Social enterprises trade to address social and environmental problems, so when they succeed society benefits. According to a new British Council report launched in Scotland today, a growing number of UK social enterprises are trading overseas and are optimistic about the prospects for export growth. To find out more, we spoke to Dr Mairi Mackay, the British Council’s Global Head of Social Enterprise.
Tell us about this report and why you commissioned it
We were inspired by the finding in a 2013 national social enterprise survey that 11 per cent of UK social enterprises trade or franchise overseas.
We wanted to find out what types of social enterprises are exporting, how they are trading, where they are obtaining support and what challenges they face. We wanted to understand what ‘export’ means for businesses that sell goods and services to generate a social impact rather than simply profit, and what different models are applicable.
So we teamed up with Social Enterprise UK (SEUK), the national organisation for social enterprises, to produce the first study in the UK -- and perhaps the world -- to specifically examine overseas trade and franchising by social enterprises. This involved a host of interviews and a survey of social enterprises that trade or seek to trade abroad.
What are some of the main findings?
We learned that almost half of social enterprises surveyed (46 per cent) saw an increase in income from trading overseas in the last quarter. Moreover, two thirds (65 per cent) expected an increase in export income in the next three months, underscoring their confidence in this market.
They are using a range of methods to access foreign markets, from direct sales to franchising and managing wholly owned subsidiaries.
The top sectors in which exporting social enterprises operate are skills and employment, consultancy and education. Conversely, sectors such as housing and financial support were less well represented, indicating the local and domestic nature of these markets.
We learned that exporting isn’t exclusive to large social enterprises as the majority (72 per cent) of exporters have fewer than ten employees, while 80 per cent have a turnover of less than £500,000.
Unsurprisingly, the top region for UK social enterprise exports is Europe (79 per cent) followed by North America (49 per cent). Perhaps more surprisingly, Canada is the most popular country to export to, with 16 per cent of exporters licensing or trading there.
The factors that influence where social enterprises export include a good fit with their social purpose, an identified social need, and the ability to find customers, agents and/or distributors in a given market.
Exporters are funding their activity largely independently, with 66 per cent relying on earned income to support their export activity.
And while nearly half (49 per cent) of exporters are working independently -- indicating both a dearth of assistance for, or a lack of knowledge about, accessing trade promotion agencies -- we were pleased to learn that 16 per cent had accessed support provided by the British Council.
What are some of the practical implications for social enterprises that are thinking of trading abroad?
The first point to make is that export isn’t for everyone.
Many social enterprises are in business to provide local solutions to local problems. They might want to empower their communities or promote local trade as part of a low-carbon future. Such activities may not lend themselves to international trade.
What’s more, social enterprises face a number of barriers to exporting overseas, from limited access to trade finance to regulatory and legal issues.
For those who are keen to explore the market, collaboration is important. The report found that a third of social enterprises work as part of a joint venture, underscoring the importance of partnerships and relationships in international trade.
Other success factors include previous experience working abroad and specific policy incentives in the destination market.
Other critical factors cited by interviewees include understating customs tariffs and intellectual property statutes, access to development funds and participation in courses offered by UKTI.
One obvious point is that online sales platforms are making it simpler for social enterprises to trade internationally because they significantly reduce the cost, time and hassle of building an overseas network.
Can you give an example of a social enterprise that is trading overseas?
Suffolk-based Realise Futures is an award-winning social enterprise that helps disabled and disadvantaged people into work. It was looking at the international potential for its garden furniture made from recycled plastic, when it won a competition to be part of a UKTI trade mission to Moscow. This kick-started the social enterprise’s exporting activity.
Since then staff have completed the UKTI’s Passport To Export training programme and continue to develop international leads, selling play castles in Ireland and benches in Spain.
Export has opened new business opportunities for Realise Futures to get disadvantaged people employed in supply chains. Now, working with a partner in Amsterdam, Realise Futures are considering the potential to make and export shoes.
Are there any myths on this topic you would like to dispel?
Since the UK is a global leader in social enterprise and social investment, it is often assumed that UK social enterprises have a competitive advantage in trading globally. However, the social enterprises currently best known for operating on a large scale internationally are outside the UK. They include organisations such as BRAC in Bangladesh and Groupe SOS in France.
What do you hope this report will achieve?
We hope that this report spurs more UK social enterprises to consider overseas trade and that it inspires a range of agencies and intermediary organisations in the UK to join us and SEUK in supporting the growth of an export market for UK social enterprises. Doing so will create jobs, deliver social benefits and foster sustainable and inclusive development at home and abroad.
This report is also limited in scope and we hope that it inspires further research.
Finally, while this report focuses on UK social enterprises, we hope that it will contribute to building an international market for all social enterprises. This will further empower them to develop fresh, financially sustainable solutions to entrenched social problems, and improve people’s lives in our communities and societies.
The report called 'Exporting Social Enterprise: A survey of overseas trade by UK social enterprises – and how to foster its growth' is based on a survey of 113 social enterprises that currently trade or seek to trade abroad. It draws on interviews with social enterprises; experts from the commercial sector such as UK Trade & Investment (UKTI); the Federation of Small Businesses and the Institute of Export; and with intermediary organisations such as UnLtd and Ashoka.