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5 ways the North West social economy is booming (and set to grow even more)

The social economy in the North West of England is booming. Thanks to a combination of factors social enterprises are growing, increasing the range of services they provide and playing a bigger role in the local, regional and national economy.

Although already strong, many commentators think that the sector is set to expand further, especially in the North West. While there are plenty of opportunities, there are also some challenges to overcome, especially in finding the right kind of finance to unlock organisations’ growth potential.

  1. Social enterprises are out-performing ‘conventional’ business

The last decade has seen rapid growth of the UK social sector. According to The Social Enterprise Alliance “social enterprises and co-operatives are outperforming just-for-profit businesses; alternative banks have better returns on assets, lower volatility and higher growth; and a growing proportion of start-ups are socially-driven.”

This may be due to the economic upheavals of the last decade, with the Credit Crunch prompting many individuals and enterprises to find alternative ways of working and adding more than just financial value. It may even be due in part to the rise in social media, with bloggers, Tweeters and Facebook users quick to share and promote what they see as ‘good’ organisations (and equally quick to abandon the ‘bad’).

  1. The North West is beating the averages

Even as the social economy is thriving in the UK as a whole, the North West of England is showing signs of out-performing the rest of the country.

NatWest’s SE100 2015 report found that 63% of North West social enterprises had diversified into new markets in the preceding year, well ahead of the national average of 43%. 83% of social enterprises in the region also reported winning major new customers in the same 12 months, also beating the 79% figure for the UK as a whole.

First Ark’s Executive Director, Tony Cahill, said: “[the report] shows that the North West social businesses sector is ahead of national trends in business confidence, growth ambition, the diversification of its products and services and its customer base.”

  1. Confidence is high among North West social enterprises

People in the social enterprise sector are feeling confident about their current situation, as well as the future. First Ark commissioned research firm, Ekosgen, to compile a report on the social economy in the region. The 2016 study found that over half of social enterprises in the North West expected that they would break even and 38% anticipated a surplus. 40% said that income had increased compared with a year earlier and 45% thought that it would grow further in the following year.

Only 2% of the social enterprises surveyed said that turnover had gone down.

  1. Social enterprises excel in fast growing sectors

Social enterprises come in all shapes and sizes, performing all kinds of roles across the wider economy. That said, they do tend to do especially well in certain sectors, including education, business support, skills training, retail, plus social and health care.

Another survey conducted in 2014 found that 36% of social enterprises were involved in education, 34% in community development, 33% in health and social care and 31% in training.

These areas of excellence are good news for North West social businesses because the education and social/healthcare are seen as particular growth sectors in the region. As the social economy is already serving these areas, social enterprises are well placed to grow as demand increases.

  1. Investors see the potential

Investors are increasingly interested in social enterprises, especially in the North West, according to the Ekosgen report, with many seeing it as the largest and most active market for social investment outside London.

This interest from investors means that social enterprises may have access to the funds needed to unlock growth potential.

Taking it to the next level

Although all the pieces are in place, there are still some big challenges for North West social enterprises; studies have highlighted some problems that often hold them back. One major stumbling block is accessing the social finance that is available. This lack of access to finance is restricting growth.

Without enough money it can be hard for any organisation to grow. Social finance is out there, but many enterprises – especially smaller organisations – often have trouble unlocking it. Applying for finance can often be difficult and time consuming, requiring management procedures, reporting structures and business plans that smaller organisations simply don’t have.

First Ark Social Investment was set up to solve this problem and help the social enterprises across the region access the finance they need in order to grow. First Ark Social Investment helps social enterprises get ‘investment ready’ – offering wraparound support before application to get the management procedures, business plan and other paperwork right, then continue supporting them throughout the lifetime of the loan to make sure everyone gets the best value out of every penny.

For more information drop us an email at investforimpact@firstark.com or call 0800 464 0797. One of our team can answer your questions, talk you through Invest for Impact and tell you what you need to get ‘investment ready’.

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