Sharing his experiences of the good and the bad times, Kevin Robbie, previously Chief Executive of Forth Sector, the award winning Scottish social enterprise, had the following key messages:
- Focus on the market. Social Firms need to understand the competition – you need to know how to price goods and services competitively (taking into account the actual costs of running a supportive business) and don’t underprice your tenders
- Be alive to changes in the market and the need to refocus accordingly
- Focus on ventures that will help to both increase business and create jobs
- “Stick to your knitting” – ensure you have expertise in the type of business you set up
- Recruit managers with commercial experience and who share the organisations values
- Focus on replacing grant funding with business revenue.(Forth Sector found that the “businesses” they had to close were those that were grant dependent, and none had had business loans, which had spurred their managers to develop commercially)
- Measure your social impact
- Identify how you will access the finance necessary for business development
- Don’t let your PR be better than your product – be brutally honest with yourself
- Cash is king – beware impact of late payments on cashflow.
Kevin also talked about ways of growing businesses – acquisition, replication, and businesses focusing on gaining government contracts.
- On acquisition he recommended reading “Acquiring business for good”, which you can download from the Social Firms UK website http://resources.socialfirms.co.uk/index.php?q=node/510 .
- On replication, Kevin stressed the need to ensure that the business you intend to replicate will work in another setting. His example of this was replicating Forth Sector’s guest house model in Poland. Two locations were explored – Krakow, and another more industrial city. Replication has been successful in Krakow because, like Edinburgh, it has a large tourist market. However, as this wasn’t present in the other city it was decided a different model would need to be developed.
- On businesses focusing on government contracts, his advice was that it was possible in some cases to build in big margins to the bids, but the public sector were frequently “late payers”.