Doing business within social enterprises
The customer of a social enterprise is often a public sector organisation. There are various regulations governing public sector purchasing. There are also great opportunities to develop good business with other companies and individuals, depending on your business concept.
Through smart partnerships between social enterprises, even a small business can gain advantages. You can become more visible in your market, take on larger contracts and carry out skills development together.
Social enterprises and doing business with the public sector
Public Procurement Act (LOU)
If you run a social enterprise you can do business with the public sector through procurement. The Public Procurement Act (LOU) gives government agencies and contracting entities the opportunity to take environmental and social considerations into account in procurement. The aim is to achieve more societal benefits. For example, it may require the supplier to employ or provide internships to people with weak links to the labour market. There are also ways of reserving procurements or directly procuring goods and services that can benefit social enterprises. You need to be aware of the opportunities available and be clear about what your company can deliver when you approach, for example, a municipality.
If you want to know more about procurement and how to prepare a good tender, you can use the Tendering school for social enterprises (“Anbudsskolan för sociala företag”). Training sessions are sometimes held in Anbudsskolan, but the training material works well as a checklist when preparing a tender.
Anbudsskolan at the Swedish Agency for Economic and Regional Growth (in Swedish)
The National Agency for Public Procurement has information on all aspects of procurement and has a question and answer service open to all.
Voluntary sector organisation public partnership (VSOPP)
Working with social enterprises through a voluntary sector organisation public partnership (VSOPP) can be relevant in situations where there is no market, when there are no other suppliers selling the service. A VSOPP is a partnership between the public sector and the non-profit organisation (NPO), e.g. a social enterprise.
A VSOPP agreement is decided for an activity, owned by the NPO, in which the public sector wants to participate. The agreement determines the scope of the partnership, the resources to be contributed by each party, the duration of the partnership and other specific conditions.
The VSOPP is not an operating grant, but has greater requirements for the delivery of a service or specific activity. For example, a VSOPP agreement may cover the operation of a cultural centre in a rural area, night shelters for EU immigrants or a service solution that is needed by citizens but is not considered commercially viable.
The inquiry on third sector social welfare services has created a guide for VSOPPs.
Doing business with other companies
Many traditional businesses want to do social good in addition to their normal activities, so doing business with a social enterprise can be a win-win situation for both parties. This may be because the company wants to help create jobs or a good social environment in its local area. Partnering with social enterprises can become a chain to find new employees for the company, as a supplier of products or services. It can also be a partnership more akin to sponsorship of the social enterprise that generates goodwill.
Business partnerships
Consortia
Consortia involve a group of local businesses that are independent legal entities working together on common issues. This can involve internal services such as payroll and financial management, hiring and skills development, etc. Through the consortium, companies can make joint tenders and marketing efforts. The companies jointly own the consortium and decide on its activities, fees and joint development.
Social franchising
Franchising involves a franchisor building a business with a brand and experience that is transferred to one or more franchisees, who pay a fee to use the concept.
Social franchising works in the same way, with the addition that the concept incorporates what is specific to social enterprises such as participation, empowerment, integrating people into the labour market and so on. Social franchising also includes training and support for the new franchisees and building a network for joint development and support.
As the concept is already tried and tested and provides for cooperation with other companies right from the start, it is a more secure way of running social enterprises. There are several models/businesses around Europe.
Social Trade – partnership for sales and marketing
Social Trade is about creating more business for social enterprises by making it easier for customers to do business with social enterprises. This is done by Social Trade marketing, pitching and arranging contract writing (which may involve several social enterprises) for its members.