit objective in just eight of these.
4.6 The views provided during interviews have highlighted the differing thinking of LSEPs on this issue. It is generally accepted that a vibrant and growing social enterprise sector will require new entrants. However, this is balanced with the requirement to use public finances prudently (risks are recognised, as start-up support inevitably brings failures as well as successes) and a degree of realism surrounding the ability of LSEPs to prioritise social enterprise formation within modest resources and competing objectives.
Co-ordination
4.7 Linked to the above, the co-ordination of start-up initiatives and services remains problematic, with each provider and funder working to differing priorities and support methodologies.
4.8 Interviewees have highlighted a lack of synergy between advice, funding, training and other measures. For example, it has been reported that:
- there is insufficient linkage between early capacity building support to formative groups and the feed through to specialist business support;
- business advice and technical support is not systematically integrated into relevant start-up funding schemes (e.g. Futurebuilders);
- accredited training (from the Social Enterprise Academy and others) is not often used to reinforce one-to-one start-up advice to groups and individuals; and
- there is no clear pathway or ladder of funding support to emerging social enterprises at key stages in their development.
4.9 Particular concerns have been raised about the co-ordination of start-up provision in Lowland Scotland. Instances of unhelpful overlap and duplication are noted. These range from providers working with start-up groups on the same patch, but separately, to active competition for clients.
4.10 The challenge is one of co-ordination, between various forms of intervention and between national and local support. There are examples of effective LSEP support protocols at start-up stage (e.g. Lanarkshire, Fife etc.), but these tend to cover only local support providers. There is no widespread evidence of case/account management arrangements of start-up groups.
Geographic Coverage
4.11 There is an important spatial dimension to consider in relation to those initiatives and services that promote social enterprise start-ups.
4.12 Significant variations in the social enterprise support infrastructure across LSEP areas have been reported by interviewees.
4.13 The feedback from various sector intermediaries and support providers suggests a number of factors at play:
- the availability of EU funding has led to uneven coverage of initiatives and programmes across the regions;
- the differing traditions, priorities, and systems for business support have led to varying LEC engagement in Highland and Lowland areas;
- the limited base of social enterprise activity in sparsely populated areas is usually insufficient to justify a dedicated source of local support; and
- the national or regional remit of funders has limited their local presence, connection, and reach in some areas.
4.14 This has led to an uneven pattern of provision, with a concentration of start-up support expertise and resources in the densely populated areas of the central belt of Scotland.
4.15 This complex and uneven pattern of provision is perceived by providers to have led to confusion on the part of start-up groups. Moreover, it has led more than one interviewee to comment on a 'post code lottery' of start-up support available across the country.
Demand
4.16 At this stage, and based on the information conveyed to us, it remains unclear as to the level of demand (latent, expressed, or actual) for start-up support across Scotland.
4.17 There is a distinct lack of information on the level and type of new entrants to the social enterprise sector, and the churn within it. This in part is hampered by the lack of a clear definition of a 'social enterprise start-up' and the lack of priority associated with supporting new-starts. This does not enable a considered analysis of why and where start-up support is required.
4.18 Various providers of start-up support that were interviewed reported that demand exists and is growing. For example:
- enquiries for support from a range of intermediaries from aspiring social enterprises are reported to be strong and increasing;
- key funding sources such as Futurebuilders and Scotland UnLtd have been heavily oversubscribed; and
- there is growing interest in social enterprise reported within the wider voluntary sector by CVSs.
4.19 The feedback suggests that it is not the level of demand that is the issue, rather the quality and relevance of the social enterprise start-ups ideas being brought forward. Mainstream and specialist support providers have questioned: the preparedness of many start-up groups to take on business activity; and the potential financial viability of their business ideas in many cases.
4.20 There is a consensus among support providers that further demand would arise if the general public were made more aware of social enterprise and encouraged to consider it as an option.
4.21 There is some debate, however, around the extent to which providers should work to stimulate new activity. Some argue that proactive capacity building support is widely required to seek out and initiate new activity. Others argue that successful start-ups will be led by those people with the entrepreneurial instinct to find their own way to support providers and embark on social enterprise activity with relatively modest levels of support intervention.
Scope of Support
4.22 Another issue is the extent to which a sufficient range of support is currently being made available to start-up groups.
4.23 Support providers generally report that a variety of specialist expertise and advice already exists in Scotland. However, the stated challenge is to do more to open up or channel this support towards start-up ventures and to organise it more efficiently across the country.
4.24 There is recognition that some start-up routes are better supported than others. Support arrangements to date have largely focused on harnessing the potential of existing community and voluntary effort, and channelling this into social enterprise. The interviews confirmed that to date there has been relatively little publicly-funded support (outside of the co-operative sector) to exploit opportunities for start-ups through, for example, commercial acquisitions, buy-outs, and franchising.
4.25 It has also been suggested that particular forms of intervention are limited or lacking in some parts of the country. Two interventions stand out from the feedback received:
- there is limited suitable physical space for the incubation of start-ups, although successful models have been noted (e.g. the SMART Project Hamilton, and the Kilncraigs Incubator in Alloa); and
- there is limited 'risk' capital, both grants and loans, that can provide a suitable package of financial support responsive to the needs of start-up social enterprises.
Resourcing
4.26 It is generally accepted that, for most social enterprises, the start-up phase can be lengthy and demand relatively resource-intensive inputs.
4.27 There is recognition among support providers that there are limited resources available to them and that this support has to be prioritised carefully. This situation was reported to be common across the LECS, CVSs, intermediaries, and specialist support and training providers consulted.
4.28 The availability of resources is set to decline further with the reduction in EU funding. This has supported a number of targeted start-up initiatives (e.g. the Fife Social Enterprise Development Partnership) and most of the specialist social enterprise business support services discussed earlier.
4.29 The opportunity for service providers to generate income is reportedly limited by the ability and willingness of start-up groups to pay for advice and training. The view is that there is only a limited market for unsubsidised start-up advice and training.
4.30 This issue of resource availability has implications for start-up support, as often providers: will not prioritise support at the start-up stage, where it is considered more intensive, higher risk, and lower impact; or are unable to provide free or subsidised support. This serves to limit the support available to start-up groups.
4.31 There has been concern expressed that the decline in public funding will further erode the support available for start-up social enterprises, leading to either greater prioritisation or more shallow provision. It is also likely to serve to further drive up competition between support providers for increasingly limited grants and contracts.
Consistency
4.32 The complexity and variation within the start-up field then also raises the issue of consistency.
4.33 With a mix of objectives and interests, the approach to supporting social enterprise start-ups inevitably varies between providers. There is no standard set of support tools or interventions used.
4.34 On the one hand this variation might be welcomed as a strength. Support providers have adapted their approach and methods to particular types of start-up enterprise. For example, the support process required to establish a Development Trust is often very different from that for a Social Firm.
4.35 On the other hand, this variation might have negative implications in terms of the consistency of support, where potentially:
- differing or conflicting start-up advice may be provided to groups;
- groups do not have access to a full or standardised menu of support options; and
- support is offered at different prices (some providers offering free support, some subsidised, and some at commercial rates).
4.36 For the social enterprises capable of navigating the differing support offerings, this brings choices. For the majority of start-ups that are unfamiliar with the territory, however, this can lead to confusion, to wrong choices, or to closed doors (e.g. where a service is unaffordable).
Quality and Effectiveness
4.37 A final issue relates to the quality and effectiveness of the support currently provided.
4.38 In this, interviewees raised various concerns. These relate to the:
- responsiveness of mainstream business start-up support;
- the effectiveness of one-off, short-term, and volume programmes;
- competence of business advice offered by a range of intermediaries;
- the quality of non-accredited training to start-up groups; and
- responsiveness to the needs of particular equalities groups, such as ethnic minority communities 23.
4.39 Conversely, intensive, specialist, longer-term, and tailored forms of advice and support are generally considered to be effective.
4.40 At present it is difficult to verify these concerns - there is no widely adopted framework or system to assure the quality of the advice provided (from individual advisors or providers) or to benchmark quality between providers.
4.41 In the absence of robust evaluation evidence on the work of various providers at the start-up stage, it is difficult to assess the effectiveness of support. There is limited information on the conversion of enquiries/interest into start-ups, and the impact of support on the survival and sustainability of the social enterprises.
Key Points
4.42 This section has highlighted a number of reported issues to consider in relation to current start-up provision. These include:
- a lack of leadership and guidance, at both a national and local level, on support for social enterprise formation;
- a lack of connectivity between the various sources of funding, training, and advice;
- a geographic variation in the coverage of support across the country, and a cluttered/complex landscape of provision in lowland Scotland;
- a lack of knowledge about the scope and scale of existing start-up activity and where additional support is needed to stimulate or respond to it;
- limited support available to groups pursuing acquisition, franchising and buyout as a start-up path;
- inadequate resourcing of the start-up support providers, and uneven coverage of subsidised provision to start-up groups;
- a lack of uniformity in relation to the mix of provision available, making it difficult for start-up groups to navigate the support system; and
- a lack of evidence generally on the quality of start-up support available, and limited evidence on what works well and why.
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