How can a sustainable start-up stay up?

Getting a social enterprise off the ground is not an easy thing to do. The barriers to success and to staying afloat are well known anecdotally but now a new report, A Year in the Life of Western Australia’s Social Enterprises, lays out exactly what challenges and opportunities face these socially minded business men and women.

Report author Chris Mason, a Senior Research Fellow at the Centre for Social Impact at Swinburne University (CSI Swinburne) said these entrepreneurs have plenty of enthusiasm but sometimes lack the knowledge that ensures their survival.

“Without a doubt they’re quick to learn, eager to take on challenges, and are quite savvy in partnering and growing their business,” he said.

“But where they’re struggling is around the areas that ensure their longevity – securing external finance, retaining staff and adapting to market changes.

“Undoubtedly the most pressing issue for many social enterprises was availability and access to suitable financial resources, which directly affects longer term resilience.”

By following ten social enterprises over a 12 month period the report, the latest in the Bankwest Foundation Social Impact Series, reveals exactly where the difficulties lie.

The report found that due to the typically small nature of the social enterprises, many entrepreneurs found it challenging to dedicate adequate resources to systems that would enable effective reporting on their financial and social performance.

This in turn meant that investors and had little information upon which to base their decisions, creating a vicious circle surrounding attracting and maintaining funding levels.

“If we could overcome this hurdle it would help these businesses communicate better with potential investors, help them secure funding and help give them a competitive edge in applying for grants and tenders,” said Mason.

The report’s other recommendations included:

• the need for clear policy leadership around social enterprises entering or operating in the NDIS
• policy development to secure government support
• a review of lending practices towards financial enterprises
• the development of a robust easy-access data-collection and reporting system

“Of all the issues thrown up by the report this is the one where we feel we can make the most difference. Attracting and holding on to investors is the key to everything and so if we can ease the path through that minefield then we hope these sustainable enterprises will benefit greatly,” said Mason.

“And the reaction from the sustainable sector has been very favourable to idea. Study participant and social entrepreneur Nick Maisey, founder and director of Befriend, said that he was excited by the immediate practical application of this research.

“The development of a web-based tool for social and financial data collection and analysis will be incredibly useful and will enable great efficiency and effectiveness for social entrepreneurs.”