Recently i have been researching how charities can trade by starting social enterprises. There has been a lot of press recently regarding social enterprise, with hundreds of MP’s signing the social enterprise charter, the Coalition Government talking about the “Big Society” and how social enterprise will help people get into work who are furthest away from the labour market.
On the back of this hype, there has been many workshops, seminars, courses and conferences on how Charities can start social enterprises. Social enterprise has been touted as being a way, to move away from traditional income streams, such as, donations and grants. The idea of a charity trading to the private/public sector seams a very appealing way to generate profits and help achieve its charitable objectives.
So with all this support, where are all the trading arms? Where are the charities that trade? Where is all this commerce in the third sector? And I’m not talking about trading, where charities conduct;
• 'Primary Purpose Trading – where the charities' trading activities directly linked to its main charitable objective
• Trading activities mainly carried out by the charity's beneficiaries or service users
• Charitable fundraising events
• Charity lotteries
I’m talking about trading arms and subsidiary trading. Charities who have started an entirely separate trading entity, which channels profits back to fulfil its charitable objectives.
Well if you know of any please let me know, because I have looked and have manage to find three on the internet. I was initially shocked at this, I know my internet skills are not the greatest, but I thought I would have found at least 10 examples of charities trading in this manner, fairly easily. Then I did some research on how charities can start a social enterprise trading arm and was shocked that I found one at all.
For an individual or company who wants to start a social enterprise the process is fairly straight forward. You get an idea, set your social objectives, find some funding, start the business and trade. With social enterprise itself not being a legal structure, any business with the slightest social objective can call them selves a social enterprise (although it would probably be devastating for the business if they were found out). But, for charities who wish to start a social enterprise, it’s a whole different ball game.
Charities can trade and benefit from tax exemption, but to get these “tax perks” they are regulated by Charity Law. After looking at the law and the guidelines from the Charity Commission I have highlighted several issues which i feel may arise if a charity decides on creating a social enterprise via a trading arm or trading subsidiary.
1. Charitable objectives
A charity should first have something written into its governing documents that states it is allowed to trade. Some charities may have something written at the end of their governing document, like “or any other activity which benefits our Service Users”. These ambiguous statements can be a bit of a grey area, so I would seek advice from the HR Revenue and Customs and the Charities Commission to see if you can legally trade. Otherwise you may need to amend the document to allow you to trade.
Trustees need to be fully aware off their responsibilities when it comes to trading and may be called to intervene to protect the charity (see http://www.charitycommission.gov.uk/Publications/cc35d.aspx)
As you can see from the link there are a lot of regulations trustees need to be aware of.
For a charity to have control over the trading arm they may need an employee in a position of control. From my research the most popular way to start a social enterprise is via a Limited Company. To start a Limited company the charity will need to appoint directors, either employ an external candidate or appoint an internal employee or trustees.
Who ever is appointed needs to be fully aware of there responsibilities as a director and ensure they do not breach any company or charity law.
With all businesses there is a chance of failure. The advantage of using a trading subsidiary is that you can limit the financial impact on the charity. However this does not limit the impact on the charities reputation. A failed business could leave service users or beneficiaries unemployed which could bring some negative press. This negative press could have detrimental effects when a charity applies for other contract funding as funders may feel they are in capable of running a project.
There’s no doubt in my mind that a profitable trading arm could bring massive benefits to a charity, especially if it’s employing service users to run the enterprise. Though these benefits are big the negative side is equally as daunting. With charity and company law to contend with and conflicting against each other, charities that are not fully aware of all the issues involved could be opening them selves up to a lot of trouble. Then there is the issue of who you appoint directors and if they would want to be directors after being informed of there responsibilities.
For these reasons I am not surprise that more charities are not involved in social enterprise. If the government wants charities to be involve in their “Big Society” and create social enterprises or social firms to address problems in society in a sustainable way, then I feel they need to address the points I have raised in this article.
I freely admit I’m no expert and would love to hear your opinions on this subject in the comments below. If you are a charity who is running a social enterprise, please let me know of your experiences with these issues.
Recently the government has announced the new Enterprise Allowance scheme to support people who have been unemployed for more that 6 months into self employment.
The support is 3 fold
1. A financial package of £2000
2. Business mentors
3. £1000 loan for equipment
What has not been made clear is the amount of cash being made available for the first 6 months of trading. In the past schemes such as test trading offered unemployed people the opportunity to test their business idea by enabling them to stay on their benefit whilst trading.
Details have not been announced how the £2000 will be distributed. Is it is going to be a weekly or monthly payment or is it be
After being made redundant Paul Lamplough decided to start his own business, walking and house sitting dogs. His Disability Employment adviser put him in contact with a business adviser and an appointment was made at his home to discuss his business plans.
The business adviser helped him with his business plan to determine if the business had a chance of success. After completing the business plan, Paul and his adviser started to look for financial support to start up the business.
Through Job Centre Plus Paul was eligible to join the Test Trading scheme which allowed him to trade whilst on his benefits for 6 months. This support let him concentrate on building up his customer without worrying about pay his household bills.
Paul the applied for grants which totalled £600. He used this money to pay for some advertising fliers, poster, business cards and a jacket with his contact detail written on the back of it. He hand delivered is flier to households and businesses in his town and networked with potential customers at local events.
He used some of his profits to purchase a website www.k9-solutions.net which attracted more customers and a van so he could pick up multiple dogs from different area and walk 4 at once. With his business adviser he applied to Access to Work which funded a support work to drive the van as he was unable to drive because of his visual impairment.
With this extra support, Paul soon built up a loyal customer base and is now walking up to 25 dogs per day. He is now looking into renting a property and offering a dog crèche service where dog owners can drop there dogs off, so not to leave them for long periods of time.
Paul said “Thanks to the support i receieved, I was able to start my own business and get me back into work. I did not realise the support available and I know they are always there if I need advice.”
BLIND martial arts expert Mark Paterson has become a highly qualified teacher. The partially sighted master has overcome numerous obstacles in his life but achieving the eighth Dan black belt qualification is his most treasured. Mr Paterson, who is registered blind after being born with only seven per cent vision, launched a business venture with the support of his qualification. With a guiding hand from Action for Blind People, he has set up classes in Guis¬borough and Redcar and is now planning to teach a class around Teesside.
Redcar-born Mr Paterson, who lives in Skelton, teaches a modernised system of the Japanese fighting technique Aiki-jiyu jutsu. He said: “I’m probably the highest trained martial arts expert in the area – the eighth Dan is the highest accolade in the black belt. “The techniques I will be showing in my new classes use everything from throws and locks to pressure point fighting. “The old system, which dates back to tenth-century Japan, centres around sword fighting, so I’ve modernised it to protect people from weapons such as baseball bats and knives, which are more common on the streets today.”
Thanks to help from Action for Blind People, which helps blind and partially sighted people into employment, Mr Paterson has secured funding and drawn up his business plan. His love for the technique began in Malaysia, when he lived there as a child with his parents. His hobby continued back home in the UK and when he failed to find a teaching class in the area, he practised on friends. As time went on, he learned other disciplines such as Tae Kwon Do and Jujitsu and got the teaching bug in 1995 when one of his instructors became ill and Mark took over the class. If you are interested in learning martial arts, contact Mark on 07979557227 for details on your nearest class.
Jayne Mason was born with a congenital sight defect and left school with no qualifications. She lost her parents and her partner and was diagnosed with cancer, before setting up the Fancy Dance Shop, selling dance wear and fancy dress costumes and accessories in York and Harrogate.
Jayne deals with everything from serving customers to ordering stock and managing staff, marketing, networking, as well as her very important role as tea maker. The Fancy Dance Shop is York’s one stop dance shop, for all dancewear, supply and fancy dress needs. Jayne started her specialist dance shop after working a childminder for some time. “When my daughter got older, I wanted to work for myself, so I looked around for a niche in the market,” Jayne said. “My daughter suggested a shop that sold items for dance. So I did further research, contacting dance schools. I learnt a lot from manufacturers and found myself involved in a wonderful fascinating business. “I was a top ten national finalist in The Trading Places competition which is supported by Barclays, and I got there with no form of qualifications, but determination and hard work to succeed. You need to follow your dream and believe in yourself; if I can achieve it any one can.”
Sales of her dancewear plus her fancy dress and accessories expanded so fast that her business outgrew its Blossom Street premises and moved to a shop in Micklegate, taking on two staff.
“Our new website www.fancydanceshop.com is now complete so people can order online”. We are also developing our own brand and there is a possibility of a third shop.”
“At the beginning I struggled to create an opening in the market, as dancewear suppliers were reluctant to give new ventures credit so I had to build up her relationships with them while keeping tight control over my cash flow”
Part of the secret of her success is that she is unafraid of diversification where needed. When Royal Ascot came to York, some space was made amid the dance wear for hats.
“My dream is to franchise out nationally what has proved to be a winning formula.”
Recently some of my clients have been contacted on the telephone from people who claim to be representatives from Google. They are claiming that they can get your website on the first page of Google for a monthly fee. I was concern so i contact our friends at Catalyst Design Solutions to find out if these companies were legit.
After speaking with them it was apparent that If you get one of these calls, I would be very wary, as after questioning one of the “representatives” it was apparent that they were not from Google and what they were actually offering was different from what they first said.
Some of my clients thought this was a good offer as their website was new and not on the first page of Google. The person on the phone claimed they could instantly get their website on the first page and offered them a choice of 5 keywords, i.e. The client picks 5 keywords such as, dog walking in Manchester, pet sitting in Manchester etc…The Company then promises to get the website on the first page when a visitor types in these search terms into Google.
The only problem with this offer was that the person on the end of the phone did not mention that the listing would appear on the right hand side of google and not the left.
When you do a search on google, say for, martial arts classes in Liverpool, Google will display websites it deems most relevant to that search term. It then displays the results down the left hand side of the page and the sponsored results (ones which people have paid for) down the right hand side, and it’s these results the company is trying to sell you.
These listings in the right hand side of google are known as Pay Per Click or PPC advertising. The way it works is that a person who owns a website bids for a keyword, say, “café in Birmingham”. For this example we will say that you bid 10p for the keyword “café in Birmingham”. Google will look at the other bids and if you have bid the most, you will have the top position on the left hand side of Google.
If you have the second highest bid, then you will be second from the top on the right hand side and so on.
If a visitor goes on the internet and types “café in Birmingham” into google, your listing should appear at the top of the right hand side. If the visitor decides to click on the listing, you will be charged 10p, if nobody clicks it you will not be charged.
This is how the company makes their money. You give them 5 keyword terms, pay them x per month, they set up the PPC account and bid for the keywords and you will appear on the right hand side of google.
In reality, for a small business to get on the first page of Google (on the right hand side) the company will only have to bid between 2p – 10p per click. Even if you get 100 clicks per month (which is very unlikely) you will only be charged £2-£10 by google. If the company does this for you then they will charge you betwwen £50 – £100 per month, then it might be worth setting up an account yourself and save your self £40 – £90 per month. Plus if it’s not working for you then you won’t be tied into a contract the company will get you to sign.
Some of these companies are very good at convincing you that they will get you to the top of google and you will get loads of business from there services. I say, if you want to embark on a PPC advertising campaign, type “Google adwords” into Google or go to adwords.google.co.uk . Funnily enough, Google makes it very easy to set up an Adword account. If you feel PPC advertising is for you, I would have a go at setting up an account, you could save yourself a packet.
Thanks to Paul Watson Solicitor in Middlesbrough for supporting us
Access to Work is a Government organisation who can provide you with equipment, adaptations to the working environment or a support worker to enable the Service User to run their business (provided that it is for disability needs).
Applications can be made either for a new business or an existing one, with no cost to your self
To help ATW make a decision on your support needs, it can be useful to write a “job description” of the tasks you will need the support worker to carry out. This could be;
• If you are hearing impaired, you may need a note taker
• Guiding through unfamiliar places if you are visually impaired
• Driving you to clients if you have mobility problems
ATW may the carry out an assessment to calculate an hourly rate and the number of hours you need.
It is then your responsibility to locate a suitable support worker and to complete monthly time sheets to claim back the hourly rate.
A decision then needs to be made in relation to whether the support worker will be paid on an employee basis (PAYE) or on a self-employed basis (the support worker being responsible for paying their own National Insurance and Income Tax).
The HM Revenue & Customs offer guidance on who can be paid on a self-employment basis;-
If you decide upon or are legally obliged to employ a support worker through PAYE you may need the support of a bookkeeper or accountant to complete PAYE. It is possible that the cost could be reimbursed by ATW.
If you have the necessary skills you could do your own PAYE online or do a course on it through
Business Link, Local Enterprise Agencies, Local Council or Enterprise Centres HM Revenue & Customs.
Remember that employing a Support Worker on a PAYE basis will require an employment contract. You can get one of these for free from Business Links website.
You are awarded a support worker for 20 hours at £8 per hour. The support worker starts work and in the first month works 70 hours, this will be recorded on a time sheet and submitted to ATW. You will then pay the support worker and ATW will then reimburse the money into your account.
Depending on how busy ATW are will depend on when they reenburse the money into your account. This could lead to a delay, which could put a financial strain on the business. To keep thing simple it also might be worth having a separate account for these payments, for tax purposes, as they are regarded as a grant.
Many people starting their business for the first time require a website to promote their business or sell their products, but with so many web designers out there which one should you choose?
It can be very difficult choosing a web designer when you know little about web design, so in this article I will give you tips on how to find one which is suitable to your business.
Web designers don’t have magic wands to get you to the top of google, anyone who claims this I would be very wary of. If you want your website to be at the top of google then you will need to advertise and add to it on a regular basis.
The first thing I would do is think about what you want your website for. Do you want to, sell online, use it to display your products, give information to your clients. I would then do a bit of research on your competition, to see who is currently at the top of the search engines.
You can do this by typing in search terms, on how you feel your clients will look for you on google. Example, if I was a plumber in Liverpool, I would type, ‘plumbers in Liverpool in to google and see what comes up. Have a look at the sites which are top and see if the contact details of the people who designed them are on the site.
Once I had a list of web designers I would look on their website, there should be examples of their work. Contact the businesses they have done work for, preferably, companies who are similar to yours. So, in this example if I was a plumber I would look for, electricians, roofers and other building related professions.
Type, ‘electricians in Liverpool’ into Google and see how near the top they come. If they appear fairly high or even top, I would give them a ring and ask them about their website and the company who designed it for them.
This is the part most people don’t like, but I assure you, in my experience most businesses are please to help, if you are not competition. Think about it, if you were a plumber with a website and an electrician, rang you about your website and the company who designed it, I’m sure you would be helpful. Clients who I advise to do this often make valuable contacts. If the person is helpful, offer to send them work, ask for there card, they might off to do the same for you.
1. If you can operate I.T. software like “Microsoft Word” or “Facebook” then you should be able to update your website yourself. Ask the web designer if the website they are building has the option for you to edit it, otherwise if you need the web designer to change your prices in the future, it may be costly.
2. The best way to get up the search engines is by having a large relevant website with lots of quality links. Have a look at this guide about getting links, but to get a big site you will need to blog. If you have the I.T. skills mentioned above then request the web designer to incorporate a blog on the site.
3. Ask how much it cost to hosts the website each year, should not be more than £60
4. Ask how much per hour it costs for new work to be carried out on the site
5. My advice would be to get a web designer who works with either of the following website design software, WordPress, Joomla, Mambo. I say these because if you want a shop or other facilities in the future, it will be easier and cheaper to add them. This site is designed in WordPress
When you start up in business you are required by law to keep some form of accountant, in order for the tax office to calculate tax on your profits.
Many disabled people wishing to start up in business are concerned about, how they will be able to do this as they have had no experience in doing so. Some disabled entrepreneurs have concerns about the cost involved in hiring a bookkeeper or an accountant to submit there records to the tax authorities.
In this article I will use the term bookkeeper as the majority of small businesses may only need an accountant for a small part of there record keeping responsibilities. Accountants have gone through more training than bookkeepers and are able to handle more complex issues. If your small business does not need the skills of an accountant, then there is no point in paying top dollar to use one.
Other concerns people have, is how they will be able to cope physically doing their tax records if they have a disability which limits the work they can do.
In my experience these fears are often blown out of proportion as people feel they need to be an expert in maths to be able to keep records. This is simply not true. For someone setting up a small business, record keeping is a fairly simple process which should not incur much attention from a bookkeeper or accountant.
I would advise anyone who is thinking of starting up a small business and has concerns about record keeping to first visit the tax office and ask them what is required. Many local tax offices has staff whos job it is to help small business submit their tax records and some even run courses. If you think about it, all the Government wants, is for you to pay the correct tax you owe.
When you visit them, explain your concerns and any issues you may have. From my experience they have been very helpful with people who have disabilities and may already understand the concerns you have.
They could help you set up a system which will suit both parties and keep you on the right side of the law. They may be elements of keeping and completing records that you don’t feel comfortable with. For these more taxing (sorry) elements, you could always get a bookkeeper to do them.
As I was saying, keeping records for tax purposes is fairly straight forward and inexpensive, if you are prepared to do some of the work yourself. If all you want to do, is once a year turn up to your bookkeeper, dump a sack full of receipts on his table and run off, then yes it is going to cost you.
You can reduce this costs by keeping your records in order, which will mean less work for the bookkeeper. I would recommend that you get yourself some envelopes and files, and at the very least keep all the receipts/ invoices in order, on a month to month basis.
Talk to a few bookkeepers, tell them you are on a budget and you want do the majority of work yourself. Work with them and the tax office and find a system that is right for you.
There is also support available from Access to Work. If you have a disability which restricts the bookkeeping work you can carry out, you may be entitled to equipment or a support worker to enable you to operate your business effectively. They will not pay for someone to do your accounts, but will help easy issues which are directly related to your disability.
If your local tax office does not offer courses, try your local enterprise centres or the council. From time to time these organisations run courses for all abilities.
Becoming disabled is a difficult time for people, as it could affect every aspect of there life. For people who are self employed, becoming disabled can have a disastrous effect on their business.
The first piece of advice I can give to you if you find yourself in this position is to fight! This is not the time to feel sorry for yourself; you may have people who rely on you. I suspect if you are in business you are used to having to fight and if you want to keep your business you will need to act fast!
If you are self employed and have recently become disabled from sight loss (registered blind or partially sighted), become deaf or have mobility issues etc… it could have a negative impact on your business.
There is support out there to keep you in business. The last thing the government wants is for you to quit your business and sign on to full time benefits. In this article I will guide you through the support available and were to find it. Support which is designed to help you remain in business can take time to implement. The quicker you can apply for it, the faster it will be put in place, which should limit the impact on your business.
The main support available to people in business who have become disabled is.
2. Access to work
If you are newly disabled and in business, you could qualify for benefits which are designed to support you with the extra cost of living caused by your disability. Benefits such as, Disability Living Allowance are not means tested and could be paid to you whilst you are trading. This extra financial support could help you until you can fully operate your business.
There could also be support if your income drops during this time. You maybe eligible for Working Tax Credits, housing benefit, counsel tax benefit, which will supplement your income.
The key to accessing these benefits are working with the people who understand your disability. You need to contact local charities who operate in your area and specialise in you disability. You can find these by looking in the phone book or using the internet. These charities usually have staff who can help you access support.
2. Access to Work
Access to Work is a Government organisation who can provide funds to pay for a support worker, equipment or adaptation to your working environment to enable you to run your business (see ATW article for more info)
There are 2 different types of grants you may qualify for to enable you to continue in business. The first one is hardship grants if your disability is affecting your income and you are having difficulties in paying your utility bills, rents, child costs etc…the other type is a business grant (see business grants)
The key to remaining in business is knowledge and speed. Work with as many organisations as possible and get all the support you are entitled to.