What is a Social Firm?

Haven ladies.jpgSocial Firms are one type of social enterprise.  Social enterprises* are businesses that trade for a social or environmental purpose, and their profits are reinvested back into the company to help them achieve this purpose.  The specific social purpose of Social Firms is to create jobs for people who find it hardest to get them.

A 'Social Firm' is a market-led enterprise set up specifically to create good quality jobs for people disadvantaged in the labour market. An 'emerging Social Firm' is an enterprise that is working towards becoming a Social Firm, usually in the early stages of trading and not yet in a position to employ numbers of people, but working to a business plan which illustrates how they're going to achieve their goal. The 'Social Firm sector' is the collective term used for emerging Social Firms and Social Firms.

* For more information about social enterprises, visit the Social Enterprise Coalition or Social Enterprise London websites.

Criteria - the Values-Based Checklist

The criteria used to assess whether a business is a Social Firm can be found in the Values-Based Checklist. These criteria are based around three core values that Social Firms will subscribe to within their businesses: enterprise, employment and empowerment. See the checklist (available in mind-map and list versions) for full details, but key are the following criteria:

  • Enterprise - Social Firms are businesses that combine a market orientation and a social mission (‘businesses that support’ rather than ‘projects that trade’). The business activities of Social Firms vary widely as shown by these case studies. At least 50% of the firm’s turnover will be earned through sales of goods and/or services, (the lowest for Social Firms in April 2005 was 66%). The firm will have an appropriate legal status. It must not be governed or driven by individual profit (except for worker co-operatives). Remote shareholders will not extract unreasonable profit.
  • Employment - more than 25% of employees will be disadvantaged people. Reasonable adjustments will be made for employees relevant to their needs.
  • Empowerment - Social Firms are committed to the social and economic integration of disadvantaged people through employment. A key means to this end is economic empowerment through all employees having a contract of employment and a market wage at or above national minimum wage.

Extra elements: a Social Firm Trainer

There is already a wealth of advice and information about general business development in the social enterprise sector. So 'The Extra Elements: A Social Firm Trainer' has been has been designed purely to fill the gaps specific to setting up and running a Social Firm that they don't cover. It is therefore a tool that is complimentary to, and should be used alongside, what is already available. It is split into six parts: A: What is a Social Firm? B: How does starting and growing a Social Firm differ from other business development? C: Developing the right organisational structure for a Social Firm D: Raising appropriate start-up funding for a Social Firm E: Developing supplimentary income streams F: Developing a supportive workplace.

Star Social Firm logo.jpgStar Social Firm quality standard

The Values-based checklist helped the subsequent formation of the accreditation scheme, the Star Social Firm quality standard. Find out more about why the Values-based Checklist was written.

Video - What is a Social Firm?

View this three minute video ("Social Firms, successful businesses, empowering employment") explaining what Social Firms are:

Other case studies and videos

For more useful case studies and videos, visit our case studies page at: http://www.socialfirms.co.uk/resources/case-studies