1. Generating ideas

Inputs, outputs and processes

All businesses have inputs and outputs and must add value during production.

A business adds value when the selling price of an item produced is higher than the cost of all the resources used to make it.

Think of a pair of designer sunglasses which sell for £100. If the cost of the materials, employees, marketing and all other inputs used in making one set of sunglasses is just £20, then £80 worth of value has been added by the firm during production.

The skill involved in wanting to start and run a business is called enterprise. The individual who sets up their own business is called an entrepreneur.

EXAMPLE- Primark's production process. Primark's cost of production is very low and basic materials (cloth, sequins etc.) are turned into a product for consumers. Primark was recently found to be exploiting its workers across the developing world to maximise profit (watch for 5 minutes from 10 minutes and 9 seconds).

Benefits and risks of starting a business

• Nearly half a million businesses start up each year. A business start up is a new firm operating in a market for the first time. All of the MyBnk enterprise programmes help young people with their own start-ups.
• We want to excite and motivate young people about the opportunity to start their own mini businesses. It’s important to highlight the benefits as well as encouraging young people to consider the risks of setting up a business
• We make a clear distinction between risk and calculated risk in the enterprise programmes.
• A calculated risk is when advantages and disadvantages of an action are carefully weighted and considered. A calculated risk is worth taking because the result, if it is successful, will be beneficial
• We encourage young people to take calculated risks and nurture calculated risk taking.

EXAMPLE- Check out Seth Godin on why businesses may take calculated risks

EXAMPLE- Martyn Dawes, founder of Coffee Nation (now Costa Express): “[Entrepreneurs can] make too many assumptions about what their customers want and so they start to try and build a not completely proven and understood business. This usually unravels down the line.”

EXAMPLE- Dessi Bell, co-founder of Zaggora: “The key is to try and launch even if it’s not the final product or service so you can test the market and collect customer feedback as soon as possible in order to bring the perfect product or service to the customer.”

Social enterprise

Most businesses e.g. Nike, Adidas etc. sell goods or services to make a profit. However, some organisations are social enterprises that are not purely motivated by profit. At MyBnk, Enterprise in a Box allows young people to set up their own social enterprises. We encourage young people to consider social enterprise as an option in all enterprise programmes and consider the impact of their business on people and the planet.

EXAMPLE- Watch this short video as an introduction to social enterprise

EXAMPLE- This video gives some inspiring examples of young social entrepreneurs.

What are social enterprises?

No one official definition has been standardised to define social entrepreneurship. Diverse understandings of the term exist across the world. Due to different local context, based upon diverse socio-historical, political, and economic foundations, various nuanced definitions of social entrepreneurship have naturally emerged.

However, social enterprises can generally be understood as:

Businesses driven by social or environmental purposes. As with all businesses, they compete to deliver goods and services, but the difference is that their social purpose is at the heart of everything that they do and most of the profit that they make is reinvested towards achieving that social purpose.

Definition - Social Enterprise UK (source)

A social enterprise is a business that trades for a social and/or environmental purpose. It will have a clear sense of its ‘social mission’: which means it will know what difference it is trying to make, who it aims to help, and how it plans to do it. It will bring in most or all of its income through selling goods or services. And it will also have clear rules about what it does with its profits, reinvesting these to further the social mission.

Social enterprises come in many shapes and sizes from large national and international businesses to small community based enterprises. But they all:

• Are businesses that aim to generate their income by selling goods and services, rather than through grants and donations
• Are set up to specifically make a difference
• Reinvest the profits they make in their social mission

History of social enterprise

Social enterprise has been in existence for hundreds of years. Co-operatives functioned as a means to fund socio economic agendas as early as the mid-1800s in the UK. The co-operative movement was founded by Robert Owen (1771-1858), a wealthy trader who believed in putting his workers in a good environment with access to education for themselves and their children. Owen did this successfully in the cotton mills of New Lanark, Scotland and the first co-operative store was opened. Owen also wanted to form "villages of cooperation" where workers would help themselves out of poverty by growing their own food, making their own clothes and ultimately becoming self-governing.

Social enterprises have embraced many of the values of co-operatives including honesty, openness, social responsibility and caring for others.

Modern social enterprises are also influenced by social firms, US non-profits in 1960s that experimented with enterprises to create jobs for disadvantaged populations. The social firm model insists that over a third of employees are people with a disability or labor market disadvantage, every worker is paid a fair-market wage, and the business operates without subsidy. Social firms have been popular across the globe and inspired social enterprise.

Triple bottom line

The phrase “the triple bottom line” was first coined in 1994 by John Elkington, the founder of a British consultancy called SustainAbility. His argument was that companies should be preparing three different (and quite separate) bottom lines. One is the traditional measure of corporate profit—the “bottom line” of the profit and loss account. The second is the bottom line of a company’s “people account”—a measure in some shape or form of how socially responsible an organisation has been throughout its operations. The third is the bottom line of the company’s “planet” account—a measure of how environmentally responsible it has been. The triple bottom line aims to measure the financial, social and environmental performance of an organisation over a period of time. Only a company that produces a TBL is taking account of the full cost involved in doing business. Source - The Economist

EXAMPLE: Short video that explains the positive impact of social enterprises

Social enterprise mark

In February 2010 the Social Enterprise Mark was launched. Like the Fair Trade brand, the Social Enterprise Mark aims to increase the visibility of socially motivated businesses. More than this, the mark represents the growing commercial identity of social enterprises and a deliberate attempt to carve out a recognisable niche for such organisations in the business community. Qualification for the mark requires that a business conform to set criteria; companies must earn at least 50% of their income from trade and spend at least 50% of their profits on socially beneficial purposes. The mark has been received with mixed responses in some corners with suggestions that the qualifying criteria is not strict enough.