A B U S I N E S S P L A N N I N G G U I D E TO D E V E LO P I N G A S O C I A L E N T E R P R I S E : A S S E S S M E N T
Example of a balance of incomes
Achieving a Balance of Income You might find it useful to look at the balance of incomes that you are going to need to sustain your business. Some social enterprises, e.g. co-operatives, employee-owned business and social businesses, aim to generate 100% of their income from commercial activity. Others, such as social firms and development trusts, might only look for 50-75% of their income to come from commercial activity – because this may be more achievable given the social impact they are seeking.
100% 90% 80% 70% 60% 50%
You should aim to generate more and more of your income from commercial activity, as you move towards the social enterprise becoming viable and sustainable. This will give you greater security and release your reliance upon grant funding. However, it may be that you never achieve 100% commercial income and getting the balance of commercial and non-commercial income right will be a key factor to your success. The table below illustrates the key differences between commercial and non-commercial income.
40% Non commercial income
30% 20%
Commercial income
10% 0 Year1
Non-commercial income
Commercial income
Grant aid – grant funding from either public sector funders, charitable trusts or other funding bodies such as The Big Lottery
Sales – selling goods or services to individual customers
Service Level Agreements – outcome related grants where the public sector provides a ‘fee’ for a specified service Donations – charitable giving by individuals or businesses (can be cash or ‘in-kind’)
Year 2
Year 3
Year 4
Year 5
As you develop your business, the diagram above illustrates how you might balance the non-commercial and commercial income each year. The focus here is to increase sales income and reduce reliance on grants.
Contracts – legally binding contractual arrangements to supply goods and services to other organisations, businesses or public agencies Sponsorship – receiving payment in return for advertising or publicity
There is no right funding composition for a social enterprise. This will depend upon which market you will be operating in, your stage of development and the social impact that you hope to achieve.
What can you add to the business plan? You should now be able to complete the following sections of the business plan:
What are the external trends that will effect your business? How do you plan to move towards commercial sustainability? What is your business idea?
50
51