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CHAPTER 7 CONCLUSIONS AND RECOMMENDATIONS
7.1 This section draws together the main findings and the implications arising from the study.
Key Findings
7.2 This study set out to examine the support currently available to start-up social enterprises in Scotland and elsewhere; its purpose is to help inform a more coherent strategy to social enterprise formation in Scotland.
7.3 On the basis of the work undertaken, a number of main findings have arisen:
- the start-up of social enterprises requires an effective pipeline of support, offering different forms of interventions at different stages of development;
- as yet there is no agreed rationale, approach or framework for delivering support specifically to start-up social enterprises in Scotland, in contrast to other parts of the UK;
- there is a growing array of providers and initiatives across the country that are contributing to the promotion, encouragement, and support for new social enterprises;
- current arrangements for providing start-up support in Scotland can best be characterised as fragmented, complex, uneven and inconsistent;
- there is also limited evidence available to demonstrate the quality, relevance, and effectiveness of existing provision for start-up groups or their impact on social enterprise formation;
- while the importance of encouraging start-ups has been recognised across the UK, each administration continues to develop its own unique approach in response to local circumstances; and
- there is a broad range of interventions that might contribute to an increased rate of social enterprise formation in Scotland, which go beyond traditional forms of funding, training, and advice.
Issues and Implications
7.4 Based on the research carried out, a number of main issues and implications are evident.
Setting the Direction
7.5 The government is well placed to help create an environment that allows social enterprises to emerge and flourish. However, to date, the rationale for providing start-up assistance to the sector has not been clearly articulated or the priorities established.
7.6 A strong lead and clearer guidance to local partners on the issue would be helpful. The starting point is to build agreement on why it is important to encourage more start-ups and what outcomes are sought. This should lead on to clearer priorities and from this a more considered response to how partners should intervene. This must be based on better data on, and a better understanding of, the dynamics of the social enterprise sector.
Stimulating Entrepreneurial Potential
7.7 At present there is emerging evidence that points to a general lack of awareness of social enterprise in the UK, which may restrict people's ability to make informed choices about the type of enterprise they will form. It also seems that levels of passion, interest, and potential for social entrepreneurship vary between different groups within society.
7.8 In order to encourage a stronger flow of quality start-up ideas it is necessary to raise awareness of social enterprise as a way of doing business. In this it will be important to continue and build on early actions to raise the profile of social enterprise in Scotland and to stimulate aspirations among target groups (e.g. BME communities). Various approaches to social marketing should be considered here 33.
7.9 Beyond this, careful consideration should be given to the current level of social entrepreneurship and start-up activity evident across Scotland. This will allow a more informed view as to whether, and where, it might be helpful to take proactive action to encourage new-starts, and where a reactive stance will suffice.
Opening Up a Pipeline of Support
7.10 Start-up social enterprises emerge from a variety of routes. Often groups require early support to form, familiarise, prepare, and bring forward potentially viable social enterprise ideas. At present CVSs and an array of other intermediaries active at this stage offer various forms of 'capacity building' support e.g. help to form a group constitution, training for management committee members.
7.11 Increased coherence and clarity would be helpful during the initial stages of support to start-up groups. This calls for: a robust assessment of the viability of start-up proposals; greater differentiation between the generic capacity building support available to start-up groups and the expert business support; and improved feed through of promising groups and ideas to relevant start-up business support, training, and funding providers.
Skills Development
7.12 In any start-up venture people will require the knowledge and skills to put together a business model, find a market, and test its viability. Various forms of entrepreneurship, leadership, and start-up training have been established in Scotland and elsewhere.
7.13 There is now the opportunity to bring about a step-change in the learning available to support social enterprise formation. This might include: the introduction of social enterprise teaching into relevant programmes in schools, colleges and universities; an extension or replication of successful specialist learning programmes for social entrepreneurs; the greater use of accredited and quality assured start-up training; and the integration of training support into start-up funding/support packages.
An Integrated Start-Up Funding Package
7.14 Access to some form of public funding/finance is potentially an important need of start-up enterprises, particularly those setting up in areas where market failure exists. Such funding interventions for social entrepreneurs (e.g. UnLtd) and start-up enterprises (e.g. Northern Ireland) have generally proven effective. At present there is no coherent national framework for investing in start-up social enterprises in Scotland.
7.15 Consideration should be given to the scope for a nationally-branded funding programme to support start-ups. For this to add value, it might: support start-up groups rather than individuals; focus on potentially high risk/impact starts; make awards based on an assessment of a business plan; and offer a flexible financial package (grants and loans) for set-up costs. This could provide a mechanism around which the funding, business advice, mentoring, and training needs of promising start-ups could be assessed, packaged and delivered. This would best be integrated with existing funding streams (e.g. UnLtd, CDFIs) as well as localised forms of business support and training.
Hot-housing Social Enterprise Prospects
7.16 Few new ideas, even the most promising ones, are born fully formed; therefore they often need incubation in a protected environment. This report has highlighted various types of initiatives designed to incubate social enterprise start-ups and to accelerate their early development.
7.17 Based on the evidence from Scotland, and examples from elsewhere in the UK, it would seem that there is further scope to create supported environments in which start-ups can be nurtured and scaled up. This might include a suite of measures to: nurture entrepreneurial talent (e.g. the School for Social Entrepreneurs); provide incubation space (i.e. physical incubator units); harness rapid routes to start-up (e.g. via buy outs, acquisitions, franchising etc.); accelerate entry to new markets (e.g. health innovation accelerators); and invest in scaling up or replicating the most promising ideas (based on venture capital approaches).
Organising Business Support
7.18 At present, the findings suggest that start-up provision in Scotland has developed on a piecemeal basis and is currently disjointed or uneven across the country due to the variety of different funding and support bodies around the country. As noted earlier, the challenge is to ensure that provision as a whole is greater than the sum of its parts.
7.19 Given the complexity and clutter evident in some areas, especially Lowland Scotland, this will be challenging. Either one can attempt to rationalise, standardise and declutter the field, or else accept that there can be no single 'one size fits all' solution and embrace a diversity of provision.
7.20 If we accept that choice is a good thing and that competition can be positive, then the challenge becomes more manageable - to ensure that groups find the best and most appropriate support available to them in the market. The possible solutions then include: better support protocols between providers; case management of new-start groups; clarification of the specific offering available from each provider; a directory and route map of support available; and an extension of services where necessary to fill gaps.
Resourcing the Support Infrastructure
7.21 The report has also highlighted the challenge for government in ensuring that a sufficient and stable support infrastructure for start-up groups exists (e.g. in light of declining EU funding for start-up initiatives). It is important that there is future Scottish Government investment in social business to achieve clear and agreed outcomes.
7.22 Consideration should be given to where best public investment can be used. Different forms of investment might be desirable: the targeted use of funding to help initiate incubator or accelerator schemes; a programme of direct investment in high risk/impact start-up proposals; contracts to business support providers that specify support requirements in particular areas; and continued experimentation in the use of learning bursaries or support credit schemes to put choice back into the hands of start-up groups.
Guaranteeing the Quality of Provision
7.23 This report has also touched on the lack of consistency or quality assurance across the range of support available. While various forms of accreditation and standards exist (e.g. ILM accreditation, SFEDI standards) and are available for training and advice, these have not been widely adopted or used as yet. In part, this is because some support providers are too small to gain accreditation or because this has not previously been a requirement.
7.24 Where possible, start-up business support and training might best be delivered through a quality-assured network of providers. In part this might help to ensure minimum standards of quality across the country. The starting point is to agree an appropriate mechanism of quality assurance for start-up services/advisors, and to build this into future funding agreements and contracts with them. This accreditation must be subject to regular review to ensure monitoring, consistency, and quality control.
Building on What Works
7.25 Finally, while the social enterprise sector has excited increasing policy interest and development activity over recent years, there still remains a relative lack of evidence on the start-up market. At a very basic level it is difficult to discern what start-up activity and support is currently going on, and what impact it is having.
7.26 If serious attention is to be given to the issues discussed in this report then further intelligence should be gathered that measures the performance and impact of start-up work. Where successful models exist there should be a genuine commitment among partners to expand, extend, or replicate these.
Recommended Actions
7.27 Overall, the study has identified significant potential to strengthen the support available to start-up social enterprises in Scotland.
7.28 There are a number of interrelated areas where action should now be considered by the Scottish Government as part of a more coherent approach.
7.29 We recommend that:
- further research/intelligence should be gathered into the level of social entrepreneurship and social enterprise formation across the country, and into the dynamics of the sector Scotland-wide;
- the explicit rationale and priority attached to social enterprise start-up should be set out by the Scottish Government, together with associated guidance to LSEPs;
- increased action should be taken to raise the profile of social enterprise as a start-up option, including targeted work to stimulate the aspirations of targeted groups (e.g. young people, BME groups);
- greater clarity and focus should be provided as to the 'capacity building' role and offering of the CVS Network and others to groups aspiring to embark on social enterprise;
- training from accredited providers, such as the Social Enterprise Academy, should be made more widely available to support social enterprise formation in Scotland;
- a social enterprise start-up funding scheme should be introduced to provide integrated funding (grants and loans) and business support based on an assessment of the business plan and needs of the start-up;
- funding should be made available to test a small number of pilot/pathfinder projects designed to incubate, accelerate, and scale-up promising social enterprise start-up ventures;
- a tool such as a national directory and/or guidance should be introduced which helps groups to understand and navigate the resources and support available throughout Scotland (by area, type, and sector);
- a method of accrediting and assuring the quality of business advice to social enterprises should be agreed (various forms of accreditation already exist), and should form the basis for any publicly-funded support to the sector; and
- appropriate performance indicators to monitor and evaluate the impact of publicly-funded support providers on social enterprise start-up should be introduced.
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