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01. What is a social enterprise?
A social enterprise is not a specific legal structure but rather a business approach driven by social or environmental objectives. While the exact definition may vary, social enterprises generally share the following characteristics:
- Their primary purpose is to achieve social or environmental goals which are embedded in their governing documents.
- They reinvest the majority of their profits or surpluses into furthering their social or environmental mission.
- They are independent, autonomous businesses not controlled by the state or government.
- They generate at least 50% of their income through trading activities, such as selling goods or services, contracts, or service level agreements.
- They are transparent about their efforts to achieve their social or environmental objectives and can demonstrate their social impact.
- They commit to distributing assets to achieve their mission in the event of company dissolution, often through an asset lock clause in their governing documents.
02. Choosing a legal structure for your social enterprise
Social enterprises can adopt various legal structures, depending on their specific needs and goals. The most common structure for a social enterprise is a Community Interest Company (CIC) – a special type of limited company designed for social enterprises that want to use their profits and assets for the public good.
Other legal structures for your social enterprise could include:
- limited company
- charity, or a charitable incorporated organisation (CIO)
- co-operative
- sole trader or business partnership
The choice of legal structure depends on factors such as the nature of your social mission, your funding requirements, and your desired level of control and governance.
03. Setting up your social enterprise
Once you have chosen a legal structure, follow these key steps to set up your social enterprise:
- Define your social or environmental mission and ensure it aligns with your business model.
- Develop a sustainable business plan that outlines your products or services, target market, financial projections, and social impact metrics. Download our guide to business planning.
- Register your social enterprise with the appropriate regulatory bodies, such as Companies House or the Charity Commission.
- Secure funding through grants, investments, or revenue generation. Check our guidance on our Funding page.
- Build a skilled and passionate team that shares your vision and values. This is important as you will need three unrelated directors to get funding from trusts.
- Establish partnerships with like-minded organisations and stakeholders to amplify your impact.
- Think about how you will regularly measure and report on your social impact alongside your financial performance.
Need advice on setting up a social enterprise?
Complete our Request Support form, or contact us on 0330 236 9350 or info@communityimpactbucks.org.uk
04. Useful links
Ready to go? There are lots of resources to help you on your social enterprise journey:
For guides, events and networking opportunities tailored to the social enterprise community, visit Social Enterprise UK
To view a collection of webinars on setting up a social enterprise, visit Social Enterprise Mark
For funding, mentoring and resources to help you start and grow your venture, connect with UnLtd
To tap into training and support programmes, contact School for Social Entrepreneurs
For general advice on setting up a social enterprise, visit GOV.UK
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