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					     GEM UK 2005




Social Entrepreneurship Monitor
United Kingdom 2006
Rebecca Harding
         2
GEM UK 2005




              AcknowlEdgEMEntS                         Lincoln (Social Enterprise Unit)
              This report would not have been          provided last minute and valuable
              possible without the help of Dr          information. As always, I am also
              Jonathan Levie (Hunter Centre for        indebted to Simon Harmer and
              Entrepreneurship) and Professor          his colleagues at Intuition Design
              Mark Hart (Kingston University),         who allowed me to work right up
              who dedicated large amounts of           to the last minute on the report.
              their valuable time to creating the      My thanks are also due to Davina
              variables in the dataset used in         McAleely and Mark Quill who kept
              this analysis. I am really grateful to   the GEM global project running
              them for their commitment to GEM         while I wrote this.
              UK generally and to the Social
              Entrepreneurship aspects of it in
              particular. I am eternally grateful to
              Dennis Harding (Delta Economics)         diSclAiMEr
                                                       The data for this report are compiled by the GEM UK
              for his support on the policy and        team, as part of the annual adult population survey.
                                                       Their analysis and interpretation are entirely the
              literature searches and Andrew           responsibility of the author.
                                                                                       3
                                                                                       ExECUTIvE SUMMARY




ExEcutivE SuMMAry                         Are social entrepreneurs                • Those who are labour market
This report focuses on the social         different?                                inactive are marginally more
entrepreneurs who may grow the            • Social entrepreneurs are a distinct     likely to be social entrepreneurs
social enterprises of the future. It is     group with more positive attitudes      than mainstream entrepreneurs.
the second Social Entrepreneurship          than the general UK adult             • Black Africans and Black
Monitor report published by the             population, with less positive          Caribbeans are, respectively,
Global Entrepreneurship Monitor             attitudes than mainstream               three times and two times more
(GEM) UK1 project. Like the first           entrepreneurs.                          likely than Whites to be social
report, it uses data from a survey of     • As social entrepreneurs                 entrepreneurs.
27,296 18-64 year olds randomly             become more experienced, it
stratified by UK region2. It measures       appears from the data that they       Structure and funding of social
levels and types of early stage             become more disillusioned with        enterprises
community or socially oriented              entrepreneurship and see fewer        • Business activity is not based at
entrepreneurial activity in the UK,         opportunities, are more likely to        home, irrespective of age of the
with a view to informing policy             fear failure and less likely to see      social enterprise.
about this important feeder group to        it as a good career choice.           • There is a greater likelihood that
the overall social enterprise agenda.                                                social enterprises will become
                                          who are the social                         not-for-profits or charities as
the geography of social                   entrepreneurs?                             they become more established,
enterprise                                • Women are proportionately                but even so, the majority of
• Social entrepreneurship is an             more likely to be social than            enterprises are not charities
  important phenomenon across               mainstream entrepreneurs                 either at the baby or the more
  the UK, at some 3.2 % of the              despite the fact that overall men        established stage.
  working age population or nearly          are more likely to be social          • The profile of financing is
  1.2 million adults.                       entrepreneurs than women                 similar to that of mainstream
• Regional differences between              (3.6% compared to 2.8%). The             entrepreneurs. However, social
  levels of SEA are not significant         percentage of women managing             entrepreneurs are proportionately
  and the gap between the highest           an established social enterprise         more likely to have failed to
  rate in London (4.7%) and the             is marginally higher than those          gain access to finance because
  lowest in the East Midlands               managing a baby enterprise,              of the nature of their business.
  (2.6%) is less than the TEA (Total        while for men there is no                Interestingly, inadequate business
  Entrepreneurial Activity) gap             difference in these two activities.      planning is not the largest factor
  between London (8.4%) and the           • Younger people are more likely           for established social enterprises,
  North East (3.9%).                        to be social entrepreneurs than          but unwillingness to share and the
• Rural locations are more socially         any other age grouping (3.9%             costs of finance are.
  entrepreneurial than urban regions.       compared to, say 2.8% of              1. Harding, R and Cowling, M (2004): Social
                                                                                     Entrepreneurship Monitor GEM UK, London
• Although they do not have the             over 55s).                               Business School and The Work Foundation.
                                                                                  2. The GEM UK 2005 sample size was 32,500 of whom
  highest levels of SEA, the most         • Education is a strong predictor          27,296 met the age criteria for selection.

  deprived wards in the UK do               of social entrepreneurial activity,
  have higher levels of baby and            and those in full time education
  established social enterprise             are the most likely group to be
  managers.                                 SEA active (5%).
                                                  4
                     GEM UK 2005




                                                                whAt iS SociAl                             This report focuses on the social
                                                                EntrEprEnEurShip And                       entrepreneurs who may grow the
                                                                why doES it MAttEr?                        social enterprises of the future. It is
                                                                The UK government estimates that           the second Social Entrepreneurship
                                                                there are 55,000 social enterprises        Monitor report published by the
                                                                in the UK. This is some 5% of all          Global Entrepreneurship Monitor
                                                                businesses with employees and              (GEM) UK7 project. Like the first
                                                                constitutes a total turnover of            report, it uses data from a survey of
                                                                nearly £27 billion3. Focusing just         27,296 18-64 year olds randomly
                                                                on the social enterprises which are        stratified by UK region8. It measures
                                                                companies limited by guarantee or          levels and types of early stage
                                                                industrial and provident societies,        community or socially oriented
                                                                this is still 1.2% of all enterprises in   entrepreneurial activity in the UK,
                                                                the UK4.                                   with a view to informing policy
                                                                                                           about this important feeder group to
                                                                These businesses are formally              the overall social enterprise agenda.
                                                                constituted companies with a
                                                                revenue stream from trade in               Although measurements and maps
                                                                goods and services. Thus, the              of social enterprises in the UK
                                                                Small Business Service defines             have improved since the first Social
                                                                social enterprises as businesses with      Entrepreneurship Monitor, the whole
                                                                “primarily social objectives, whose        area of social entrepreneurship
                                                                surpluses are reinvested for that          remains relatively under-
                                                                purpose in the business or in the          researched in terms of its scope,
                                                                community, rather than being driven        its remit, its role in regeneration
                                                                by the need to maximise profit for         and growth. There is plenty of
                                                                shareholders and owners”5 or, in           material to suggest that social
                                                                short-hand, “businesses trading for        entrepreneurship is important as a
                                                                a social purpose”6. The essence            driver of social reform and there
3. See http://www.sbs.gov.uk/sbsgov/action/detail?r.
   l3=7000021093&r.l2=7000000634&r.                             of this definition means that any          is a body of literature providing
   l1=7000000412&r.s=sc&type=RESOURCES&itemId
   =7000031657                                                  surplus or profit, is recycled for         cases of how it has contributed to
4. SBS (2005): Survey of Social Enterprises Across the
                                                                the benefits of the activity, rather       the professionalisation of public
   UK Research report prepared by IFF for the SBS.
5. DTI (2002): Social Enterprise: A Strategy for Success.       than for shareholders or directors.        services such as health, education
   Available at: www.dti.gov.uk/social enterprise.
6. This is the Social Enterprise Coalition’s definition, www.   Because of their structure and             and social work and welfare
   socialenterprise.org.uk.
7. Harding, R and Cowling, M (2004): Social                     constitution, they are able to serve       programmes in the US and the
   Entrepreneurship Monitor GEM UK, London
                                                                a triple bottom line achieving             UK, as well as in less developed
   Business School and The Work Foundation.
8. The GEM UK 2005 sample size was 32,500 of whom
                                                                profitability, societal impact and         regions of the world9. There
   27,296 met the age criteria for selection.
9. Pomerantz, M (2003): “The Business of Social                 environmental sustainability               is long-standing literature that
   Entrepreneurship in a down economy” In Business
   March/April 2004, vol 25, Issue 2                            simultaneously.                            points to the importance of social
                                                                                             5
                                                                                             WHAT IS SOCIAL
                                                                                             ENTREPRENEURSHIP
                                                                                             AND WHY DOES IT
                                                                                             MATTER?




entrepreneurship as a phenomenon           Such a definition captures a whole
in social life and as a feature of         spectrum of social entrepreneurial
corporate social responsibility10 and      activity, however, not all of which
there are cases that teach how to          needs to be either generating
become a good social entrepreneur          revenues or growing and making
as a for-profit or a not-for-profit firm   an economic as well as social
and to measure the social impact of        contribution over the long term. We
the enterprise11.                          need a definition that reflects the
                                           two critical features of a social, as
However, the process by which              opposed to a mainstream enterprise:
entrepreneurs a) decide on a socially-
oriented business model and b)             • The project has community or
grow, is less well understood. One           social goals rather than profit.
of the reasons for this is arguably        • Revenue is used to support
because it is hard to define social          the social and community
entrepreneurship in such a way that          goals, rather than returned to
isolates the relatively small-scale,         shareholders.
often voluntary or charitable work
that individuals do to make a social       We derive the definition of social
difference from a social entrepreneur      entrepreneurship from the definition
who may go on to establish a high          of mainstream entrepreneurship
turnover social enterprise.                contained in the annual Global
                                           Entrepreneurship Monitor (GEM)
Social entrepreneurs are the               reports as follows:
entrepreneurs who “recognise that a                                                   10. Dees, G. (1994): “Social Enterprises: private initiatives
                                                                                          for the common good.” Harvard Business School case
part of society is stuck and provide       “Social entrepreneurship is any                study, November. Dees, J. Gregory, Battle-Anderson,
                                                                                          B. and Wei, J. (2004): “Scaling social impact
new ways to get it unstuck”12.             attempt at new social enterprise               strategies for spreading social innovations.” Stanford
                                                                                          Social Innovation Review (1), No 4, Spring 2004,
They act as change agents in the           activity or new enterprise creation,           24-32. Putnam, D (2004): Social Entrepreneurs,
social sector: they innovate and act       such as self-employment, a new
                                                                                          New Statesman, Issue 4674 p 26. Dholakia, N.
                                                                                          and Dholakia, R (1975): “Marketing Planning in
according to the desire to create and      enterprise, or the expansion of an             Social Enterprises.” European Journal of Marketing
                                                                                          volume 9, Issue 3. Wooster, M. (1995): “Doing good
sustain social value and consider          existing social enterprise by an               for profit” American Enterprise July/August 1995,
                                                                                          Issue 4, p 97
themselves to be accountable “to           individual, teams of individuals or        11. Emerson, J., Wachowicz, J., and Chun, S. (2001):
the constituencies they serve for          established social enterprise, with
                                                                                          “Social Return on Investment (SROI): Exploring
                                                                                          aspects of value creation” HBS Working Knowledge
the outcomes they achieve”. In             social or community goals as its               http://hbswk.hbs.edu Boschee, J. (1995): “Social
                                                                                          Entrepreneurs” Across the Board March 1995,
short, they are “one species within        base and where the profit is invested          volume 32, Issue 3, p20. See also the New
                                                                                          Economics Foundation, www.neweconomics.org.
the genus ‘entrepreneur’. They             in the activity or venture itself rather   12. www.ashoka.org
                                                                                      13. Dees, J. Gregory (2001 – revised version): The
are entrepreneurs with a social            than returned to investors.”                   Meaning of ‘Social Entrepreneurship’”. Stanford
mission”13.                                                                               Graduate Business School.
                                               6
                    GEM UK 2005




14. The social entrepreneurship monitor of 2004 found     This is a sufficiently broad definition   power to transform and change
    that unemployed people and excluded groups were
    proportionately more likely to set up social rather   to allow a range of different             society. The conventional view
    than mainstream enterprises.
                                                          activities to be included, but equally    is that entrepreneurship is about
                                                          sufficiently narrow to exclude            mainstream start-up businesses and
                                                          activities that are established without   the contribution that they make
                                                          a revenue stream in mind.                 to economic growth. However,
                                                                                                    if we are to harness the role that
                                                          The importance of understanding the       all entrepreneurial activity plays,
                                                          motivations of social entrepreneurs       then entrepreneurship should be
                                                          and the role that the enterprises they    conceived more broadly, as it has
                                                          establish have to play in generating      a wider applicability to important
                                                          wealth in the UK in terms of jobs         social concerns and may even be
                                                          and income as well as in terms of         a better driver of regeneration and
                                                          welfare, cannot be understated.           employment in deprived communities
                                                          Entrepreneurship has tremendous           than orthodox activity14.
                                                                                    7
                                                                                    WHAT IS GEM?




whAt iS gEM?                               Equally as interesting, especially
The Global Entrepreneurship Monitor        to national policy and practitioner
(GEM) started in 1999. Now in its          audiences, however, are a further set
seventh year, this world-wide project      of questions that are focused on the
will involve some 42 countries in          cultural and labour market contexts
2006. This represents the largest and      in which entrepreneurship thrives.
most rigorous longitudinal study of        More specifically these questions
entrepreneurship in the world.             centre around:

GEM defines entrepreneurship as:           • Individual motivations.
                                           • The demographic profile of
“Any attempt at new business or              entrepreneurs.
new venture creation, such as              • The types of entrepreneurial
self-employment, a new business              businesses being created.
organisation, or the expansion of an
                                           • The political, economic, social
existing business by an individual,
                                             and technological drivers of
teams of individuals, or established
                                             entrepreneurship.
business.”
                                           • The role of government in
                                             stimulating entrepreneurship.
This is a sufficiently broad definition
to include anyone who is adding
                                           how does gEM measure
value to the work they do by acting
                                           entrepreneurial activity?
entrepreneurially, although too
                                           Each of the countries in the study
narrow to identify those enterprises
                                           has a team of researchers who use
that fulfil a not-for-profit or specific
                                           a standardised questionnaire survey
social purpose.
                                           of the adult population to create the
                                           Total Entrepreneurial Activity (TEA)
GEM’s core research questions
                                           index. This random adult population
remain those that were first set at the
                                           survey is conducted by telephone
start of the programme:
                                           during June and October of each
                                           year and, on the basis of the 18-64
• How much entrepreneurial activity
                                           year olds within the population it is
  is taking part in the world?
                                           used to identify:
• Why do levels of entrepreneurial
  activity differ between countries?       1. nascent ventures: these are the
• What are the links between                  firms that would be called start-
  entrepreneurial activity and                ups by most analysts. Anyone in
  economic development?                       the survey who said they were
                                              actively involved in creating a new
         8
GEM UK 2005




                 business that they would own all       gEM uk
                 or part of and had not paid any        GEM UK has been building
                 salaries or wages to anyone for        since 2002, when it became the
                 more than three months.                largest ever single country study of
              2. Baby businesses: these are the         entrepreneurship within the GEM
                 more established, owner-manager        project. The survey was expanded
                 businesses that have been running      further in 2003 and in 2004 to
                 for up to 42 months and have not       include separate regional studies,
                 paid salaries for longer than that.    additional questions on finance,
                                                        technology and turnover, and case
              There will be some double counting        studies of entrepreneurial businesses
              between these two groups – serial         as part of the expert survey. From
              entrepreneurs may be setting up           a base sample size of 16,000 in
              and running several businesses            2002 (with 4,000 additional cases
              simultaneously. This problem is           from the Barclays enterprise survey),
              overcome by allocating these              the UK study has now grown to a
              individuals either to nascent or to       base level of 25,000 (again with
              baby businesses, but not to both.         an additional 4,000 cases from the
              Adding together the two categories        Barclays study).
              of people makes the TEA index,
              that can then be used to illustrate       The expanded sample size allows
              differences and similarities between      us to provide reliable and robust
              countries, regions, types of people       inter-regional comparisons of
              and types of entrepreneurship.            entrepreneurial activity and to
                                                        have a large and representative
              In addition to this, the adult            sample of the UK’s entrepreneurial
              population survey is supported            businesses, including an attempt to
              by a practitioner survey of experts       understand entrepreneurship in the
              involved with policy formulation and      most deprived wards of the UK. We
              delivery, small business support, small   have asked additional questions on
              business finance and entrepreneurs        turnover and employment, as well
              themselves. This gives the study a        as the postcode locations of the
              richness and allows each country          businesses in order to examine them
              team to make specific and evidence-       more closely.
              based policy recommendations to
              their national governments.
                                                                                    9
                                                                                    WHAT IS GEM?




The level and importance of social         3. Are you, alone or with others,
entrepreneurship were investigated            currently managing any such
for the first time in 2003 and has            social activity, voluntary or
continued since. We took GEM’s                community service, activity or
broad approach to defining                    initiative?
entrepreneurship and adapted it to
ask similar questions about social         Like Total Entrepreneurial Activity
entrepreneurship. The method is            (TEA), Social Entrepreneurial
based on the approach taken in             Activity (SEA) is the sum of the adult
the rest of GEM UK and requires            population of those answering
individuals to respond to the              positively to one of the above
following questions:                       questions (minus double counting).
                                           Since the questions make clear that
1. Are you alone, or with others,          the use of profit or revenues is for
   currently trying to start any kind      community or social purposes, we
   of social, voluntary or community       are measuring the potential within the
   service, activity or initiative? This   general adult population to set up
   might include providing subsidised      social enterprises.
   or free training, advice or support
   to individuals or organisations;        Again, as with the mainstream
   profit making activity, but where       measures of entrepreneurial activity,
   profits are used for socially           TEA, we also similarly include sub-
   orientated purposes; or self-help       groups of social entrepreneurial
   groups for community action.            activity:
2. Are you alone, or with others,
   currently trying to start any kind      • nascent Social Enterprise
   of social, voluntary or community         – normally referred to as start-ups
   service, activity or initiative as        of between 0 and 3 months old.
   part of your job? This might            • Baby Social Enterprise – those
   include providing subsidised or           active for between 4 and
   free training, advice or support to       42 months.
   individual or organisations; profit
                                           • Established Social Enterprise
   making activity, but where profits
                                             – those active for longer than
   are used for socially orientated
                                             42 months.
   purposes; or self-help groups for
   community action.
                                          10
                   GEM UK 2005




15. http://www.sbs.gov.uk/SBS_Gov_files/
   socialenterprise/GHK-Review-of-SEStrategy.pdf
                                                   why MEASurE SociAl                          • Provided Community Investment
                                                   EntrEprEnEurShip?                             Tax Relief to investors in CDFIs.
                                                   With the social enterprise sector as        • Ensured that Business Links
                                                   large as it is in the UK, it is important     operatives and all major
                                                   to understand the cultural and                government enterprise support
                                                   entrepreneurial base that supports            schemes included support for
                                                   it, in the interests of developing            social entrepreneurs and social
                                                   policies to support more social               enterprises.
                                                   entrepreneurship and, hence, more           • Extended the Small Firms Loan
                                                   social enterprise. Both the HM                Guarantee Scheme to include
                                                   Treasury and the Department for               social enterprises.
                                                   Trade and Industry’s Small Business         • Created Community Interest
                                                   Service (SBS) see two main areas in           Companies (CICs) which plugged
                                                   which social enterprises contribute to        an important legal gap in the
                                                   the UK economy:                               corporate governance of social
                                                                                                 enterprises by providing an ‘asset
                                                   • By providing an alternative                 lock’ to ensure that revenues
                                                     business model for firms to                 remained within the firm and by
                                                     trade commercially in an                    requiring companies applying
                                                     environmentally and socially                for CIC status to pass a ‘test of
                                                     sustainable way.                            community value’.
                                                   • By providing an alternative               • Built and developed the evidence
                                                     delivery system for public services         base on social enterprises.
                                                     such as health, education,                • Integrated social enterprise
                                                     housing and community support.              thinking into cross governmental
                                                                                                 initiatives such as the Local
                                                   To this end, policy since the DTI’s           Enterprise Growth Initiatives
                                                   Strategy for Success in 2002 has              (LEGI), DEFRA’s £1.5m
                                                   focused on defining the size of the           ‘Enterprise for Inclusion’ rural
                                                   sector and its value to the economy,          support programme and
                                                   on creating an appropriate and                the ‘FutureBuilders’ £1.25m
                                                   enabling regulatory and business              programme to assist the
                                                   support environment and on                    community and voluntary (or
                                                   improving the performance of                  Third) sector to win public sector
                                                   social enterprises. By 2005 the               contracts.
                                                   government had:
                                                                                               The Strategy for Success is now
                                                   • Launched and established the              three years old and has recently
                                                     Community Development Finance             been reviewed15. Of most relevance
                                                     Institutions (CDFIs).                     to this report, the review process
                                                                                        11
                                                                                        WHY MEASURE SOCIAL
                                                                                        ENTREPRENEURSHIP?




has recommended that the specific        regional differences across the UK       16. The Index of Multiple Deprivation The IMD 2004
                                                                                      measures deprivation for every Super Output Area and
support needs of mainstream and          are much narrower than they are              local authority area in England. It combines indicators
                                                                                      across seven domains into a single deprivation score
social enterprises be investigated       for mainstream entrepreneurship,             and rank. The domains are: income deprivation,
                                                                                      employment deprivation, health deprivation and
further, that the needs of the Third     a result which is consistent with            disability, education, skills and training deprivation,
                                                                                      barriers to housing and services, living environment
Sector are better understood and that    the 2004 report, and that there              deprivation and crime. More details from www.alg.
new entrants are encouraged into the     are no significant differences in            gov.uk. Similarly the definition of “urban” and “rural”
                                                                                      comply with government postcode data supplied by
social enterprise market place, while    levels of SEA by IMD. However,               the Countryside Agency.

helping to establish social enterprise   there are differences in stages of
as a viable business model and to        development: the most deprived
open markets to social entrepreneurs.    wards in the UK have significantly
                                         higher levels of baby social
Focus of the report                      entrepreneurs and established social
This report aims to provide              entrepreneurs suggesting that there
an evidence base that aids               is a role for social entrepreneurship
understanding of the social              in regenerating deprived
entrepreneurs and their activities at    communities. Similarly, rural areas
an early stage in their development.     are more socially entrepreneurial
The next section looks at how much       than urban areas.
social entrepreneurial activity there
is in the UK using the SEA index,        The characteristics of social
which is directly comparable to          entrepreneurs, and how they differ
the TEA index published in other         to mainstream entrepreneurs,
GEM reports. It breaks up social         are important to understand if
entrepreneurial activity into nascent    the government is to develop the
activity (managers or those involved     correct policies for business support.
in a start up for 0-3 months), baby      The fourth section reports on the
activity (managers for 4-42 months)      characteristics, of both types of
and established social entrepreneurial   entrepreneur and argues that social
managers of more than 42 months.         and mainstream entrepreneurs exhibit
Some 3.2% of the UK population           distinct characteristics although
falls into one of these three            both exhibit more positive attitudes
categories suggesting that this is a     towards entrepreneurship than the
substantial phenomenon that policy       general population.
makers need to take.
                                         The report goes on to examine
This section also looks at social        the demographic profile of social
entrepreneurship across the UK           entrepreneurs and mainstream
by region, by index of multiple          entrepreneurs. Interestingly, the SEA
deprivation and by urban and             rate is highest amongst the youngest
rural locations16. It shows that the     age group (18-24) at 3.9% of the
        12
GEM UK 2005




              population of that age. Those            Many have tried to gain external
              with graduate and postgraduate           finance and failure rates are
              degrees are the most likely to be        highest for unsecured bank loans
              SEA active: for example, SEA is          and government grants. The
              8.3% amongst the population with         biggest single reason for failure
              Master’s degrees, and is 5% for          is the unsuitability of the business
              those who are in full time education.    for that source of finance. 42% of
              Interestingly, SEA rates are higher      respondents said that inability to
              than TEA rates of the labour market      get finance would be the single
              inactive category of the workforce,      biggest barrier to establishing a
              suggesting that this is a potential      social enterprise.
              way for re-engaging this group
              in the labour market. Finally, the       The report concludes with a
              most socially entrepreneurial            discussion of policy and its
              ethnic group are Black Africans at       importance in stimulating
              10.9% of the population. This is         social entrepreneurship. As with
              more than three times higher than        mainstream entrepreneurship, social
              the rate of social entrepreneurial       entrepreneurial activity appears to
              activity in the White population.        be heavily influenced by access to
              Black Caribbean people are               training. Where individuals have
              more than twice as likely as White       taken training, either at school, as
              people to be social entrepreneurs        part of a college or university course,
              (6.5% compared to 3%).                   workplace training or a government
                                                       programme, the SEA rates double.
              Finally the report looks at the nature   The impact is particularly strong for
              of the enterprises that the social       women, with SEA activity between
              entrepreneurs run. The majority          two and two and a half times higher
              of them are run from premises            amongst women who have taken
              separate to their own homes (66%)        training. Social entrepreneurship is
              and some 41% of them are not-            an important precondition for the
              for-profit businesses. 8.8% of them      existence of social enterprises, and
              are limited liability companies and      a broader understanding of social
              a further 4.6% are partnerships.         enterprise as an alternative business
              34.8% of them are charities. 56%         model at an earlier age may help to
              of them have less than 50% of            stimulate the social enterprise sector.
              their revenue from grants and of
              those who have revenue from sales
              only, some 27% have 90% of their
              revenue from sales.
                                                                                                                               13
                                                                                                                               HOW MUCH SOCIAL
                                                                                                                               ENTREPRENEURSHIP IS
                                                                                                                               THERE IN THE UK?




                                         7
                                                                                                                         Figure 1
                                                                                                                   TEA
                                         6                                                                               TEA and SEA rates for the UK compared
TEA and SEA rates (% Adult Population)




                                                                                                                   SEA
                                                                                                                         (2003-2005)17
                                         5
                                                                                                                         Source: GEM UK Adult Population Surveys 2003-2005

                                         4


                                         3


                                         2


                                         1
                                                                                                                         17. Figure 1 shows the TEA rates published in the GEM
                                                                                                                            UK reports, 2003-2005 and are consistent with levels
                                         0                                                                                  reported in the GEM Global reports.
                                                 2003                         2004                    2005
                                                                              YEAR


       how Much SociAl                                                          calculated then as 6.6% of the
       EntrEprEnEurShip iS                                                      population, but was not directly
       thErE in thE uk?                                                         comparable with TEA, as it included
       Overall in the UK we estimate                                            established businesses older than 42
       that some 3.2% of the working                                            months. As a result, it over-estimated
       age population is engaged in                                             the SEA-active population, which
       social entrepreneurial activity. This                                    only measures the newest activity
       represents nearly 1.2 million people                                     up to 42 months. It does, however,
       and, as figure 1 shows, although                                         demonstrate that a proportion of the
       the rate of engagement with social                                       SEA active social entrepreneurs will
       entrepreneurial activity is not as high                                  continue to run more established
       as for mainstream entrepreneurial                                        social enterprises.
       activity (at 6.2% of the working
       population), this is still a substantial                                 Table 1 looks at levels of social
       number of individuals.                                                   entrepreneurship by type of activity:
                                                                                nascent, baby and established social
       Figure 1 does not give a figure for                                      enterprise managers in 2005. It also
       SEA for 2004. The SEA rate was                                           looks at the general level of active

                                                                                                                         Table 1
                                                                                                     % working age
                                                                                                      population         Types of social entrepreneurship in the
                                                                                                                         UK, 2005 (% adult population)
                                   Actively involved in start up effort                                      3.5
                                                                                                                         Source: GEM UK Adult Population Surveys 2003-2005
                                   Manages a start-up effort                                                 2.8

                                   Nascent social entrepreneur (0-3 months)                                  1.9
                                   Manages a baby social enterprise (4-42 months)                            1.3
                                   Manages an established social enterprise (> 42 months)                    1.5
                                   SEA 2005                                                                  3.2
                               14
         GEM UK 2005




                                                                                        9
                               Figure 2
                                                                                        8
     Levels of SEA and TEA across                                                                                                         TEA
             the UK regions, 2005              TEA and SEA rates (% Adult Population)   7                                                 SEA
                                                                                        6
Source: GEM UK Adult Population Survey 2005
                                                                                        5

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                                                    involvement in a start up effort:                 Immediately obvious from figure
                                                    this provides a slightly higher level             2 is the fact that TEA rates vary
                                                    of involvement than the SEA rate,                 substantially across UK regions.
                                                    as some answer positively to this                 The differences in TEA rates are
                                                    question who do not yet qualify for               significant at the 1% level. However,
                                                    inclusion in the SEA index.                       the variation between regions for
                                                                                                      SEA is less marked and they are
                                                    The Department of Trade and                       not statistically significant. London
                                                    Industry’s Small Business Service                 has the highest TEA and SEA rates
                                                    and the Social Enterprise Coalition               (8.4% and 4.7%). The East Midlands
                                                    are working with the Regional                     has the lowest SEA rate (2.6%), but
                                                    Development Agencies (RDAs) to                    not the lowest TEA rate (5.3%). The
                                                    promote social entrepreneurship                   North West (3.3%), the South West
                                                    and social enterprise at a regional               (3.8%), the West Midlands (3.9%)
                                                    level. Most RDAs have strategies                  and Yorkshire and Humberside
                                                    to support social enterprises within              (3.4%) have above UK average
                                                    their broader enterprise strategies               levels of social entrepreneurship.
                                                    and many are interested in the role
                                                    that social enterprises and social                Table 2 compares the levels of TEA
                                                    entrepreneurs play in community                   and SEA between urban and rural
                                                    regeneration and servicing the                    locations.
                                                    needs of deprived regions.


                                Table 2
                                                                                                                         TEA        SEA
   Rural and Urban TEA and SEA
               compared, 2005                                                Urban                                        8.2       3.1
Source: GEM UK Adult Population Survey, 2005                                 Rural                                        6.0       4.8
                                                                                         15
                                                                                         HOW MUCH SOCIAL
                                                                                         ENTREPRENEURSHIP IS
                                                                                         THERE IN THE UK?




                                       TEA     SEA     BABY      ESTABLISHED        Table 3
                                                                                    Stages of Entrepreneurial Activity
20% Most deprived                      6.1     3.2      1.7              2.0        by Index of Multiple Deprivation in
20% somewhat deprived                  6.8     3.3      1.4              1.7        England (2005)
                                                                                    Source: GEM UK Adult Population Survey 2005
20% Average                            6.4     3.0      1.3              1.5
20% somewhat affluent                  6.3     3.4      1.0              1.3
20% most affluent                      5.8     3.4      1.2              1.1


As with mainstream entrepreneurial       Summary
activity, rates of social                This section has illustrated:
entrepreneurship are higher in rural     • That social entrepreneurship is an
locations than in urban locations.         important phenomenon across the
                                           UK at some 3.2 % of the working
Table 3 compares the levels of             age population or nearly 1.2
TEA and SEA by Index of Multiple           million adults.
Deprivation (IMD), but includes the      • Regional differences between levels
baby social enterprise managers            of SEA are not significant and the
and the established social                 gap between the highest rate in
enterprise managers as well.               London (4.7%) and the lowest in the
                                           East Midlands (2.6%) is less than
The data in table 3 only refers to         the TEA gap between the London
the English regions since Wales,           (8.4%) and the North East (3.9%).
Scotland and Northern Ireland do
                                         • Rural locations are more socially
not all calculate the IMD in the
                                           entrepreneurial than urban regions.
same way.
                                         • Although they do not have the
                                           highest levels of SEA, the most
The table shows that the most
                                           deprived wards in the UK do have
deprived wards, although not
                                           higher levels of baby and established
having the highest overall SEA,
                                           social enterprise managers.
do have high levels of baby social
enterprise and established social
                                         All this suggests that the prevalence
enterprise managers. It is the most
                                         for social entrepreneurship is more
affluent wards that have the highest
                                         widespread amongst less well off and
levels of SEA overall, but this does
                                         rural communities naturally. As policy
not appear to translate into social
                                         initiatives to promote social enterprise
enterprise management where the
                                         in deprived and rural communities
levels are lower.
                                         take hold, they will potentially have
                                         more impact in these areas, since
                                         they already have a strong social and
                                         community sector.
                              16
        GEM UK 2005




                               Table 4                                                  General UK    SEA active    TEA active
    Attitudes and Perceptions of                                                        population   respondents   respondents
         the General Population,              I have personally known an
                                                                                          27.7          50.5          60.3
          Social and Mainstream               entrepreneur in the last three years
 Entrepreneurs in the UK, 2005                There are good start up
                                                                                          38.5          54.0          70.3
Source: GEM UK Adult Population Survey 2005   opportunities in my area
                                              Fear of failure would prevent me
                                                                                          34.2          25.2          14.1
                                              from starting a business

                                              I have the skills to start a business       50.7          70.6          91.8

                                              Entrepreneurship is a good career
                                                                                          54.3          52.5          53.3
                                              choice
                                              Entrepreneurs have a high status in
                                                                                          71.7          71.6          72.2
                                              society
                                              There is good media coverage of
                                                                                          54.4          58.4          58.1
                                              entrepreneurs



                                              ArE SociAl                                  Interestingly, responses to the last
                                              EntrEprEnEurS                               three attitudinal questions are
                                              diFFErEnt?                                  not significantly different, whether
                                              The government’s strategy is to             an individual respondent is an
                                              increase the opportunities for              entrepreneur of any kind or not.
                                              individuals who wish to set up              However, the perceptional responses
                                              social enterprises by opening               at the top of the table do suggest
                                              markets and creating good support           that social entrepreneurs are
                                              infrastructures. In order to formulate      distinct as a group of respondents,
                                              strategy effectively, the government        compared either to the mainstream
                                              needs to know the attitudinal               entrepreneurs or to the general
                                              characteristics of the social               adult population. They are less
                                              entrepreneurs themselves and how            confident than their mainstream
                                              they differ (if at all) from mainstream     counterparts, but are significantly
                                              entrepreneurs and the general adult         less likely to fear failure and
                                              population. This section focuses on         significantly more likely to know an
                                              feeding into that evidence base.            entrepreneur, to think that there are
                                                                                          good business opportunities and to
                                              Table 4 shows the core attitudinal          think they have the skills than the
                                              and perceptional characteristics            general adult population.
                                              of the general population
                                              and mainstream and social
                                              entrepreneurs.
                                                                                           17
                                                                                           ARE SOCIAL
                                                                                           ENTREPRENEURS
                                                                                           DIFFERENT?




                                                          Baby          Established   Table 5
                                                         managers       managers      Attitudes and Perceptions of Baby and
I have personally known an entrepreneur in the                                        Established Social Enterprise Managers
                                                           50.7            50.9       in the UK, 2005
last three years
                                                                                      Source: GEM UK Adult Population Survey 2005
There are good start up opportunities in my area           65.3            58.6
Fear of failure would prevent me from starting a
                                                           28.5            32.3
business

I have the skills to start a business                      73.6            73.6

Entrepreneurship is a good career choice                   49.1            38.6

Entrepreneurs have a high status in society                69.0            69.3

There is good media coverage of entrepreneurs              56.5            58.4




Table 5 looks at the same responses           only 38.6% of established social
for baby and established social               enterprise managers think that
enterprise managers.                          entrepreneurship is a good career
                                              choice compared to 49.1% of those
Table 5 presents a rather disturbing          managers of baby social enterprises.
picture of perceptional change as
the entrepreneur becomes more                 Summary
experienced. There are no significant         This section has presented two key
changes in likelihood that an                 features of social entrepreneurs:
individual will know an entrepreneur
or think they have the skills, and they       • First, social entrepreneurs are a
have similar attitudes towards the              distinct group with more positive
status of entrepreneurs and media               attitudes than the general UK
coverage. In three important areas              adult population but less positive
there is a marked deterioration in              attitudes than mainstream
perceptions between those who                   entrepreneurs.
have only been managing a social              • Second, as social entrepreneurs
enterprise for up to three and a                become more experienced, it
half years and those who have                   appears from the data that they
been managing one for longer.                   become more disillusioned with
Those with more experience are far              entrepreneurship and see fewer
more likely to fear failure (32.3%              opportunities, are more likely to
compared to 28.5%) and see                      fear failure and less likely to see
fewer good opportunities (58.6%                 it as a good career choice.
compared to 65.3%). Further,
                                            18
                    GEM UK 2005




18. Harding, R. and Harding, D. (2005): “Profiling social
    entrepreneurs” A report for Coactive.
                                                            All this suggests a rather fragile       Policy needs to focus on maintaining
                                                            attitudinal base in the social           and developing the strength of
                                                            entrepreneurial community. Long          attitudes amongst the population
                                                            standing research suggests that          of social entrepreneurs, if the
                                                            social entrepreneurs tend to be          population of social enterprises is to
                                                            more positive and tenacious about        continue. Social entrepreneurs are
                                                            their enterprises or ventures and this   community-centric and rely heavily
                                                            is certainly borne out by comparison     on networks and support structures
                                                            with the general population.             for their work18. Networks are easy
                                                            However, if they are compared with       and relatively cheap to construct
                                                            the mainstream entrepreneurs in our      and the emphasis on infrastructures
                                                            survey, they are less bullish about      should include these normative
                                                            all perceptional questions. Further,     aspects of the support base.
                                                            when the level of experience is
                                                            taken into account, it appears that
                                                            social entrepreneurs may become
                                                            disheartened the longer they have
                                                            been managing a social enterprise.
                                                                                                        19
                                                                                                        WHO ARE THE SOCIAL
                                                                                                        ENTREPRENEURS?




                                   9
                                                                                                  Figure 3
                                   8                                                  Men         Male and Female Social and Mainstream
                                                                                      Women
                                                                                                  Entrepreneurial Activity in the UK, 2005
                                   7
                                                                                                  Source: GEM UK Adult Population Survey 2005

                                   6
TEA and SEA (% Adult Population)




                                   5


                                   4


                                   3


                                   2


                                   1


                                   0
                                       TEA   SEA                   Baby          Established
                                             ENTREPRENEURIAL ACTIVITY



     who ArE thE SociAl                                  women are less likely to be SEA
     EntrEprEnEurS?                                      active than men (2.8% compared
     The data presented here gives a                     to 3.6%), the gap is not as marked
     demographic breakdown of levels of                  as the gap between male and
     social entrepreneurship compared to                 female TEA (3.6% compared to
     mainstream entrepreneurship. While                  8.2%). In other words, women
     the government is aiming to reduce                  are proportionately more likely
     the complexity and proliferation of                 to become social entrepreneurs
     enterprise support mechanisms, this                 compared to mainstream
     should not be done at the expense of                entrepreneurs. And while the
     providing diverse support.                          numbers of men running a baby or
                                                         established social enterprise are the
     For example, figure 3 shows the                     same, there are slightly more women
     gender breakdown of different                       who run established social enterprises
     groups of social and mainstream                     than baby enterprises.
     entrepreneurs. It suggests that while
                                    20
               GEM UK 2005




                                    Figure 4                                           9

  TEA and SEA in the UK by age group
                                                                                       8                                                         TEA
      Source: GEM UK Adult Population Survey 2005                                                                                                SEA
                                                                                       7                                                         Baby
                                                    TEA and SEA (% Adult Population)



                                                                                                                                                 Established
                                                                                       6


                                                                                       5


                                                                                       4


                                                                                       3


                                                                                       2


                                                                                       1


                                                                                       0
                                                                                           18-24        25-34      35-44          45-54         55-64
                                                                                                                AGE GROUP


                                                             Figure 4 compares TEA and SEA                           the most likely to be running an
                                                             by age. It illustrates that although                    established social enterprise.
                                                             it is the older ages groups, 35-
                                                             44, who are most likely to set up                       Degree level educational attainment
                                                             a mainstream enterprise, it is the                      appears from table 6 to be a
                                                             youngest age group, 18-24, who                          strong predictor of SEA activity,
                                                             are most likely to be engaged in                        with particularly high levels of
                                                             social entrepreneurial activity. Not                    social entrepreneurship amongst
                                                             surprisingly, however, it is the older                  those with Masters and Bachelors
                                                             age groups (over 45) who are                            level qualifications. The group with



                                     Table 6
                                                                                                                 TEA        SEA   BABY     ESTABLISHED
Social and Mainstream Entrepreneurial
  Activity by Educational Attainment in                                      Doctorate                           10.3       3.9    1.7          1.0
                        the UK (2005)
                                                                             Masters                             10.5       8.3    4.2          3.0
      Source: GEM UK Adult Population Survey 2005

                                                                             Bachelor                            7.6        4.7    2.1          2.6

                                                                             A level                             5.3        3.1    1.0          1.2

                                                                             GCSE                                5.0        1.6    0.4          0.7

                                                                             Higher vocational                   5.9        2.4    0.8          1.0

                                                                             Other vocational                    4.0        2.3    2.0          2.6

                                                                             No formal qualifications            3.1        1.3    0. 3         0.5
                                                                                   21
                                                                                   WHO ARE THE SOCIAL
                                                                                   ENTREPRENEURS?




                                                                              Table 7
                                        TEA    SEA     BABY     ESTABLISHED
                                                                              Social and Mainstream Entrepreneurial
Full time employed                      7.3    3.5      1.6          1.5      Activity by Employment Status in the UK
                                                                              (2005)
Part time employed                      6.7    3.2      1.1          1.9
                                                                              Source: GEM UK Adult Population Survey 2005
Homemaker                               2.3    1.7      0.7          0.8

Retired                                 1.0    2.1      0.6          1.2

Full time education                     2.8    5.0      1.3          0.8

Long term registered disabled           0.4    1.6      0.4          1.6

Out of work and claiming benefit        3.6    1.7      0.3          1.0

Out of work not claiming benefit        2.6    2.9      0.1          0.8




Masters level qualifications are also     more likely to be SEA active than
most likely to be running either a        TEA active.
baby or an established enterprise.
                                          Finally for this section, table 8
It is those who are in full time          presents the same information by
education who are most likely to be       broad ethnic group.
SEA active, although it is those in
part time employment who are most         Table 8 presents some interesting
likely to be running an established       results:
social enterprise.
                                          • Although individuals from                                                  Table 8
Interestingly, individuals who are          the Indian sub-continent are       Social and Mainstream Entrepreneurial
labour market inactive are slightly         more likely to be mainstream        Activity by Ethnic Grouping, UK 2005
                                                                                        Source: GEM UK Adult Population Survey 2005
                                        TEA    SEA     BABY     ESTABLISHED

 White                                  5.6    3.0      1.3          1.5

 Mixed ethnic origin                    7.3    5.5      1.6          1.0

 Indian sub continent origin            11.3   2.2      0.9          1.7

 Other Asian                            4.0    3.7      1.1          0.8

 Black Caribbean                        7.4    6.5      0.3          0.9

 Black African                          17.1   10.9     2.6          1.3

 Other non-white                        8.8    26.3     5.3          0.0
        22
GEM UK 2005




                 entrepreneurs, they are not        • Education is a strong predictor
                 more likely than their White         of social entrepreneurial activity,
                 counterparts to be social            and those in full time education
                 entrepreneurs.                       are the most likely group to be
              • However, all other ethnic             SEA active (5%).
                groupings are more likely than      • Those who are labour market
                their White counterparts to be        inactive are marginally more
                social entrepreneurs.                 likely to be social entrepreneurs
              • Black Africans are three times        than mainstream entrepreneurs.
                as likely as Whites to be social    • Black Africans and Black
                entrepreneurs and Black               Caribbeans are, respectively,
                Caribbeans are twice as likely.       3 times and 2 times more
                                                      likely than Whites to be social
              Summary                                 entrepreneurs.
              The data presented in this section
              suggests:                             All this suggests that while the more
                                                    educated, employed and older
              • Women are proportionately           individuals are more likely to be
                more likely to be social than       running social enterprises, there
                mainstream entrepreneurs,           is proportionately higher levels of
                despite the fact that overall men   social entrepreneurship amongst
                are more likely to be social        young people, women, ethnic
                entrepreneurs than women            minorities and the labour market
                (3.6% compared to 2.8%).            inactive. Social entrepreneurship
                The percentage of women             is clearly an important way of
                managing an established social      engaging these, often excluded,
                enterprise is marginally higher     groups in entrepreneurial
                than those managing a baby          activity generally and any policy
                enterprise while for men there is   initiatives to promote general
                no difference between these two     entrepreneurship amongst these
                activities.                         groups should integrate social
              • Younger people are more likely      entrepreneurship as a matter of
                to be social entrepreneurs than     course, as it may be that this has a
                any other age grouping (3.9%        greater appeal to these categories
                compared to 2.8%       of over      of individuals.
                55s).
                                                                                     23
                                                                                     WHAT SORT OF
                                                                                     BUSINESSES DO SOCIAL
                                                                                     ENTREPRENEURS RUN?




                                                                               Table 9
                                                    Baby        Established
                                                                               Ownership Structure of Baby and
 Charity                                            34.8           54.7        Established Social Enterprises, UK 2005
                                                                               Source: GEM UK Adult Population Survey, 2005
 Not for profit                                     41.0           32.7

 Cooperative                                         2.6           2.3

 Sole trader                                         3.7           0.8

 Partnership                                         4.6           0.8

 Limited liability                                   8.8           3.8




whAt Sort oF                             social enterprises operate from the
BuSinESSES do SociAl                     entrepreneur’s home.
EntrEprEnEurS run?
The government’s focus on social         ownership structure and funding
enterprise means that some               Table 9 shows the ownership
emphasis in this report must             structure of baby and established
be on the characteristics of the         social enterprises.
enterprises managed by the social
entrepreneurs. This section compares     It appears that the diversity of
baby social enterprises with their       ownership structure at the baby
more established counterparts (more      business stage seems to concentrate
than 42 months).                         into two dominant ownership
                                         structures once the enterprises
Jobs                                     become more established. Despite
The median number of paid jobs           this, the revenue pattern becomes
created for a baby social enterprise     increasingly independent as the
is one while for an established social   enterprise becomes older. For
enterprise it is two.                    example, 51.6% of baby businesses
                                         have greater than 50% of revenue
location                                 from public sources compared
66% of all baby social enterprises       to 37.5% of established social
work from premises outside the           enterprises. Of the baby and
entrepreneur’s home. This figure         established social businesses who
rises to 79.6% of established            have revenue from sales, some
business working from separate           46.4% have more than 50% of their
premises. Just 13.6% of established      revenue from sales.
                                      24
               GEM UK 2005




                                     Table 10                                            Baby                         Established
Finance Attempted and Not Succeeded,                                          Finance       Finance tried   Finance        Finance tried
Baby and Established Social Enterprises                                         tried         but failed      tried          but failed
                 Compared, UK 2005
                                                      Friends and Family       17.4             4.3          20.0              2.0
       Source: GEM UK Adult Population Survey, 2005
                                                      Other individuals        12.2             4.3          14.0              7.1
                                                      Unsecured Bank
                                                                               11.3             10.3         14.0              5.0
                                                      loans
                                                      Bank overdraft           31.9             6.3          25.5              2.0
                                                      Non-bank
                                                                                3.2             5.2          3.0               2.0
                                                      unsecured loan
                                                      Mortgage or
                                                                               17.4             8.7          12.0                   -
                                                      secured loan
                                                      venture capital           5.2             3.5          7.0               2.0
                                                      Government               22.6             14.7         14.0              13.1
                                                      Credit cards             23.5             1.7          5.0                    -


                                                      Additional data show some 21.1%            of development, with some 31.9%
                                                      of baby social enterprise managers         focusing on bank overdrafts. There
                                                      have previously run a social venture       is a proportionately high emphasis
                                                      or enterprise that is not in operation     on government sources at 22.6%.
                                                      any longer, compared to 18.6%              The sources of finance are more
                                                      of established social enterprise           dispersed once businesses become
                                                      managers.                                  more established.

                                                      Sources of finance                         Failure rates are again similar to
                                                      Table 10 gives an idea of the              mainstream enterprises, although
                                                      sources of finance attempted by            a proportionately higher number
                                                      social entrepreneurs and looks at          of social enterprises (42.4% of
                                                      the failure rate of these attempts.        baby and 39.1% of established)
                                                                                                 say that the nature of the business
                                                      Care should be taken with                  was the reason why the funding
                                                      interpreting this data as the              application was rejected. Costs of
                                                      numbers are small. However,                finance are also a dominant factor
                                                      the pattern of accessing finance           for established businesses (45.5%).
                                                      is similar to that of mainstream           These figures are illustrated in
                                                      entrepreneurial counterparts at            table 11.
                                                      the baby social enterprise stage
                                                                                       25
                                                                                       WHAT SORT OF
                                                                                       BUSINESSES DO SOCIAL
                                                                                       ENTREPRENEURS RUN?




                                                                                 Table 11
 Reasons for failing to get finance                Baby        Established
                                                                                 Reasons for Failing to get Finance,
 Not investor ready                                24.2           18.3           Baby and Established Social Enterprises
                                                                                 Compared, UK 2005
 Nature of business                                42.4           39.1
                                                                                 Source: GEM UK Adult Population Survey, 2005

 Nature of business                                23.5            8.7

 Business too small                                32.4           27.3

 Fear of debt                                      29.4            4.3

 Unwilling to share ownership                      14.7           54.5

 Costs of finance too high                         30.3           45.5

 Weak management team                              11.8            9.1




Summary                                   more likely to have failed to gain
This section has presented a picture      access to their finance because
of a commercially oriented socially       of the nature of their business.
entrepreneurial sector, that has          Interestingly, inadequate business
the potential to become the social        planning is not the largest
enterprises that are identified in        factor for established social
government publications:                  enterprises, but unwillingness to
                                          share ownership and the costs of
• Business activity is not based at       finance are.
  home, irrespective of age of the
  social enterprise.                   This suggests that as the social
• There is a greater likelihood that   enterprises grow, they do become
  social enterprises will become       more commercial with proper
  not-for-profits or charities as      organisational structures to support
  they become more established,        their activities. Financing remains an
  but even so, the majority of         issue, however, and financiers and
  enterprises are not charities        policy makers alike should be aware
  either at the baby or the more       that the individual entrepreneur is
  established stage.                   often ideologically bound to their
                                       venture. This means that attempts
• The profile of financing is
                                       to inject a degree of equity or co-
  similar to that of mainstream
                                       ownership could prove problematic as
  entrepreneurs. However, social
                                       a means of financing this type of firm.
  entrepreneurs are proportionately
        26
GEM UK 2005




              policy concluSionS:                     that while many social entrepreneurs
              how do wE                               may be driven by the desire to make
              incrEASE SociAl                         a social or community difference, it
              EntrEprEnEurShip?                       is access to finance that needs to be
              There are a number of points that       the focus of policy and commercial
              can be drawn out of the analysis        activity to develop tailored packages
              contained in this report that may       that are suitable for this vital group.
              be useful to policy makers. For
              example, we know that social            There is one other area that is
              entrepreneurs are a distinct group      potentially extremely important in
              of individuals with definite and        changing attitudes from the base
              more positive attitudes towards         up and addressing the issues of
              entrepreneurship. We have               de-motivation as experience builds.
              also demonstrated that these            GEM UK collected data on training
              attitudes become less positive          and its impact on TEA and SEA and
              as the enterprise becomes more          analysed it for the first time in 2005.
              established. Similarly, younger         For both types of entrepreneurship,
              people and excluded groups are          enterprise training increases the
              more likely to become social            prevalence of entrepreneurial
              entrepreneurs, but it is older people   activity: for TEA it nearly doubles
              who are actually running the more       and for SEA it more than doubles as
              established enterprises. When it        illustrated in table 12.
              comes to financing, this presents a
              potential problem since established     The effect is more marked by
              social enterprise managers are          gender with women being between
              often rejected for finance because      two and three times more likely to
              they would not share their project      become social entrepreneurs if they
              and found the costs of commercial       have had some form of access to
              finance too high.                       training. This compares to roughly
                                                      a half more likely for all types of
              Yet, it is the fear of not getting      training for men.
              finance that is the biggest single
              barrier to social entrepreneurs.        Like mainstream entrepreneurship,
              Some 42.5% of baby social               promoting a social entrepreneurship
              enterprise managers and 34.8%           culture has to underpin the
              of established social enterprise        promotion of social enterprise
              managers cited this as their main       and social entrepreneurship.
              obstacle to overcome. This suggests     Social entrepreneurs have specific
                                                                                          27
                                                                                          POLICY CONCLUSIONS:
                                                                                          HOW DO WE
                                                                                          INCREASE SOCIAL
                                                                                          ENTREPRENEURSHIP?




                                                                                    Table 12
                                              TEA active          SEA active
                                                                                    Take up of Training and TEA and SEA
                                             Y         N         Y         N        prevalence, UK 2005
                                                                                    Source: GEM UK Adult Population Survey, 2005
 Enterprise training at school              7.3       5.8       6.0        2.8

 Enterprise training at college or uni      9.4       5.2       5.4        2.7

 Work experience in SME at uni              7.3       5.3       4.1        2.7

 Government or public sector training       9.3       5.5       6.4        2.7




characteristics and interestingly,          entrepreneurial activity could catch
it is young people who are most             up with early stage entrepreneurial
likely to become SEA active. This           activity. This would offer more
suggests that by promoting social           individuals the chance to realise
enterprise as an alternative business       their labour market potential through
model within schools as part of any         entrepreneurship and indeed create
enterprise training, the levels of social   opportunities for all.
                 GEM UK
Foundation for Entrepreneurial Management
         London Business School
               Regent's Park
           LONDON NW1 4SA


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