Set up a social enterprise

Looking to improve your income though self-employment? Or do you have a burning ambition to be your own boss long term, to make an impact, to meet a particular need or further a cause? Whatever your motivation, a lot can be gained by starting up a small social enterprise.

Serves – anyone wishing to set up a social enterprise or charity
Preparation – time taken to prepare your social enterprise vision
Cooking time – from seven days upwards


  • social mission
  • skill set
  • personal attributes
  • business partner
  • financial viability
  • market research
  • gap in the market
  • competition
  • alternative
  • start-up funding
  • legal structure


  1. Describe your social mission in accessible language. It should explain and justify the value of the social change you aim to bring about, who you aim to help, and how you are going to go about it, and how will know what difference you are trying to make. For example, “to enable disadvantaged children and young people to learn to play a musical instrument” or “to provide art therapy for people with dementia”. This will clarify your own thinking and help convince others of your cause, including registration bodies, potential funders, (and perhaps social investors), the public, potential beneficiaries and/or customers.
  2. You will need to have a relevant skill set to run your own social enterprise. Of course, these would pertain to your venture, whether it involves IT, homeopathy or bike repair! But generally speaking, for most businesses you will need to be OK with oral and written communication (including presenting your product to customers, funders and investors), have a reasonable head for finances, able to manage projects, and solid administrative skills.
  3. Now, take stock of your personal attributes: and consider those you are going to need for your venture. In most cases you need for example to be methodical, perseverant, good at multi-tasking, a flexible worker, self-reliant, calm, with good people skills, sensitive to others’ needs, decisive, creative and good at spotting opportunities.
  4. If you lack any of these skills or attributes don’t give up, you could either learn them or adapt, or find a business partner whose skills complement your own. For example, you may be great keeping things going behind the scenes but dislike pitching your product in front of an audience. If you could find a person with the latter skills and attributes and you can work with them, you could have a winning formula.
  5. Get a good idea of the likely financial viability of your business model. Check there is sufficient market demand for your products or services by doing market research; you must be able to sell your product or services if your cash flow is to remain healthy.
  6. The key to success can be to spot a gap in the market and tailor your business to fill that niche. Even if you plan to sell something that’s already proved popular, you should still carry out some market research to seek honest feedback from potential customers. This need not be sophisticated or expensive, you simply need to know who your customers will be and what they think about your products or services. Don’t just canvass friends and family, most will be reluctant to criticise, and they probably only represent a small proportion of your market.
  7. As part of market research, assess the competition – web-based searches are a good place to start. Also flick through the pages of business directories and local papers/magazines. Even walking around the area in which you’re thinking of setting up may reveal much about the competition you will face.
  8. This research may expose important flaws in your business idea, but better to find this out now. You might decide your only option is to think of an alternative business venture or model. Many successful entrepreneurs have had to work their way through numerous bad business ideas to arrive at good ones. Alternatively, your business idea might simply need a tweak here and there to enhance its chances of success.
  9. To take this further, next research and prepare a Business Plan for your venture. See Recipe Preparing a Business Plan At this stage it could be pretty basic, you can add to it later, but its purpose is to be clear in your own mind what you are intending to achieve, whether this is really a viable idea, and what you need to do to get there over the next 1, 2, and 3 years. This will influence funders and investors, discipline your thinking and activity, demonstrate your financial viability and help you monitor and measure progress.
  10. Unless you have money to put into the business, you will need to access start-up funding. This may involve business grants and project grants, or loans. Loans include Social Venture Capital, Venture Philanthropy Capital, Social Banks and Ethical Lenders, and Community Banking. Loans or donations can also be obtained from the public via crowdfunding sites. See our Recipe How to fund a start-up social enterprise
  11. Alongside this you must choose a legal structure. If you want to set up a business that has social, charitable or community-based objectives, here is a useful guide on choosing a legal structure
    Other structures can be used for private business ventures. However, with these you may encounter difficulties in convincing customers, funders or social investors that you are a social enterprise. These are: Sole trader business (registered with Her Majesty’s Revenue and Customs (HMRC) For details see ; business partnership, For details see Limited company (which must be registered at Companies House) –a company limited by shares. For details see

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