Reflections on Voice 08

For those of you that have never been, Voice is the annual UK social enterprise conference. This year (Voice 08) was in Liverpool and is one of my two must-attend conferences of the year (the other being RCN Congress).

For me it does 3 things:

1) It connects me with many of my social entrepreneur contacts, some of whom I only see once a year. Most of us are running around trying to grow and develop our own social enterprises, so it is nice just to have some time to reconnect, swap some gossip and drink fairtrade coffee (which Voice is always swimming in).

2) You meet some really interesting people. Anyone who knows me knows that I am a terrible collector of business cards and love finding new people to add to my network. Most of what I do is put people in touch with other people, so the more interesting, talented and cool people I know the better. Occasionally you meet a potential client but actually it is a much richer source of potential collaborators and people who spark interesting ideas and possibilities in your head.

3) It gives me a space to kick ideas around over food, coffee and ideally wine with some of the most interesting social entrepreneurs around. I saw at least three new business models emerge in the bar on Tuesday night (to the extent I didn't even notice the earthquake) and I will blog about some of these in the next few weeks. It is an amazing space for creative, quirky and very bright mavericks all of whom are passionate (and even angry) about trying to make the world better.

Anyway, if you have never been, I would strongly urge you too and the organisers this year created lots of opportunities and space for networking and just kicking ideas around.

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How the EPOCH business model will increase your turnover or your money back

What I am about to describe is the EPOCH model which is freely available for you to use under our creative commons licence. It is free so if I doesn’t work you won’t get any cash but I will give you your time back, maybe by coming round and doing some gardening or cleaning your car or sorting out your web page :)

First of all, the EPOCH model is a 5-stage process to help your thinking and discussion and understand your current earnings potential as well as possible new income streams. You can work through this on your own, you can work through this with your board, you can involve staff, users and stakeholders and you can even ask someone like me to come along and facilitate it.

The EPOCH model asks 5 questions and each question feeds into the subsequent question. The 5 questions are:

E – What are you EXCELLENT at?
P – What PEOPLE could benefit from you doing the things you are excellent at?
O – What are the OUTCOMES on the people who are you are doing your excellent thing to?
C – Who would COMMISSION you for these outcomes?
H – HOW MUCH would these commissioners pay for these outcomes?

So let’s go through these one step at a time.

Step one is E – What are you EXCELLENT at?

This is often a hard one for people. They know what they do and what they want to do but have never really given much thought to what they are excellent at. Let’s say you run a community café – is your food or drink excellent? By which I mean is it much better than your competitors? Could I come along and easily replicate what you do? If the answer is yes – you are in trouble. If I can come along and replicate it to the same quality then you can only really compete on price and you are going to spend the rest of your life cost-cutting, penny-pinching and trying to undercut your opposition. That isn’t a life! If that’s all you can do, jack it all in now, sell your car, buy a one-way flight to a tropical beach and spend the rest of your days sipping rum from the bellybuttons of Nepalese madiens – it will be far far more rewarding.

The other issue is that what you are excellent at may not be what you are currently doing. You may have real talent as a facilitator, or a chef, or a trainer or a gardener and you may work in the accounts department. Your excellence is often in the areas of your passion and spending time doing what you are really excellent and passionate at is the beginning of real personal happiness as well as business success. So think of the whole organisation as well as the people within it and tease out the areas of real passion that you are really good at and crucially better than your current and future competitors.

Most organisations and people I have worked with can tease out at least 5 things they are excellent at – keep going until you have at least 5 (but the more the merrier).

Step two is “P – What PEOPLE could benefit from you doing the things you ?”

Don’t think of this as the people who are you are currently delivering services to but much much wider. If you are excellent at gardening, who could benefit from someone being excellent at gardening? People with gardens, businesses with gardens, housing associations with open spaces, parks, the National Trust, companies who sell gardening equipment, people who want to develop compost heaps in their garden, colleges looking to train people at gardening, organisations looking for outdoor work placements, nursing homes, sheltered housing, hospitals, etc.

You should be able to come up with AT LEAST 10 groups of people or organisations who could potentially benefit from EACH thing you are excellent at. So now you should have at least 5 things you are excellent at and at least 50 groups of people or organisations that you could benefit.

Step three is “What are the OUTCOMES on the people who are you are doing your excellent thing to?”

So for each group of people or organisations that you have identified, you need to work out the outcome you have on them. Again many people find this really hard as they are so used to describing their processes and being commissioned for their processes.

Let’s take the gardening example again and work through some of the people and organisations we identified earlier:

• What would the outcome be of us providing gardening for people with gardens? Well a neat and tidy garden would be an obvious one. If you worked alongside the people themselves you could also increase their fitness by providing gentle (or vigorous) activity.
  
• What would the outcome be for businesses with gardens? A more professional image for their organisation might be one. Providing work for local people or local social enterprises could be another (under their corporate social responsibility programme).
  
• What would the outcome be for housing associations with open spaces? A more professional image could be one. Increased local resident satisfaction could be another. Winning additional contracts (based on their environment and appearance) could be a third. Providing a compost facility (maybe with a food recyclying scheme) could be a fourth.
  

Now we could go on, but already we have identified the following outcomes that you could achieve. And if this is an area that you are genuinely excellent at, then you could achieve the following outcomes BETTER THAN OTHER ORGANISATIONS CAN:

• a neat and tidy garden 
  
• an increase in fitness by providing gentle (or vigorous) activity.
  
• a more professional image for a business
  
• providing work for local people 
  
• a more professional image for a housing association
  
• increased local resident satisfaction 
  
• additional contracts (based on their environment and appearance
  
• providing a compost facility (maybe with a food recyclying scheme) 
  

If you work through all 50 people and organisations from step 2, you should now have over 100 possible outcomes that you can deliver.

Step four is “Who would COMMISSION you for these outcomes?”

Now the key here is to work out who would be interested in the outcomes from step 3. Again we will work through some of the gardening examples:

• Who would be interested in paying for a neat and tidy garden? Well the public themselves would be one. Possibly the relatives or carers of elderly people might be another.
  
• Who would be interested in an increase in fitness by providing gentle (or vigorous) activity? Again the public themselves. Also local general practitioners might be interested. Maybe other organisations such as Age Concern.
  
• Who would be interested in a more professional image for their business? Business owners could be one. Estate departments might be another. Possibly the local Council.
  
• Who would be interested in providing work for local people? Local businesses might be interested as well as public sector bodies such as Job centres, New Deal for Communities, local Councils, etc.
  
• Who might be interested in a more professional image for a housing association? Housing associations would be an obvious one. Perhaps also a national or regional network of housing associations could be interested in providing this for their members.
  

If step 3 provided over 100 outcomes, you should now have developed over 150 potential customers who would be interested in buying outcomes that you can deliver BETTER THAN YOUR COMPETITORS. These are 150 potential businesses and 150 potential income streams (and possibly several hundred if you are being really creative).

Step five is “H – HOW MUCH would these commissioners pay for these outcomes?”

This is where you have to do some market research and will involve time in the library, time ringing up competitor organisations and time on the web (proper time on the web mind – not levelling up your Night-elf Druid on World of Warcraft!).
Again I will work through a few gardening ones and at this stage you should have 150 to work through:

• What is the going rate to maintain a neat and tidy garden?
  
• What do people pay to increase their fitness?
  
• What would GPs pay to keep frail elderly people active?
  
• What would a local business pay to maintain a professional image?
  
• What would the local Job centre pay to provide meaningful and sustained employment for someone on long-term benefit?
  
• What would a local housing association pay to increase resident satisfaction?
  

Notice that in all of these, you are not selling gardening. If you try and sell gardening then you are limited to daily rates and people focus on the process not the outcome. You are selling a neat and tidy garden, fitness, keeping the elderly active, sustained employment, resident satisfaction, etc. Gardening is simply the route to the outcome but you are selling the outcome. If it is worth £5,000 for someone to be given a sustainable and meaningful job then that is the value of what you do and this is often significantly more than the hourly or daily rate of your process.

So now you should have over 150 potential income streams and the value of each of those income streams.

So what’s next?

Well this is where you sit down as a board, a management group or with your members and decide which of these business you want to explore. You should be able to compete in these because the starting point is your excellence, i.e. what you are better than your competitors at. Which business you choose to move into is as much about your values, your ethos and your mission as it is about income and profits – or at least it should be if you are a social enterprise and now you have a whole heap of possibilities to discuss, debate and mull over (preferably over food and almost definitely with glass or two of wine).

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The myth of audited accounts (or how to save money on your accountancy fees)

I was having a discussion yesterday with a group of nurse entrepreneurs and we were all comparing notes and strategies – particularly during the start-up stage. One of the really interesting discussions was about whether or not you have to have audited accounts or not.

Now for the uninitiated, you may not even realise that there are two different kinds of accounts – audited and unaudited. Put simply, audited accounts are prepared by an accountant and are then audited, which is process whereby they check a random number of transactions have been processed accurately. So for example, they may check that your £200 travel expenses on the 31st December was really a business trip or a taxi back from some disreputable nightclub in the heart of the city. Unaudited accounts are also prepared by an accountant but they take your word for it that the transactions are all correct.

One of the other big differences is the cost. If you want audited accounts you have to (surprise surprise) pay some to audit them. Often you pay several people to audit them including a senior accountant (the auditor) who signs them off as audited. This can easily add several hundred pounds (if not several thousand pounds) to the cost of preparing your accounts.

If you have come from a public sector background or a large private sector company, it is easy to assume that all accounts have to be audited as that is just the way things are always done. Many people don’t realise that you may be able to have unaudited accounts which still meet all your legal requirements but can save you a lot of unnecessary expenditure – particularly in the early days.

So what are the pros and cons? Well the most obvious con is the costs and the hassle – it is much easier and cheaper to produce unaudited accounts and in fact I have only prepared unaudited accounts for the last 5 years as a social entrepreneur. The pros are that some public sector funders (but by no means all) want them and at a certain size you have to have audited accounts whether you want to or not.

Initially we were worried that our unaudited accounts wouldn’t be taken seriously and we would have to go and get them audited. Over 5 years though, we have secured £50,000 of bank lending, £60,000 of venture capital and over £250,000 of public sector contracts all by using unaudited accounts. In all that time, n-one has even asked us why our accounts were unaudited let alone asked for them to be audited.

So what is the legal position? Well Companies House provide some really useful guidance information at Companies House and Business Link (who do have their uses from time to time) have some additional info here and here

In a nutshell, you can choose to only produce unaudited accounts if:

a) you have a turnover of not more than £5.6 million and
b) you have a balance sheet total of not more than £2.8 million.

On a more practical level, if your business would really notice the saving in accountancy costs of several hundred pounds (and you can only dream of having a £6 million turnover) then you are probably exempt from having audited accounts.

What I would say to people though is make sure you are ready to be audited, whether or not you are planning to have audited accounts. Firstly it is good practice and secondly, your members can demand an audit (depending on your legal structure). In practice, this means keep all your receipts, cheque books and bank statements in a simple system so that you can prove what that £500 taxi ride was for if anyone ever asks

So if this little nugget of advice has saved you a few hundred pounds or even a few thousand pounds, you can show your appreciation by buying me a pint at Voice 08 or RCN Congress. I will be the balding fat bloke propping up the bar coming up with innovative and entrepreneurial ways of getting a free pint from my dear beloved readers :)

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Firestarter Podcast 7 - The pros and cons of Community Interest Companies part 1

This is the Firestarter Podcast which is the world's first podcast for social enterprises in health.

This week's podcast features an interview with Adrian Ashton looking at the pros and cons of Community Interest Companies (CICs). This is part 1 of the interview and was recorded at Cafe 72 in Todmorden - the most child-friendly cafe we have ever seen :)

This podcast covers:

• The history and development of Community Interest Companies
  
• Why you should never chose your legal structure based on someone else telling you that's what you should be
  
• Companies limited by guarantee are not a bad default structure
  
• CICs are a "bolt on" to existing limited company structures
  
• The key elements of a CIC
  
• Limited by shares vs limited by equity
  
• Why children should not be listening to this podcast
  
• Limitations on the community you are set up to benefit
  
• Issues around the asset lock and how you can incorporate this in any company
  
• Co-ops are not legally defined in the UK

Main pros of being a CIC

• Kite-mark that you are a social enterprise
  
• Provides assurances with public sector commissioners
  
• The CIC regulator is very helpful and supportive

Main cons of being a CIC - part 1

• Much more bureaucracy in setting one up and in annual reporting
  
• The Chair has much more power than the other Directors
  
• The role of alternate directors

More from Adrian at www.adrianashton.co.uk

You can subscribe to these podcasts via iTunes if that is easier,

Podcast 7 - This can be downloaded here

The music is "Fire Dance" by djbouly and is brought to you under a creative commons licence.

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Why is most free business support so terrible?

One of the things that first got me interested in supporting other social entrepreneurs is how bad our experience of free business support was. I'd better not say Businesslink or they might get uppity - oh bugger I just have done it! I mean in fairness, they are not all bad and there are some fabulous business advisers out there. But it's like kebabs - there are fantastic kebabs and kebab shops out there but most of the ones I have had at 4am on a Saturday night in Manchester were terrible (even allowing for the copious quantities of Irish cider in my belly). Free business advisors are like that - for every one that is fantastic (in all they kebaby and extra chilli sauce glory) there are dozens that are really really awful.

The first time I went to a social enterprise conference and met other weirdos like me (or social entrepreneurs to the uninitiated), I realised that nearly everyone had had the same experience. Especially in the bar, there was hardly anyone who had a good word to say about them. The other week I met a social entrepreneur who said one of their life's ambitions was to find a social entrepreneur who had had a good experience with free business support. Even ministers and senior national people would admit that the service is "patchy" (which is about as damning as they ever get)

So why is this?

Well I think there are 3 main reasons:

1) Most free business advisers have never started a business

I have never found any firm statistics but it seems that the majority of business advisers are ex-bank managers. Maybe this is the holy grail in banking that you work for years in a bank and one day (if the god's smile on you) you may be elevated to the status of business adviser. Or maybe it's the bank restructuring that is throwing lots of talented bank managers out on the street. Either way, very few business advisers I have met have ever run a company, let alone founded one, let alone founded a social enterprise. Now I am not saying that people who have never set up a social enterprise have nothing useful to offer social entrepreneurs but their advice does sometimes across as virgins trying to teach people how to have better sex. People who have been involved in established businesses are ok but they still don't really understand start-ups (they are still virgins but at least they have sat and watched people have sex). Often their view of business comes from textbooks or courses and as we know, running a business is very different from how it is presented in books.

2) They have a complete monopoly in any given area

One of the most frustrating things is that if your local business support is rubbish, you can't go to another one. It is the worst kind of monopoly. There are about a dozen different areas I could easily travel too and I would happily travel to a really good adviser but you aren't allowed to. They get shedloads of cash to provide local services and if your service is bad - tough! Now I am not a huge advocate of market forces but if business support was funded on how many people used them and those people could choose from a number of alternatives, then gradually the really awful ones would get starved of cash. They would then either have to improve their service or get out of the game entirely.

3) The research says that they provide a really excellent service

This is the one I really don't get. I have seen presentations at conferences and workshops where people present surveys showing that over 90% of people rate the service as excellent. In my generally-rose-tinted-view-of-the-world don't think they are lying, so I really struggle to understand why nearly everyone I meet across the country thinks the service is awful but the customer surveys say they are excellent. Maybe they only survey people who keep coming back and who presumably find it useful, or maybe there are small business (rather than social enterprises) who really do find it useful? Or maybe people are just too damn polite? Or maybe they are liars, maybe they manipulate the survey results or maybe the questions are phrased like:

Question 1 - How would you describe your local free business support?

a) Amazing
b) Fabulous
c) Great
d) Really helpful
e) Patchy

Question 2 - Would you rather receive free business support or have a rusty poker inserted up your anus?

a) Yes I would definitely rather have the free business support
b) Yes I would probably have the free business support
c) Just how rusty is the poker again?

So ...... so ..... so what? So did I fill in the recent survey on business support to social eneterprise? No. I suppose I should have but to be honest I don't think it will acheive anything. Free business support is a multi-million pound industry and there are too many people making too much money for there to be any serious challenge to the system. The people who use the service have no power and no choice and the funders have never been on the receiving end of the survey, so there are no real levers for change. I did go to recent event with social entrepreneurs, Businesslink people and the Office of the Third Sector and in fairness the Social Enterprise Coalition did reflect the experience of many social enterprises (in much politer language than me) so you never know. But I am not holding my breath :)

On a more positive note though, if you do find a really good free business advisor the treat them like a cherished lover - value them, use them and pump them vigorously for every last drop of knowledge and advice. Also tell your friends about them and spread the word that you have found a good one. Feel free to post their contact details in the comments section and I will do whatever the opposite of "naming and shaming" is to them.

By the way, if you are coming to the Voice 08 conference this year (which is a really great conference by the way), then do your own straw poll and if you can find 5 social entrepreneurs who have had a really positive experience with business support, then I will buy you all a pint. It would be nice if you came up and said hello anyway but I will be on the lookout for groups of six entrepreneurs searching for me and looking for a free drink the way social entrepreneurs do.

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Firestarter Podcast 6 - Central Surrey Health part 2

This is the Firestarter Podcast which is the world's first podcast for social enterprises in health.

This week's podcast features an interview with the staff of Central Surrey Health which is the first of the large-scale NHS community organisations which evolved into a social enterprise.

This podcast covers:

• Staff-ownership models vs community-owned models
• How to engage staff & dealing with unions
• The change management process
• The highlights from the first year's acheivements

We are currently putting the finishing touches to our RSS feed and our iTunes connection which will make it easier for you to download the podcast, subscribe to updates, etc. In the meantime, you can access our first few podcasts here:

Podcast 6 - This can be downloaded here

The music is "Fire Dance" by djbouly and is brought to you under a creative commons licence.

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Firestarter Podcast 5 - Going from grant-funding to contract-funding

This is the Firestarter Podcast which is the world's first podcast for social enterprises in health.

This week's podcast features another interview with Chris Dabbs, the Chief Executive of CHAP (Community Health Action Partnership) and co-ordinator of the NHS Networks' Social Enterprise Network. 

This podcast covers:

• The problems with being grant-funded
• Moving from a "dependent needs-based mentality" to an "independent strengths-based mentality"
• How to start the process
• Developing contacts among commissioners
• Generating income from several different types of customers and organisations 
• Turning creativity into enterprise and business solutions 
• Why there is no shortage of money (but often a shortage of good ideas!) 

We are currently putting the finishing touches to our RSS feed and our iTunes connection which will make it easier for you to download the podcast, subscribe to updates, etc. In the meantime, you can access our first few podcasts here:

Podcast 5 - This can be downloaded here

The music is "Fire Dance" by djbouly and is brought to you under a creative commons licence.

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