What makes a successful community business?

There are many answers to that question, depending on who, and what, you ask.  In March 2017, Power to Change commissioned SERIO, an applied research unit at the University of Plymouth, to investigate ‘what works’ for community businesses in three sectors: health and wellbeing; sports and leisure and community hubs.

The research looked at existing literature on community business success factors and barriers, conducted an England-wide survey of businesses from across the three sectors, developed 15 in-depth case studies and analysed financial sustainability of community businesses. The thoroughness of this approach meant that the research could really get to the heart of what makes successful community businesses tick.

So, what did we find? 

What was clear from the start was the sheer range and complexity of community businesses, both within and across each of the three sectors. As would be expected, business models and purpose varied greatly.  What quickly became clear, was that there were several common success factors and barriers that were shared by all three sectors to a greater or lesser extent.

Common success factors

Top of the list of factors that community businesses from across all three sectors commonly identified as key to making them successful was being ‘financially self-sustaining’, which may seem obvious. However, it was encouraging to find that a high proportion of businesses in all three sectors are generating increasing levels of income from trading or contracting sources, as opposed to relying on grants as their main source of funding.

Next came ‘engagement from the community’ with a high proportion of businesses reporting a high reliance on community engagement and awareness, and ultimately, on their volunteers and employees.

Thirdly, all three sectors reported that ‘having volunteers or staff with the required skill sets’ to plan a financial strategy for the future, including assessing risk and identifying solutions, is a key enabler of their success.

And finally, the ability to ‘form and maintain strong partnerships and networks’ was commonly cited as a key enabler. In particular, being able to network effectively and communicate ideas in a simple and coherent way was seen as the main driver of creativity within businesses, leading to new services and greater sustainability.

Common barriers?

Thankfully, there were fewer common barriers identified in the research but they still represent significant hurdles. First is ‘access to funding’, which may seem contradictory to the financial sustainability success factor above. However, the majority of community businesses across all three sectors reported that they still rely on grant income for a proportion of their funding, even if the income they receive from trading or contracting is increasing. What is clear however is that all considered it was becoming increasingly challenging to secure grant funding as a regular income stream for the future.

Secondly, issues surrounding the ‘transfer of assets’ to community-run businesses was a common barrier for the three sectors and was particularly pertinent for the community hub and sport and leisure sectors. Despite a strong finance and support environment designed to accelerate growth in this area, a gap in funding for major capital projects, where other funding streams are insufficient, was clearly identified.

But rising above it all

Something that consistently stood out to the research team was the dedication and optimism of the community businesses we spoke to. Their determination to ensure their future sustainability and enhance their local area was an impressive reminder of the power of socially minded local business, and we would like to thank all those that took part in this research.

Read more about the nuances and detail related to what works in these community businesses https://www.powertochange.org.uk/research/

If you have questions about the research, Lee Richard’s (principle investigator) contact details are: lee.richards@plymouth.ac.uk  or Tel: (01752) 588953

Find out more about SERIO and our work at: www.serio.ac.uk