An optimistic outlook for the community business sector

Ester Kincova, Policy and Research Intern at Power to Change

13th December 2019

 

The 2018 Community Business Market report, published today, is the fourth in the series of annual reports describing the size and shape of the community business market in England. It offers the most robust estimate to date of the community business market size, as well as insight into the scope and structure of the market. The report estimates that 7,800 community businesses are operating in England in 2018, with a total market income of £1.05 billion and £0.69 billion worth of assets.

Community business confidence

The growing confidence of the community business sector is a key theme in the report. For example, when considering their financial positions for the coming year, there is a sense of optimism amongst the community businesses surveyed. This is striking considering the economic uncertainty for businesses in the UK as it leads up to Brexit. Two-thirds (66%) of community business survey respondents are confident about the financial prospects of their business. This is up from 63% in 2017 and 47% in 2016. In addition, the proportion of survey respondents feeling pessimistic about their outlook has dropped by 7% since 2017, to 13%. Three-quarters of respondents expect their income to increase in the next 12 months.

The localism agenda

This sense of confidence might be rooted in an understanding of the potential opportunities for the sector at the national and local level. For example, those interviewed for the research reported that they believe the localism agenda is gaining traction. As one interviewee from the health and social care sector noted,

‘I think there’s been an increased interest in [community businesses]. In the context of commissioning and procurement, [there is] the political climate of a push for increasing localism’.

The role of grant funding

On the face of it, the slight increase in surveyed community businesses accessing and deriving most of their income from grants (39%) may quash our optimism about the community business market and its capacity for sustainability. However, it is important to consider that the profile of community businesses surveyed is markedly different in 2018 compared to 2017. For example, a much larger proportion of those surveyed this year were small businesses and a higher proportion (67%) had started trading post-recession (and are still relatively early on in their business lifecycle). We might expect small businesses in the start-up or development phase to derive less of their income from trading.

Yet, 51% of community business respondents to the 2018 survey expect to receive more income from trading or contracts and 45% of respondents expect more income from grants in the year to come. Encouragingly, many community businesses are optimistic about increasing these trade opportunities through expansion or diversification, as well as expanding into other sources of income, such as crowdfunding.

There is no doubt that these are politically uncertain times. Let’s hope community business’ optimism sees them through to success in 2019.

The full Community Business Market in 2018 report is available to read here.