Market report 2022

This year, we received an unprecedented 1,015 valid and completed responses to our Community Business Market Survey, our eighth annual study of the sector. The findings from this survey and 15 community business interviews, together with the additional data we use to estimate the size of the market, provide the most comprehensive picture yet of how community businesses contribute to a fairer economy and the wellbeing of communities. 

With their ability to adapt and respond swiftly to their communities’ changing needs, community businesses are playing an integral role in levelling up the country towards a fairer economy

Tim Davies-Pugh, CEO of Power to Change

KEY FINDINGS

Our market analysis estimates that there are 11,000 community business operating in England, with a total income of just under £1 billion. Community businesses are owned by, rooted in, and accountable to their communities, operating with sustainable business models that generate both financial return and benefits for communities.

In their size, structure, services, and staffing, community businesses are as diverse as the communities they were established by and support. They are run and led by local people with knowledge or experience of the kind of economic and social challenges faced by many in the communities they support.

Characteristics of people that use or benefit from community businesses’ support or services.

The proportion of community businesses reporting that they primarily provide public-facing support appears to be larger than ever; 31% of surveyed community businesses, a 10-percentage point increase from 2021. At 25%, community hubs remain the most common type of community business surveyed.

Main activities reported by community businesses.

Community businesses contribute to fairer local economies through operating, trading, and partnering locally. Compared with the private sector, a higher proportion of what they spend stays in their local community, and their trading income is invested in developing and delivering more services and facilities for local people.  

Often operating in areas of high disadvantage, social exclusion, and economic inactivity, they support financial inclusion and employability where it is most needed. 

They provide sustainable work for local people and build skills through volunteering opportunities, making a much-needed contribution to the prosperity and prospects of their local areas and the people living there. 

KEY FINDINGS

The average total income reported by survey respondents this year is £264,000. The hybrid model of community business typically includes earnings from trading and grants. At the time of the survey, 83% of respondents generated some income from trading and 84% said they receive grant funding. Grant income can help maintain services while trading helps with growth and sustainability.  

Income generated by trading.

In order to better serve the wider community, we’ve really had to develop as a business to generate income. We’ve built revenue that can then further support community events and activities.

…All those activities go towards the wellbeing of the people in the community and our business model is fundamentally about providing a venue that benefits the entire community’s wellbeing

Fieldgate Arts Centre

Community businesses provide high quality work and employ an average of 9 staff and 29 volunteers – nearly all live locally (86% and 92% respectively).

Average paid staff: 9  | 86% paid staff live in local area.
Average number of volunteers: 29  | 92% volunteers live in local area .

Community businesses located on or a near a high street.

Community businesses owning and/or managing fixed assets in their local area.

Owned by and at the heart of communities, community businesses are ideally placed to identify and respond to the distinctive needs of local people and their neighbourhoods. Adaptable and resilient, they have continued to adjust their services to reflect changes in demand in the face of persistent and emerging economic, social, and environmental challenges. Their impacts are wide-ranging and make a sustainable contribution to the long-term wellbeing of communities and the places where they live.

KEY FINDINGS

95% of respondents said that their business’s primary purpose is generating economic and social and/or environmental benefit in the local community. By operating in ways that generate sustainable benefits for people and places, community businesses contribute to local prosperity and wellbeing.

Reported positive impact on improving the environment and taking climate action.

As community businesses understand and have strong connections with local people – 90% said their business is defined by its link to the local area – they are particularly well-placed to develop and adapt products and services that address some of the persistent economic, social and health disparities and disadvantages areas face. Community businesses deliver wide-ranging benefits for the people they serve; 98% said they have a positive impact on health and wellbeing, and 97% on reducing social isolation.

What we’ve always tried to do is be a safe and a welcoming space for people, so people can come, and they can enjoy the café, or do a course, or just enjoy the space. It has strengthened the community quite a lot.

Anstice Trust

Putting power in community hands, community businesses are at the forefront of building community resilience, pride, and empowerment. 98% said that they have a positive impact on community cohesion, and 97% identified growing local empowerment and pride as a key area of impact.

With social purpose at the heart of their operating model, community businesses are also ideally placed to address global challenges at a local level. A significant majority feel that the way they trade or operate makes a contribution to improving the environment or tackling climate change (72%), and 74% said that they had a positive impact on tackling injustice and inequality.

The post-pandemic economic landscape is being shaped by a renewed appreciation of community-led responses to external challenges. With their sustainable business models and high local profile and impact, community businesses are well-placed to thrive. Our research shows that those who have been adjusting their operating and business models to maintain or adapt their services in response to new challenges have been proving the most resilient and optimistic.  

However, feelings of confidence about the future are understandably mixed – at the time of the survey 50% of respondents were feeling more confident about their financial prospects over the coming year, whereas over a third (37%) felt less confident. 

KEY FINDINGS

With the right type of support, the sector has proven itself resilient to external shocks. Community businesses continue to adapt and be responsive, ensuring their continued sustainability. However, in the light of ongoing and emerging economic and social challenges, the sector needs renewed support to fully realise its considerable potential. 

More recent geopolitical developments abroad have joined domestic economic instability and uncertainty to exacerbate economic, social and health disparities, and disadvantage. Community businesses are not only facing the same operational challenges as the private sector, but are also seeing growing demand for support. 

The cost-of-living crisis has only just really begun to be felt. I think this is going to be a very difficult winter. I think projects like ours are going to be needed more than ever. 

Community farm

Even at the time of our research in July 2022, 77% of community businesses reported increased demand for support related to the costs of food, and 79% for support related to increases in the costs of energy. Anecdotal insight from community businesses through our operations indicates that these concerns have only risen since then. 

In this year’s survey, 37% of community businesses said they are less confident in their financial prospects for the next year. Of these community businesses, 69% cited an increase in the cost of living as a contributory factor, and even 31% of those who felt confident about their prospects were still worried about the impact of the cost-of-living crisis on their business. 

Fragile finances across the market mean there’s a perennially high priority on seeking financial support, and there’s a similar appetite for help with strategic development, business planning and evaluation, to build sustainability. Nearly two-thirds (64%) of community businesses aspire to grow income from existing sources, and 82% said they will seek new sources of grant funding. 

Plans to seek grant funding and boost trading revenue.

Many community businesses have been exploring, embracing, and developing their own digital technology (57%), which helps to provide innovative additional or alternative community-focused services. These flexible, novel, and entrepreneurial approaches are ensuring that the services they provide can sustainably meet the growing and changing expectations of their community, and their own future business aspirations.  

This is our eighth annual report on the community business market, drawing on the findings from an unprecedented number of responses to our survey and in-depth interviews with community businesses. Together with our analysis of data from a wide range of sector and other external sources, it provides the most comprehensive picture yet of the nature and scale of the community business market.  

The research was carried out by CFE Research with input from Power to Change, and this webpage report has been written jointly by CFE Research and Power to Change.  

CFE Research is an independent not-for-profit social research company providing research and evaluation services to government departments, public sector agencies, education providers, and local and national charities. It specialises in education, employment and skills, helping its customers understand what works, in what context and why.  

For further information or any questions about the research, you can contact Chloe.Nelson@powertochange.org.uk, Head of Impact and Learning at Power to Change, and John.Higton@cfe.org.uk, Research Director at CFE Research