Posted: 11 February 2010, in Blog

No, not a reference to the cult social realist film “Scum” dir Alan Clarke 1979 – but a query about your ability to genuinely control your business, social mission and future.


Are you at the beck and call of funders and local authorities?


Will there ever be a day when your social enterprise will generate free profit to enable you to realise your social mission?


I only ask because I was reminded the other day of the old story about the curse of the “rag trade”.


The essential message is that having a large retailer as your sole customer may not be strategically sensible in the long term if you are in the knickers/shirt/skirt business. This is because as in any monopsonist relationship, the powerful buyer/funder will drive the weak supplier(s) down to their preferred cost structure not their supplier’s price/profit structure. Sound familiar?


Anyway, why this came up is that I overheard a social entrepreneur bemoaning the injustice of the purchase – supplier relationship with Scottish Local Authorities. Apparently, (staggering I know) that best value is all about lowest price, the recession has knackered everything (don’t mention the election) and that being entrepreneurial and profitable is unwelcome because LA purchasers still believe that charities (sic) shouldn’t be about profit.


No one in his conversation could offer a way out of this relationship other than the unthinkable option of handing an unsustainable and loss making Service Level Agreement back to the council concerned – despite the impact on the reserves and future of the social enterprise.


So who is actually in control here? Does it matter? Is there a difference between de facto and de jure independence? What would OSCR say to an organisation with charitable status, tax and funding benefits that ran unsustainable businesses to the detriment of its future?


If you are in this situation, one way forward might be to look at the work of Gerr Boschee. Check out his free downloadable version of the Boston Matrix, do some triage and have the courage to apply the lessons.


Tough choices guaranteed but over the next few years, social entrepreneurs need to take strategically correct decisions, survive and be ready for the upturn – it will come, capitalism is like that. The culture change will be challenging too – you may become more commercial and refuse to subsidise the State.


In the future, historians might look back and say “look the Scots got smarter, were unwilling to be downstream low cost subordinate providers of social and consumer services and their social enterprise sector is now more profitable and sustainable as a result”. The voluntary sector? – now that is a different kettle of fish.


A personal view from “Morethanprofitman”

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