Social Enterprise UK’s State of Social Enterprise Report 2015 presents a pretty cheerful picture.

According to the report, half of the UK’s social enterprises are making a profit (though this has dropped slightly since 2013 when it was 55 per cent) and another quarter are breaking even. The proportion of them that increased their turnover over the past 12 months is 52 per cent, while the corresponding statistic for mainstream SMEs is 40 per cent. They also lead mainstream SMEs in job creation: 41 per cent of social enterprises created jobs in the past 12 months compared to 22 per cent of SMEs.

They also appear to be more innovative, pound for pound, than their mainstream counterparts. The number of social enterprises introducing a new product or service in the last 12 months has increased to 59 per cent, whereas, among SMEs that percentage has fallen to 38 per cent.

Seventy-three per cent of them also earn three-quarters or more of their income from trade and increasingly from export trade. Admittedly, however, the increases here are modest. The proportion of social enterprises that export or license is now 14 per cent and for about a third  of that percentage, international trade accounts for between 11 and 50 per cent of income – in other words, four or five per cent of social enterprises derive some income from international trade.

How social are social enterprises?
Here again, the report paints a picture in bright colours: 31 per cent of social enterprises are working in the top 20 per cent most deprived communities in the UK. Forty per cent of them are led by women; 31 per cent have Black Asian Minority Ethnic directors; 40 per cent have a director with a disability. Fifty-nine per cent employ at least one person who is disadvantaged in the labour market and, for 16 per cent of social enterprises, this group forms at least half the total number of employees.

The ‘buts’…
In a generally positive outlook, there remain a few of these.

Twenty-seven per cent are reliant on public sector, in one way or another, for their income, a proportion which has increased from earlier reports in 2011 and 2013, and 59 per cent of social enterprises do some business with public sector. You can choose to look at this as illustrating their strength in providing public service. You can also see it as a worrying dependence on public sector contracts.

The Social Value Act, introduced in 2012, which requires public bodies to consider choosing providers based on the social value created in an area and not on cost alone, was hailed as a big step forward for social enterprises. However, almost half (49 per cent) of social enterprises operating in public sector markets say they’re yet to see it arrive in tender documents.

Perhaps the greatest cloud on the social enterprise horizon, however, certainly the most cited barrier to the sector’s growth is finance: 39 per cent of the social enterprises surveyed believe its lack of availability is a barrier to their sustainability. Just 5 per cent of SMEs think access to finance is a barrier.

Key Statistics from the State of Social Enterprise Report (from Social Enterprise UK website http://www.socialenterprise.org.uk/advice-services/publications/state-social-enterprise-report-2015)

A dynamic movement: Close to half (49%) of all social enterprises are five years old or less. 35% are three years old or less – more than three times the proportion of SME start-ups. In terms of new business formation in the UK, social enterprise is where the action is.

At the forefront of economic recovery: The proportion of social enterprises that grew their turnover over the past 12 months is 52%. A greater proportion of social enterprises are growing than mainstream SMEs (40%).

Making a profit, making a difference: 50% of social enterprises reported a profit, with 26% breaking even. Almost all use the majority of those profits to further their social or environmental goals.

Focused where most needed: 31% of socialenterprises are working in the top 20% most deprived communities in the UK.

Operating globally: The proportion of socialenterprises that export or licence has grown to 14%. For over 1⁄3 of these, international trade accounts for between 11% and 50% of income

It’s all about business: 73% of social enterprises earn more than 75% of their income from trade.

Stronger than ever in public services: 27% of social enterprises have the public sector as their main source of income, an increase on 2013 and 2011. 59% of social enterprises do some business with the public sector.

Innovation pioneers: The number of social enterprises introducing a new product or service in the last 12 months has increased to 59%. Among SMEs it has fallen to 38%.

An inclusive and diverse leadership: 40% of social enterprises are led by women; 31% have Black Asian Minority Ethnic directors; 40% have a director with a disability.

Job creators: 41% of social enterprises created jobs in the past 12 months compared to 22% of SMEs.

Not just any jobs: 59% of social enterprises employ at least one person who is disadvantaged in the labour market. For 16% of social enterprises, this group forms at least half of all employees.

Paying fair: The average pay ratio between social enterprise CEO pay and the lowest paid is just 3.6:1 – for FTSE 100 CEOs, this ratio stands at 150:1.

Not getting in on the Act: 49% of social enterprises operating in public sector markets say they’re yet to see it arrive in tender documents – there is much to do before the Social Value Act works as intended.

Appropriate funding and finance still key: 44% of social enterprises sought funding or finance in the last 12 months and 39% believe its lack of availability is a barrier to their sustainability. Just 5% of SMEs think access to finance is a barrier.