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Crisis Ethical Enterprise and Employment (3xE) Network

‘Winning Business’
An introductory guide

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‘Winning Business’

Contents
1. Why grow a trading business? 2. Things to think about when getting ready to do business. 3. The need for market research. 4. Working with other organisations/developing partnerships. 5. Winning business. 6. Summary. 4 4 5 6 7 10

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3xE Network: a social enterprise network for the homelessness sector
The Ethical Enterprise and Employment (3xE) Network is run by Crisis to bring together organisations using social enterprise and supported employment models, and organisations working with unemployed people who are homeless or at risk. 3xE works in partnership with social enterprise infrastructure organisations throughout England to improve take up of their services by homeless sector social enterprises. 3xE also funds a variety of support services specially tailored to the needs of the homelessness sector to enable organisations to start and develop social enterprises or supported employment schemes. The network is funded by the Big Lottery Basis programme.

Info sheet
This is the fourth in a series of info sheets that 3xE is producing to capture and disseminate the learning from the Network. It is based on a conference that the 3xE project held on November 30th 2011 (“Winning Business”), which explored the ways in which organisations in the homeless sector can begin to develop and generate commercial trading services and incomes. It details the key themes and issues raised over the day by both speakers and participants and offers details of where further information about them might be accessed1. It is intended as a ‘primer’ – rather than serve as a blueprint for how to develop a social enterprise and then subsequently win business, it offers the rationale for doing so and the key stages to consider when planning your strategies. Many groups who use this info sheet may already be pursuing aspects of development which are introduced here. The info sheet is therefore structured into separate sections, the ordering of which reflect a typical ‘journey’ in developing and launching a new social enterprise venture. This infosheet draws upon national research, training materials and personal experiences of Adrian Ashton – a nationally acclaimed provider of advice, training and consultancy services in relation to Governance issues and enterprise development.(www.adrianashton.co.uk)’

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please note any web links were correct at time of publication of this info sheet – some websites may change over time

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1. Why grow a trading business?
It is important to be clear as to the reasons why an organisation is interested developing a social enterprise as a trading business, as it will help ensure that the right business models are adopted. Some of the most commonly cited reasons for homelessness and housing sector organisations to set up such are venture are: • there is increasing competition for funding from traditional sources such as grant making trusts and public bodies, • generating income from traded services presents a clear opportunity to not only protect services, but also potentially increase them by being able to subsidise them through profit from trading, • traded income also helps to balance the financial risk of being over-reliant upon a single, or very small number of, existing income sources.

2. Things to think about when getting ready to do business
It is important for social enterprises to have strong business foundations before competing for business and trading in the open market. In any new venture there may be barriers that could impede development and likely success. Being clear about what these might be, and how they can be best addressed is crucial. While there are many other books and materials already published on such barriers2, the main ones that were identified through the “Winning Business” event were: Finance: • Developing new services and products will incur costs (e.g. staffing, materials, premises, etc), a long time before sales revenues are generated and received. These will need to be carefully factored into the business plan and start-up finance may need secured. Introductory guides to the different sources of development finance can be found at http://www.sel.org. uk/funding-and-finance/ and http://www. slideshare.net/adrianashton/financingsocent-mmu-guest-lecture-nov-2011 Getting the Right Skills and Support: • Your organisation will need good management support. For some social enterprises not all of those leading the business are recruited as entrepreneurs or marketing managers. Look around you to see who can help – for example, it may be that some providers of finance can also offer you financial guidance as part of their investment in you.

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http://www.unece.org/fileadmin/DAM/ceci/ppt_presentations/2007/eed/tur.pdf http://sheffield.academia.edu/ColinWilliams/Papers/648817/Tackling_the_barriers_to_entrepreneurship_in_a_deprived_neighbourhood http://www.cdfa.org.uk/2011/09/14/access-to-finance-is-largest-barrier-to-sustainability-of-uk-social-enterprises/

Understanding the market: • Organisations don’t always thoroughly understand who their customers will be. Without adequate market research it is impossible to properly price or promote the service in a way that will attract their interest and custom.

3. The need for market research
However well you are able to gain the resources, investment and skills needed to develop and launch your new enterprise, ultimately you need to be assured that it is feasible – there is a demand for it and people are willing to pay you a price that allows you to sustainably offer it. In order to best present your service to targeted customers it is vital to make sure that you understand them – find out what their priorities and concerns are, how and when they procure services, and what they might be willing to pay. It is important to do this before you enter into the market place and compete for business. There are already various published guides3 (including a 3xE info sheet ‘Marketing Matters’) on how to undertake market research and develop a marketing plan. Whichever ones you use, the key task will be to identify what it is that makes you ‘stand out’. What can you offer, either through the way in which you deliver your service, or the impact it creates for your customer that they currently can’t benefit from by using any other enterprise. Knowing this will make it far easier to attract their attention, and also their business.

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http://managementhelp.org/marketing/market-research.htm http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073901910

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4. Working with other organisations/ developing partnerships
For some smaller social enterprises or those that are looking enter into larger contracts working in partnership with other organisations can increase the contracting opportunities. Partnerships can be used to pursue various aims and take different forms from occasional and informal joint purchasing agreements to access savings on bulk/shared purchasing, to legally formalised consortia for delivering contracted services. An example of consortia delivering services is the WISE Group4; they identify contract opportunities and delivery partners, and offer partnerships which include access to management functions and infrastructure. This gives credibility to the partners so they can bid for contracts they would otherwise be excluded from. In return the WISE Group gains the opportunity to access new services that it can offer elsewhere. A social enterprise might identify a contract opportunity that fits with its services and social mission, but which it is too small to bid for, or not be able to satisfy the requirements of the commissioning officer (such as having 3 years of audited accounts or adhering to certain quality management standards). In such instances, collaborating with another enterprise that can deliver the balance of services and to collectively meet those requirements is highly beneficial. Thus improving the capacity for all involved to enter the supply chain of contracts that they would otherwise not be able to bid for independently. This also helps them to

develop a trading history which is can then build on to grow and strengthen itself to bid for later contracts in its own right. There are many other benefits to working collaboratively with other organisations, in partnerships or consortium; these can vary depending on the size of the organisation and the aims of the collaboration. However, some of the benefits can be: • Offers immediate access to a wider variety of skills, expertise and resources, with each member working towards their strengths • There is a potential for wider social aims and impact to be met • Savings in time and money (especially with bulk purchasing) • Allows organisations to ‘shortcut’ the time and costs involved in developing the infrastructure needed to when bidding for and delivering contracts • Minimises the risk • Increases the possibility to bid for larger and more sustainable contracts • Improves the prospect of investment opportunities When exploring the development of any such partnership, it is important to recognise that it will take time and effort, not all parties will want the same things from the relationship, and not all may care that you’re a social enterprise or about your social mission. There are various resources available to support organisations begin to explore and start the process of developing partnerships: http://www.partner-up.org/resources/ http://foundationcentre.org/gainknowledge/ collaboration http://www.charity-commission.gov.uk/

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http://www.thewisegroup.co.uk/content/

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publications/rs2.aspx? http://www.charity-commission.gov.uk/ library/guidance/cc34text.pdf http://www.ncvo-vol.org.uk/advice-support/ collaborative-working Whichever type of partnership is being explored, there are common stages that need to be worked through to ensure the best use of the time and other resources that may be available to you in pursuing them – a) agree the purpose for the partnership – what everyone wants to achieve from it and what they agree is their shared or common purpose in coming together b) agree how the partnership will operate – how decisions will be taken, who will be responsible for what actions and areas, who else needs to be involved, and how its performance will be monitored c) ensure that other stakeholders and interested or affected parties have the opportunity to be involved d) encourage all partners to commit the resources they have agreed to, and that the partnership will need to make it a success e) review the achievements and progress of the partnership at regular intervals

5. Winning business
Finally, now that an enterprise has been formed and its management is in place, it can begin the business of winning contracts and work. Finding the Opportunities Ultimately, all strategies that are employed to win business rely on being able to find it! This can be done in a variety of ways including monitoring various registers (examples of which are listed in the appendices to this info sheet), networking and ‘knocking on doors’. If potential customers don’t know that you’re interested in them they won’t contact you with invitations to deliver services. Developing a range of personal contacts can help you to remain on top of changes in the marketplace. There are various websites that list and profile arising contract opportunities. Those listed below offer a free, either national or European, directory. However, there are others that will also search for contract opportunities on your behalf on a paid subscription basis. Many local authorities also have their own dedicated procurement system to advertise and accept proposals to deliver contracted services so you should make contact with your relevant authority. Contacting your local Chamber of Commerce may also help in identifying contract opportunities with private companies. http://contractsfinder.co.uk/ http://www.fundingcentral.org.uk/Default.aspx http://www.ojec.com/Default.aspx http://ted.europa.eu/TED/main/HomePage.do

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Elevator Pitch As well as selling your service or product, you will also need to sell your organisation. You should consider crafting an ‘elevator pitch’, essentially being able to tell the story of your organisation and why people should be interested in doing business with it in the space of less than 2 minutes5. Practicing such a ‘pitch’ is vital as you won’t have a second opportunity to make the first impression with a potential customer. Procurement & Contractual Requirements You should also be able to satisfy the contractual requirements of your customers. For example, public contracts usually require references, of a number and type, which most start-up enterprises will be unable to meet. So consider carefully if it may be more appropriate to target private customers who won’t require such stringent conditions. Another option is to become a sub-contractor to a larger company that can fulfil the contractual obligations. You can identify the companies to approach by finding out who delivers the Level 1 (top-level) contract to your chosen firm. When targeting customers, it can also be useful to identify how formal their tendering processes are, so you are prepared for the time required to prepare proposals to deliver services for them. Under EU regulations any public contracts for works (physical buildings, etc) valued at more that roughly £4million, and for other services valued at more than roughly £150,000, must be openly advertised6. Below these amounts, commissioning authorities will be allowed to use their own procurement rules. However, such local rules can vary widely between areas and bodies, so you should be aware that procurement procedures for one public body for a certain contract value will not automatically be the

same elsewhere for contracts of the same amount. Further background information on public sector contracting for social enterprises and community and voluntary bodies can be accessed on-line at http://www.navca.org.uk/ localvs/lcp-1 Capacity Being able to recognise how well you can meet customers’ requirements means you need to be realistic about your own capacity – not just in terms of being able to satisfy the requirements set by the contracting body, but also in assuring yourself that you can afford to complete the work up front. Delivering services under contract will invariably mean that you won’t be paid until sometime after you have delivered the work. It is important to bear in mind that they may also have concerns about using a ‘new start’ enterprise as a supplier, so you will need to demonstrate your capacity, quality and abilities. It may be that initially you are only able to offer a relatively small level of service or quantities of your product. However, even small contracts with any type of organisation offer you a ‘foot in the door’. From this initial contract you will gain contacts, be able to develop and build on relationships and grow your services in the future. Pricing Strategy Consider your pricing strategy - this forms an important part of your marketing plan (see 3xE info sheet ‘Marketing Matters’). The price you charge should ensure that you can afford to deliver your service and also generate a surplus to reinvest. While there are resources7 that can support you to identify what such a price might be remember that you should also be able to show how your price is realistic. You should research your competitor’s prices and be realistic about where you sit in the market.

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http://www.readwriteweb.com/start/2010/04/the-art-of-the-elevator-pitch-10-great-tips.php see http://www.out-law.com/page-5964 and http://competition.practicallaw.com/7-422-4818 www.bized.co.uk/sites/bized/files/docs/pricingstrat.ppt

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If your prices are higher than the average (due to the additional costs related to running a social enterprise) than it may be more difficult to secure the deal. However, you may be able to overcome this by targeting your business at companies that are more socially conscious and consider your ‘social value’ within their bidding process. For example, tcuk8 are identifying the financial benefits to the wider economy that they are generating through their employment of ex-homeless clients (creating savings to state benefits and associated health costs if they had remained otherwise unemployed, generation of income tax, etc) to put them in a favourable position when contracting. Social Value This illustrates the wider concept of ‘social value’ – being able to show how you are benefitting both the local community and wider society. Such value might include employing local people (making savings to the state in terms of unemployment costs), a commitment to using local suppliers yourself (and so strengthening the local economy), health benefits that your staff enjoy in terms of education and support (reducing the need for longer-term health costs) and so on. An approach to identifying such ‘value’ that is frequently cited in relation to winning contracts from public bodies is ‘Social Return on Investment’ (SROI). The SROI methodology not only identifies the impacts to the stakeholders of your services but also places a monetary value on them. In doing so, it is able to calculate a ratio of ‘benefit created to cost’ – for example, for every £1 an authority has spent on commissioning a service, £3 of benefit may have been created in the wider community through people’s health improving, savings accrued to state benefits from people entering employment, and savings to the justice system from people

reducing rates of offending. Further guidance and examples of SROI can be accessed through the SROI Network at http://www. thesroinetwork.org/ The concept of ‘social value’ is not consistently useful in respect of winning contracts, as some bodies stipulate that contracts are awarded only on the basis of cost at the point of delivery. However, there seems to be a growing interest in the wider social benefits associated with contracts. Under the Public Services (Social Value) Act 2012 all public bodies in England and Wales are required to consider the economic, social and environmental benefits when procuring public services9. Although this does not apply to public work contracts or public supply (goods) contracts, there is a growing approval for public bodies to consider social value when procuring all contracts, across the board. Ultimately the need to be able to evidence and articulate the ‘social value’ you are creating will be based on the interests of your target customers – an echo of the arguments about the need for market research and understanding what is important to your customers. Introductory guides researching and reporting on such impacts and value can be accessed at http://www. socialimpactscotland.org.uk/third-sector/ methods-and-tools-.aspx and http://www. proveandimprove.org/ Keep trying! Finally, if you don’t win the contracts or work that you are pursuing, always ask for feedback. It may be that there is something about your service which is not appealing – if so it’s important to address this so that it doesn’t prevent you from winning work in the future.

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www.tcuk.org/ps http://www.socialenterprise.org.uk/uploads/files/2012/03/public_services_act_2012_a_brief_guide_web_version_final.pdf

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6. Summary
In summary and conclusion, any organisation considering developing trading enterprises needs to be honest with itself about its capacity, culture and ability to do so. Generating income through social enterprise won’t be relevant or suit every organisation. However it should at least be explored if for no other reason than to assure itself that continuing as it currently is really is the most appropriate strategy for it to pursue. This info sheet serves to offer an overview of the main processes and stages involved in not only developing a commercial service, but also in ‘taking it to market’ and winning business. The various links and references are offered at starting points to a range of other existing resources and support that already exists. It is not a set ‘blueprint’ as no two organistions are exactly the same, or face the same issues. However, it presents the principal questions to ask, explains the rationale as to why these are important and offers support in addressing them. The following links to additional resources on developing a social enterprise may also be useful: http://www.socialfirms.co.uk/get-involved/ start-social-firm http://www.ncvo-vol.org.uk/advice-support/ funding-finance/income-sources/open-market This info sheet draws upon the already stated 3xE conference, national and other research, training materials and personal experiences of Adrian Ashton – a nationally acclaimed provider of advice, training and consultancy services in relation to the development and management of social enterprises and business development www.adrianashton.co.uk

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Appendices:
Sources of details of where to find contract opportunities: There are various websites that list and profile arising contract opportunities. Those listed below offer a free either national or European directory, but there are others that will also search for contract opportunities on your behalf on a paid subscription basis. Many local authorities also have their own dedicated procurement system to advertise and accept proposals to deliver contracted services so you should make contact with your relevant authority. Contacting your local Chamber of Commerce may also help in identifying contract opportunities with private companies. http://contractsfinder.co.uk/ http://www.fundingcentral.org.uk/Default. aspx http://www.ojec.com/Default.aspx http://ted.europa.eu/TED/main/HomePage.do Bibliography: Selected additional publications which further explore some of the issues raised in this info sheet: Catalyzing Consortia: the factors required for successful social enterprise consortia cohesion and successful tendering, SELNET, 2009 Collaboration for success: insights into social enterprise collaboration to deliver public services in the North West region, SELNET, 2009 Working in a consortium: a guide for third sector organisations involved in public sector deliver, Cabinet Office, 2008

Key points captured from all speakers and workshop sessions at the ‘Winning Business’ event Partnerships: Using Partnerships to Win Business Richard Litchfield, Eastside Consulting 1. Partnerships may arise either reactively in response to arising contract opportunities, or pro actively in pursuit of strategic business development - but both take time 2. Rather than try and develop new skills and expertise ‘in house’, consider collaborating with another organisation who already has them 3. Understand that there will be cultural differences between organisations: the same job title won’t carry the same responsibilities everywhere 4. Be clear what you have to offer other organisations, as well as what you want/ need in return and what you’re not willing to compromise on 5. Remember the ‘pub test’ - how well do you think you can get along with these other people? Marketing: Get ready for success: How well do you know your market? Sara McGinley, Marketing & Communications Director, Social Firms 1. Have a concise, clear pitch- don’t baffle your potential client with too much detail. They may not know or care what a social enterprise is, put yourself in their shoes, what are they looking for? 2. What stops your firm buying from social enterprises? Empathise with what it is and get round it when you are trying to sell to others. 3. Should you create more social enterprises in an area /sector of the market if ones already exist, what’s your USP? 4. You need a great service and product, the “feel good “message is not enough.

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5. Make sure you advertise your service in both the social enterprise arena and where you’d expect to find it e.g. amongst sector competitors in yellow pages Contracts - The elements of your business that you need to have in place in order to win contracts in the private and public sectors. Facilitator: David Miller, Bikeworks 1. Build a good team around you and ensure you can promote their skills and experience 2. Try for achievable goals, if you are a smaller organisation look for contracts with other small organisations. 3. Work on internal contracts, if available, to increase your experience, job record and sustainability. 4. If you miss out on a bid, find out who got the bid and why 5. Similarly if you miss out on a quote, find out what the other quotes were after the process and then look into re-pricing your service Being Investment Ready - How do you make your business investment ready? What are investors looking for and how do you demonstrate you have it? – this was combined with workshop 3. Facilitator: Danny Wilson, Big Issue Invest 1. Shop around for investors as some will be better suited for your needs 2. Look into the different types of investment – are you looking for a loan or an investment? 3. Investors are looking for clear business plans 4. Investors invest in people as well as the business model, therefore be seen to be professional at all times and demonstrate your passion and ambition 5. Scale and robustness is important to investors, therefore the more contracts you have the better

Where are the contracts? - How do you find new contracts? What do you need to have in place to demonstrate you can deliver? Facilitator: Sian Thomas, TCUK 1. Knocking on doors, and getting the right contact details can be a challenge but is essential 2. Attend local business forums and networking events 3. Different sectors have different rules and regulations – check these and make sure that you are in a position to respond to their needs 4. Use the Chamber of Commerce to find upto-date information on local businesses 5. Make sure that you target your pitch (e.g. elevator pitch) 6. Keep going! Social Value, is it valuable? Facilitator: Adrian Ashton, www.adrianashton. co.uk 1. Its import to identify your social value to inform internal business planning and prioritising of your development ideas 2. Presenting your social value/impact reports to customers or commissioners shouldn’t be automatic - only share them if relevant and they’re likely to be interested in what it shows 3. There are benefits, but also limitations, to using existing tool-kits and measures - especially as they allow for easier benchmarking, but may mean you miss important stuff 4. Given the wide number of such tool-kits and standards, it can be difficult to choose which is appropriate without investing time in exploring the options

3xE Network Crisis 66 Commercial Street London E1 6LT Tel 020 7426 8500 Email 3xE@crisis.org.uk www.crisis.org.uk/3xe
Registered Charity Numbers: E&W1082947, SC040094.