Social enterprises are businesses that trade in order to achieve social objectives. They may make a profit, but unlike conventional businesses - where money can quickly leave the local economy as it is paid to distant shareholders or owners - the surpluses social enterprises make are reinvested in the business or in the local community. These three key characteristics of social enterprises can be summarised as follows:

• They trade in order to achieve social objectives
• They combine economic and social objectives
• And they operate in the interest of the community

Social enterprises, then, are driven by their social objectives rather than by the need to maximise profits for their owners or shareholders and this makes them different to private businesses.

But they do also have much in common with private businesses:

• They trade in goods or services
• They must be able to identify paying customers for their products
• And they seek to survive in the marketplace

Social enterprise has also become increasingly important in national policy.

In 2004 the Government published the first national strategy for the development of the sector and this has since been followed by a review and action plan. Many policy-makers now see social enterprise as being of central importance as part of a ‘mixed market’ for the delivery of public services and increasingly even initiatives aimed at the voluntary sector – such as ChangeUP and the Futurebuilders fund – can be seen to emphasise social enterprise business models and income-generation.

The Dept of Trade & Industry has defined a social enterprise as: ' …a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.'

Since late-2006, however, the Government has adopted a somewhat broader definition of social enterprise, defining it as part of a 'third sector' which encompasses all organisations which are 'non-governmental, principally reinvest surpluses in the community or organisation and seek to deliver social or environmental benefits'. Based on this broader definition the Government estimates that there are at least 55,000 social enterprises in the UK, with a combined turnover of £27 billion per year, accounting for around 5% of all businesses with employees and contributing £8.4 billion per year to the UK economy.

In Birmingham, there are around 320 trading social enterprises. These range from small, emerging enterprises to large, fast-growing, multi-million pound turnover businesses - such as Future Health & Social Care - that have achieved national prominence. Over half have turnovers between £100k and £1m per year.

See our case studies for more information about some of Birmingham and Solihull’s inspirational social enterprises.

While there is no single legal definition of social enterprise, and many differing views about what constitutes a social enterprise, we believe that trading and income-generation are central to longer-term sustainabiity and we like to see social enterprises aiming to generate at least 50% of their income from trading revenue.