Social Enterprise East of England
Going for Growth Case Studies
Green Light Trust Partnerships This year Green Light Trust (GLT) is celebrating its 20th anniversary. GLT is rooted in its experiences of running a project in Papua New Guinea focussed on protecting the rainforest. The project had spread the message through drama performances which travelled throughout the area by way of a dugout canoe. Its mission ‘bringing communities to life through working with nature’ is currently enacted through four key work streams: children, community empowerment, increasing biodiversity and forging environmental links with communities overseas. Like many social enterprises GLT has a range of partnerships with other voluntary sector organisations, with funders and directly with communities. However they have been particularly successful in galvanising the input of the private sector through creating meaningful partnerships and this forms a core element of the organisation’s plans for the next 20 years. Telling some of these stories demonstrates the range of potential partnerships hold. A large corporate: B&Q In 1992 GLT spoke at a conference to outline the work in Papua New Guinea. Their presentation stood out to one of the speakers they shared the stage with who also ran a sustainability programme in Papua New Guinea. He was impressed by their approach and so they suggested that next time they went to Papua New Guinea he came along to see it in action. This fortuitous meeting with Dr Alan Knight, then the Environmental Controller at B & Q, led to GLT’s first partnership with a private sector business and illustrated to them what the benefits could be. At that time B&Q were quite ahead of the game in that they already had a sustainability programme and a Corporate Social Responsibility (CSR) agenda but what Alan Knight recognised in GLT’s approach was their ability to act at the grassroots level, something B&Q were not achieving. After accompanying them on a visit to the rainforests of Papua New Guinea later that year he was impressed enough with their approach to want to
get involved more. GLT had a suggestion ready: they had been creating a programme called ‘Bringing the Rainforest into your School’ and needed funding to support the roll out of that work and B&Q provided financial support for the programme. Regular contact and meetings with Alan subsequently led to B&Q supporting another strand of GLT’s work. In 1999 GLT brought Alan together with Suffolk County Council and the Forestry Commission and together these three agreed to work with GLT on planting five community woodlands, based on GLT’s success in their own exemplar woodland project at their headquarters. Essentially, Alan backed GLT because its approach was providing impact at grassroots level. This access to communities and commitment to genuine community empowerment is not something that a multinational business can itself deliver directly. It is also not something that such a business knows much about. As Alan explains, “B&Q was beginning its sustainability journey. GLT helped me to think through and reassess the whole CSR agenda as I planned for the future”. A regional business: HFL and Snail Wood In 2005 GLT began working with HFL, a Newmarket-based business with 140 staff, a 32 acre site and a Chief Executive whose ambition is to lead ‘the perfect company’. This combination enabled GLT to create their first business-owned and run WildSpace. Dave Hall, the HFL Chief
Executive loves to be first. This ‘early adopter’ tendency which drives HFL’s success fitted well with the development of GLT ‘s community WildSpace model which had been tested with communities and was now ripe for transferring into the private sector. HFL is a progressive company and recognised that creating a WildSpace would fit with the business’s core values. Unlike B&Q, who provided unrestricted cash to GLT, HFL paid a fee to be guided through the process of establishing Snail Wood. HFL were explicit about what they wanted from the project – to take a part of their site which was unused and unuseable and to produce ‘a retreat for wildlife, staff and the local community’. Whilst the site is open to the local community the steering group of Snail Wood is made up of staff from HFL. The process of establishing the wood has had a range of benefits including providing the opportunity for staff to learn new skills, increased morale and better links with the surrounding community. Dave himself continues to provide informal advice to GLT and to take a personal interest in the development of the whole organisation. HFL have proved an excellent partner for GLT and the organisational cultures are surprisingly similar. For instance they share a long term vision: recognising how long it takes for a woodland to mature the timeline for Snail Wood lasts until 2107. This is long term planning even for the private sector! Spotting synergy and grasping opportunities: Timbmet Timbmet are the largest timber importer in Europe. GLT has a focus on trees and the protection of rainforests so Timbmet is a key player in a sector that they have a particular interest in. Conversely, Timbmet is aware of its responsibilities and GLT is exactly the organisation that it makes sense for it to work with. These kinds of synergies make a partnership add up on both sides and from initial introductions Timbmet have moved quickly to engage GLT to provide them with support in establishing a business WildSpace. GLT are actively searching for other potential business WildSpaces and in spotting potential opportunities look for synergies like these, along with shared values and partners who take the long view. GLT were introduced to Timbmet after locally sourcing sustainable wood for the construction of their headquarters - a carbon-neutral building using ‘deep green’ building techniques. By repeatedly pushing their local supplier to verify the timber supply chain they raised the visibility of this as an issue which ultimately drove the supplier to contact Timbmet direct. Following this the
supplier made introductions from which the partnership has flowed. So it may seem that GLT has found partners through a range of chance opportunities and word of mouth introductions. But they are not just lucky. They have effectively transformed these introductions into partnerships by having a good product which can be seen to be having a positive impact, by having a unique methodology which the private sector does not replicate, and by recognising that this is not a one-way deal but that GLT is providing good value to its partners.
The Future and its Possibilities For the last 18 months GLT have been working in partnership with Virgin. Rather than providing grants or contracts Virgin has provided pro bono support by sending in a six-person team to create a five year business plan. This business plan aims for GLT to reach a state of 75% earned income within five years – a target they are well on the way to achieving. The business plan team regularly meet with GLT to track progress and in anticipation of the agreement of two years support coming to an end early next year GLT have begun negotiating for continued engagement. They do this from a position of strength. Through this and their other partnerships GLT have built confidence in the value of their proposition and their track record of significant, effective and varied engagement reassures potential future partners. Some of the lessons from GLTs experiences are: • • • •
seize opportunities as they present themselves be open minded about potential partners be able to present a project that can be worked on co-operatively and recognise and value what benefits are being generated from the relationship.
T.R.E.E. (Tendring Reuse and Employment Enterprise) Branching T.R.E.E. (Tendring Reuse and Employment Enterprise) is an Essex-based social enterprise which has achieved the challenging objective of operating several separate sites. With a headquarters, five retail units and 3 additional warehouses the organisation has a disbursed staff who work together to achieve the overall objectives. These objectives are: •To provide good quality low cost electrical equipment and furniture to low income households •To provide training and employment opportunities to those with barriers to entering the labour market, in particular those with learning difficulties •To minimise the volume of electrical equipment and furniture sent to landfill The seed for T.R.E.E. was planted as an idea in the head of Mark Penn, the Chief Executive, when he was volunteering with a furniture recycling scheme run by the CVS in Clacton on Sea. Mark recognised that there was a market for re-used electrical products and a new organisation could potentially operate in that space providing a useful product alongside training and employment opportunities. Five years down the track T.R.E.E.’s main business remains in electrical items and they also have business lines in both re-used and graded (seconds) furniture. Mark went about securing start up funding, premises and a van and undertook initial marketing to source the electrical items and also the customers they were sold on to. Using the T.R.E.E. business model – which entails charging customers, albeit at a discounted rate – revenues soon began to flow. This resulted in T.R.E.E. opening its first shop, in Jackson Road, Clacton, in March 2006. They found, however, that demand was high and that they were unable to source sufficient good quality stock. This led to a decision to employ a specialist engineer to work on fridge freezers, a decision that resulted in a further increase in earned income which, together with a number of other developments, allowed T.R.E.E. to take on a second warehouse and more volunteers.
Over the next 3 years T.R.E.E. went on to open a furniture shop on Clacton High Street and subsequently to relocate its electrical shop next door. The store on the other side of the furniture shop has become a T.R.E.E. outlet specialising in computers. This October T.R.E.E. has opened a fourth shop in Clacton which specialises in new and graded furniture. There is also a retail unit in Chelmsford, which sells both electrical items and furniture, and the original head quarters is a retail outlet as well as housing one of the business’s three warehouses. T.R.E.E. was this year recognised as the national market leader in its sector by the Furniture Reuse Network. With eight sites, 24 staff and in the region of 50 volunteers it’s clear they must be doing something right! How has T.R.E.E. handled the growth of the organisation across a number of sites with all the opportunities for problems such a strategy holds? Firstly, Mark points out that there has been a lot of ‘learning by doing’. T.R.E.E. were experiencing strong demand and responded to that by taking an opportunity when it arose to open its first shop. “It made sense to us to treat our customers as other businesses would. We wanted a shop-front where our customers could browse and purchase goods in the same way as other shoppers do. Even though that first site didn’t work out that well – the footfall wasn’t high enough – we knew that taking our products to the customers was the right way of doing business which is why we were keen to take on a high street premises”, Mark explains.
Since the first outlet T.R.E.E. has gradually refined its systems to enable it to replicate the shop model successfully at each new venue. Fundamental to this has been establishing rigid systems and processes to minimise the tendency for local outlets to develop along different trajectories. At the management level this comes down to running the entire business through the head quarters using a powerful database which is also the core of the Management Information System. The back office processes are standardized throughout and this is matched operationally on the ground by all outlets, sharing a brand, operating in the same manner, using the same tills, operating the same banking processes and having the same policies for refunds, for example. Having these systems and processes in place is only successful if the personnel side of the business is well managed as well. T.R.E.E. ensures that all staff ‘sing from the same song sheet’ by having a clear induction process and ongoing training. This means that new staff spend time at the headquarters before working at an external unit and there is regular top-up training for all staff, some of which is undertaken at the headquarters’ premises. Although theoretically geographical location should not affect the performance of a new branch, in real terms when running multi-branch businesses the chances of problems arising are higher in branches located further away from the core. So when T.R.E.E. opened its branch in Chelmsford Mark was careful about how to staff it. Of the two core staff members, one already worked for T.R.E.E. in Clacton. She took her knowledge of the running of the shops and of the culture of the organisation into the new branch. Mark says that they were fortunate that the second employee had many years of third sector experience, “He already understood and bought into the values and mission of the business. Whilst we provided four weeks of training at headquarters, knowing that he shared our ethos helped to build our confidence in the new venture”. A recent strategic review of the business led to the creation of a senior management team within T.R.E.E. and one of these managers oversees all the shops. Part of his role is to track quality control at each retail unit and ensure standardisation across the branches. This is complemented by a hands on Chief Executive who is regularly seen at
all the sites across the business and who seeks to make sure the staff team feel properly engaged and consulted. Each team regularly hold meetings but as a customer-facing business T.R.E.E. cannot close its shops to enable all the staff to come together at one time. So Mark relies on his senior team to cascade down information. He also recognises that in a maturing business the size of T.R.E.E. there is no need, for instance, for shop staff to know every detail of the transport side. The journey from a small organisation where everyone knows everything to an organisation with separate teams and discrete functions can be difficult for some. Mark puts emphasis on those opportunities that do arise for annual parties or celebrations which can create and strengthen bonds across the organisation. T.R.E.E. is looking to considerably upscale its business in the years ahead and to branch out into new sectors. The foundations they have put in place – systems, processes and recognising the importance of sharing values across the organisation – should help them to do so successfully. If Mark had one piece of advice for those thinking of branching, what would it be? “Don’t underestimate the resources needed. Even though we’ve done it before we still never allow enough for how the costs add up – small things like getting extra keys cut or purchasing cleaning materials. And from a time perspective – well nothing ever goes quite as smoothly as planned, does it? And as Chief Executive it’s my job to be right there on the ground doing whatever it takes to get us open on time.”
Daily Bread Dissemination It’s in the nature of social entrepreneurs to want to share what they do. They want to ensure the social or environmental impact of their business is amplified as much as possible. And often, to achieve these objectives, they are happy to share this information through dissemination, for free. This is the experience of Daily Bread a successful business selling wholefoods, which is a worker co-operative with a vision of ‘putting people before profits’. The original Daily Bread branch is in Northampton with a sister branch in Cambridge. The organisation has also supported the establishment of several other co-operative wholefood sellers across the country and more recently worked with Social Firms UK to further replicate the model. Daily Bread began trading in 1980 with nine founder members. Gradually the business grew and turnover at Northampton was £1.3m last year. The co-op has a stable and gradually rotating membership. From its inception Daily Bread has been involved in promoting the worker co-operative ideal. One of the founder Members, Roger Sawtell, has been a central figure in the co-operative movement over the last 30 years and in 1985 he wrote a pamphlet ‘A Blueprint for 50 Co-operatives’. This pamphlet took Daily Bread’s experience of its first 5 years of trading and laid out in detail how the business model worked. This pamphlet was the beginning of what is now a long history of open and free dissemination of the Daily Bread model. The first organisation this spawned was Leicester Wholefoods, which in the late 1980s sought support from Daily Bread. The team from Leicester visited Northampton to learn about the model. They were provided with advice and support as they went through the process of establishing the new organisation. Advice ranged from explaining the overall strategy to nuts and bolts details such as providing lists of suppliers. This information was always provided for free.
In 1990 a Member of Daily Bread founded a Daily Bread in Cambridge, a new organisation which began trading in 1992. A licence agreement was drafted setting out the relationship between the Northampton and Cambridge Daily Breads. The agreement initially included a fee but that was never enacted and there has never been any transfer of funds. The agreement is focused on ensuring the retention of the values and tying in the ethical objectives of the organisation. The two organisations continue to have a very close relationship – they have a shared website, undertake some joint buying and continue to exchange information. The Cambridge and Northampton organisations are able to work so closely together, and to share an identity, because they also share underlying Christian values. Daily Bread is a Christian organisation and wants to retain that identity within its brand. So whilst it positively supports the development of other worker co-ops, without the underlying Christian values these organisations cannot become ‘Daily Breads’. After the experiences of Leicester and Cambridge Daily Bread was happy to help with the establishment of a further co-operative founded in Manchester in 1994. Unicorn is not a Christian organisation and support provided was a little less as one of the founders had previously worked at Northampton, nevertheless Daily Bread was a key element in its successful establishment.
Unicorn is now a business with 50 Members and a turnover of £3.5m. The willingness to share their business information so widely reflects Daily Bread’s underlying support for the co-operative movement in general. It is part of Daily Bread’s ethos to want to support the development of more co-ops regardless of Christian values. One of the seven co-operative principles - which are guidelines by which cooperatives put their principles into practice - is ‘co-operation among co-operatives’. As a matter of principle then, Daily Bread retains a desire to support the establishment of more similar co-operatives and continues to provide, free of charge, as much support as it can to assist those asking for advice. To the outsider this may seem resource intensive for no financial return, but of course Daily Bread is looking for returns other than purely financial ones and this helps to achieve those. The co-operative sticks to the principle that ‘small is beautiful’ – it does not want to expand itself and therefore the best mechanism for expanding the model is through supporting others to do so. An obvious risk is that an organisation would set up in the same territory – competing for business - however the co-op principles limit the likelihood of this happening. Nevertheless in recent years the support for new organisations has been reactive rather than proactive. Quite apart from the time-consuming nature of actively stimulating the development of new co-operatives, such organisations really need to be established from the ground up, rather than top down. Therefore the organisations were open to a proposal developed in 2004 by Social Firms UK. The umbrella body for Social Firms approached the Cambridge and Northampton Daily Breads wanting to package the business into a new brand that could be sold as a franchise. This proposal met the ideal of supporting other co-operatives and would enable the transplanting of worker cooperatives elsewhere, but it would not remove the underlying Christian values from the Daily Bread brand itself. After agreeing a fee the Daily Breads allowed Social Firms UK access to their business information and this led to the creation of the WholeFood Planet franchise.
Wholefood Planet franchisees will join the family of organisations that Daily Bread has spawned, a family with members of different shapes and sizes and different names, but all of them using the same business model as the original Northampton branch, and all of them contributing to the vision of 50 co-operatives around the UK and the social impact that can create.
The Grow Organisation Franchising The Grow Organisation is a business that is growing staggeringly fast. Founded in May 2006, as Mow & Grow, it is projecting a turnover of £1m at the end of this financial year. A large amount of that growth stems from its burgeoning franchise network, which currently numbers 33 franchisees that operate businesses from the ‘& Grow’ portfolio ranging from horticulture to catering and mechanics to recycling. So where does the story begin? Mow & Grow was started as a neighbourhood watch project to address the problem of crime being more prevalent in areas where there are houses with overgrown gardens. Often the residents of these houses are vulnerable or elderly. The Mow & Grow project used volunteers to clear and maintain the gardens. Volunteers were sourced from agencies working with the unemployed and included large numbers of young people and those with little or no formal qualifications. It soon became apparent that by providing training to these volunteers Mow & Grow could deliver social impact on both sides of its business. Within a year of starting up Mow & Grow’s reputation was growing and it was approached by an organisation in Lincolnshire wanting to copy the model. Mow & Grow saw this as advantageous – if successful it would help to build an image that Mow & Grow was growing rapidly. Trevor Lynn, founder and Chief Executive, was flattered by their approach and he had no qualms about charging them for the model, “I had no doubt that we should charge but it also seemed so early in our own development that I didn’t have the confidence to value it as highly as I should have”. Mow & Grow hosted two visits from the team from Lincolnshire, provided copies of successful grant applications to work from, and allowed them to share the same brand. The contract between the two organisations was drafted in-house and amounted to a two page letter agreeing an annual fee of £500. Trevor admits there was no strategic discussion about whether this arrangement made sense for Mow & Grow and fitted in with its long term plans. There wasn’t anyone to discuss with, “At that stage the Board of Directors was me and my
wife! We were flying by the seat of our pants and this opportunity presented itself”. Although the Lincolnshire business was ultimately unsuccessful the experience was very beneficial to Mow & Grow. The early replication interest raised the organisation’s profile and started a domino effect: two more approaches were received within months which led to a further 15 that year. Mow & Grow responded to these developments by putting the price up. Receiving mentoring from UnLtd they decided to charge £10k per franchise and were also able to secure pro bono legal advice. This enabled them to create a formal franchise document, with regulated structured payment schemes (including an upfront fee and an ongoing cut of profits). They created two separate products one of the basic franchise and one to accredit training provision. But with everything in place Mow & Grow found that they were unable to actually sell any franchises. A frustrating year was spent flirting with potential buyers but not actually closing the deals. Eventually Trevor looked harder at the clients they were trying to attract and saw undercapitalised risk-averse social enterprises. These were the franchisees he wanted - the intention was not to attract training providers solely motivated by profit. So to be able to sell to them Trevor changed the format of the deal. Rather than an upfront fee Mow & Grow agreed to accept a percentage of the business turnover. Whilst financially amounting to pretty much the same thing this made the purchase an easier pill to swallow and Mow & Grow franchises were soon flying out the door.
Throughout this period Mow & Grow was continuing with direct delivery of services, growing its own business, securing more contracts and beginning to diversify from horticulture into a range of sectors where the trading alongside training model could be effectively transplanted. This led to the creation of a new business -The Grow Organisation- to house much of this work. As soon as demand for the franchises started to build, reassured that they did have a product that would sell and with the benefit of their own increasing experience, The Grow Organisation began to tighten and specify the terms of the agreements. These changes increase profitability, protect against risk, and lock in social value creation. For instance: •Initially, agreements had been for three years, they were then increased to five and are now ten years long. •It was agreed that selling the accreditation licence without the full franchise and brand may lead to exploitation of the model by the private sector. Now accreditation is sold only along with the Grow franchise. •Recently, franchisees are obliged to use a specific bank which eases transition of cash and also enables the Grow Organisation to have some reassurance of sound financial management. •Franchisees now use a sister organisation ‘Accountancy & Grow’ for accounting and HR needs which underwrites The Grow Organisations position from an insurance point of view. •Recycle & Grow enterprises must sell their end product back to the Grow Organisation which is currently exploring new social impact opportunities which this product could be used for. The Grow Organisation is still itself growing by expanding its franchises and the number of different potential &Grows. Some of the initial 3 year franchise deals will soon come up for renewal. Trevor plans to make the territories in some of these smaller, partly to increase competition but also because many franchisees do not actively deliver across the whole of their areas. Initially contracts were on a county basis and in many counties there is room for more than one franchisee. The Grow Organisation has matured in other ways. A risk in a franchise network is that the reputation or brand becomes damaged by the actions of one franchisee. This hasn’t happened
yet but there is now an extensive due diligence process and a 9 page application form to try to mitigate this risk. Feedback is also collected from the franchisees each month and the agreement insists franchisees must allow access to all their information including bids and accounts. Currently The Grow Organisation does not facilitate learning directly between franchisees. Trevor explains “At this stage we have such a lot to learn ourselves, we’d like franchisees to come direct to us with ideas or problems so that we can use that to develop from the core and feed out the impact across the network”. And there are plenty of new opportunities. The Grow Organisation is ambitious. It continues to deliver directly in the Eastern region and uses this as a test bed where it is actively exploring new products and services. It’s searching for merger and acquisition opportunities in the UK in both the social enterprise and the commercial sector. Approaches have been received from organisations abroad and the possibility of licensing the business by country is being explored. Can this rapacious growth sit comfortably in the social enterprise sector? Well yes. By tying in the franchise with the accreditation the package it is less attractive to the commercial sector. Running a Grow franchise will not get you rich quick. And there are other principles too. Right back at the start of this journey Trevor received help and advice from a couple of existing horticulture and recycling social enterprises. In the areas they operate in The Grow Organisation doesn’t have any franchises for sale.
Mergers and Acquisitions
Speaking Up Mergers and acquisitions Craig Dearden-Phillips is both exhausted and exhilarated. As Chief Executive of Speaking Up, a regional advocacy social enterprise, he has been overseeing merger discussions for the best part of two years. As this process reaches its final, decisive stages he is able to reflect on its ups and downs and pass on some advice to other social enterprises considering this method of developing their businesses. Craig, who founded Speaking Up in 1997, soon developed ambitious plans for the business. Through organic growth Speaking Up’s turnover grew from £0.5m in 2004 to £5m in 2009. A tenfold growth in five years. However, there were internal limits to growing quickly. Whilst he had built up surpluses the organisational capacity was not sufficient to support growth at the speed which Craig wanted. Indeed there was, Craig felt, a small risk of Speaking Up going backwards if he didn’t do something radical. He wanted, as he put it, to “change the game” within the advocacy sector – and knew Speaking Up couldn’t do this alone. So Speaking Up began to look around for other ways of achieving such growth, in particular through merging with other organisations. Initial outline conversations were held with an advocacy service working across England. It very quickly became clear, however, that the organisational cultures were quite different, and were unlikely to gel. Specifically Craig was determined to lock in Speaking Up’s distinctive ethos and the lower profit-margin elements of its work - and was not convinced this fitted with the other organisation’s strategic plans. The following year, in early 2008, Craig initiated a conversation with the charity Advocacy Partners about the possibility of merging. The two organisations were on friendly terms, they had jointly facilitated the sector-wide Chief Executives’ network and had worked together on joint bids. The relationship was close enough that the synergy was apparent and the two Chief Executives shared a common goal – to create a
game-changing, sector-dominating organisation. Earlier conversations had centred on partnerships and formal alliances (both currently championed by the Charity Commission) but, looking closely at it, both CEs felt more was to be gained by a merger. “The aspiration was for one plus one to equal three” said Craig.
Both organisations are working in a field where contracts are being consolidated and larger organisation will tend, in the future, to win out. Advocacy Partners delivers across a different area and had needs where Speaking Up had strengths – and vice-versa. Craig is explicit about the factors that appealed to him about Advocacy Partners, “They are influential and respected, they have a great Chief Executive, the territory across which they operate meshes well with our own, they share a similar culture and similar ambitions. And their cash position is extremely positive.” But to complement one another is not sufficient for a successful merger. You have to be able to take the bold decision to say goodbye to what you’ve done so far as a single entity and prepare yourself for the reality that it may take a new organisation to take the mission to the next stage. This is what both CEs believed. And it needed this belief to motivate them to take what they knew might be a difficult concept to sell to stakeholders.
Both Chief Executives wanted to explore in depth the possibility of merging and in late 2008 Speaking Up prepared a 4-page proposal for the Chief Executive of Advocacy Partners, who took this to the Board of Directors. This led, in early 2009, to the two Boards holding a day-long meeting to explore the opportunity. At the end of the day there was agreement that the idea should be progressed further and £15k was allocated to fund a feasibility study. The feasibility study was completed by Easter 2009 and recommended a merger. As a result of this the due diligence process began to look in detail at both companies including contracts, finances and the senior management team. This is expected to be concluded by the New Year. The whole process is extremely resource intensive. Craig has allocated staff to work on the due diligence process and yet has still spent around a quarter of his time on it. This adds pressure on top of already running a busy organisation. It has been important to reassure existing staff. Once the merger was recommended Craig visited each of the Speaking Up offices to personally tell the staff about the merger. The response was mainly supportive but some staff inevitably worry about the organisation losing its identity, changing its mission, or about their own job security. Speaking Up also made sure that commissioners and funders were kept in the loop. Meanwhile the same process went on at Advocacy Partners. The Boards had to consider how best to plan the governance of the new organisation. It was agreed that a respected retiring Trustee would undertake a self-audit of the Boards and recommend four members from each to join the new Board. A fresh Chair who is new to both organisations will be recruited. A succession planning process for the future Chief Executive is also well underway. Craig is honest about the challenges to the merger that have arisen. Some of these are personal - Craig and his opposite number have found their good relationship, which was so fundamental to the initial idea, strained by the due diligence process. The process unearthed new financial information effecting how the deal looked. But ultimately the official merger is expected to go ahead at the end of the year.
For those wanting to follow in Speaking Up’s footsteps Craig has the following recommendations 1. Ensure there is a good fit with your core mission, culture and long term strategy. 2. Is the deal win-win? It has to make total sense for both partners. 3. Check it’s profitable look for “one plus one to equal three”. 4. Identify potential deal-breakers early on and address them early on. 5. Recognise that the costs of the process – in time and money – will always be higher than planned. So, exhaustion aside, would Craig recommend this route to others? “An organisation needs to be resilient to go through this process but if you have the ambition that we have at Speaking Up - you want to change the world sooner rather than later – then yes, mergers can certainly help you achieve that aim!” His final point is caution - to look seriously at a merger is to risk of both time and money. “At the end of this process we may decide not to go ahead – if that’s the case both organisations will have lost a year”. So whilst looking to the future with optimism, don’t begin the journey unless you believe that the merger could make sense.
Bright Green Organic diversification Bright Green is an environmental social enterprise with a growing reputation. Regularly contributing to policy documents alongside delivering a range of products on the ground it is riding the wave of the growing recognition of the issues that it has been championing since its inception in 2006. Starting with a clear objective – to create a zerowaste centre - like many other social enterprises Bright Green has grown organically, largely using grant funding, operating on the margins of profitability and cross subsidising its work. Now with a range of separate income streams within the sustainability field including those from project delivery, consultancy and licence fees Bright Green’s strategy is to take each new opportunity and create a sustainable product from it. This creates environmental and social benefits whilst the organisation continues to push for a zero waste centre, a development they are sure will happen in due course and that they will be poised to deliver. Here is their story: When Maxine Narburgh set up Bright Green in 2006 she was already well embedded in the regional environmental sector. Many of the contacts she had and the work she was undertaking then have fed into the organisation’s current programmes. Initially, her focus was on Bright Green acquiring the land on which to create a zero waste centre, a project idea that had been circulating for some time. Such a capital asset would underwrite Bright Green’s balance sheet and enable it to develop a cutting edge, exemplar site which would lead the way both nationally and internationally. This possibility was tantalisingly close and in the interim she sustained Bright Green through undertaking consultancy in related fields such as sustainable building and renewable energy for Local Authority, charity and private sector clients in the Eastern region. Six months after operations began Bright Green directly acquired the Eastex contract, a contract they had already been managing on behalf of another organisation. Eastex is a partnership which runs a materials exchange using an IT platform to enable businesses to offer materials
that are no longer required to other organisations that may have a use for them. The Eastex service is free to users and is wholly grant funded. For Bright Green this was the first of many contracts that resulted in positive environmental impact but no positive impact on the balance sheet. Bright Green set about changing that. In-house resource was used to create the IT platform and the team created documentation such as operational and staff and handbooks which, along with other documents were packaged and sold to the Yorkshire and Humber region. Tapping into their existing networks the work on a licensing agreement was undertaken pro-bono. [Or having already recruited a Commercial Development Manager they were also able to undertake the work on drawing up the licensing agreement in-house]. The agreement included an up-front annual fee for this first new member of the Eastex network. A wholly funded project was starting to pay its own way. Recognising the significance of this development, and the potential for rolling out the Eastex product further, in February 2009 an independent Community Interest Company was established by Bright Green and two of the other partners who each own a third of this company. The product has been sold to one other region and negotiations are underway to take it across Greater London. If this goes ahead Bright Green will oversee the development of the exchange. Direct delivery is more appealing now because the contract is expected to provide an opportunity for revenue generation through advertising and membership fees. Consecutively, from 2008, funding was secured from Suffolk County Council for a 12 month long Low Carbon Communities project. At the end of that period funding from the PCT enabled it to be further developed along two strands – fuel poverty and food growing. Right now Bright Green are working on packaging this work, creating an IT and document based product and selling that into the ready market of Local Authorities around the country. The drive for income generation doesn’t mean that Bright Green has lost sight of its mission – fundamental to the plans to package this for local delivery is the importance that Bright
Green puts upon local ownership to embed the projects, which is particularly important to ensure the longevity of behaviour change actions. The continued focus on impact led to Bright Green undertaking some unpaid work in 2008. Sustainable event management involves providing recycling education and facilities, post event salvage and environmental audits to events including festivals and other public gatherings. Using volunteers Bright Green provided such services to a range of customers including the Latitude and Reading Festivals in 2008 and by 2009 was able to charge fees to provide services to this and other festivals. Seven seasonal staff were recruited to perform this work. The opportunities in sustainable event management are growing. Bright Green expects to undertake a significant increase in this work in 2010 and have their sights set higher too. With the London Olympics on the horizon they are looking at scaling up and creating an enterprise arm to use their experience to maximise the opportunities that become available. Sustainable events management, low carbon communities and Eastex currently form the bedrock of Bright Green’s business. Each of these three strands has been turned from a non-income generating high impact activity into an income generating high impact activity. Meanwhile, continuing to undertake consultancy allows Bright Green access to new opportunities. The plans for the zero-waste centre have changed but the project remains very much part of the overall business plan. Bright Green is not a huge business. Money has always been tight and as an organisation focusing on sustainability Bright Green aims to be efficient, focusing on achieving minimum environmental impact as part of the travel and expenditure budgets. It has grown steadily with a turnover of £105k in 2008/09, £120k projected for 09/10 rising to £150k the following year (leaving aside potential increased income from events management). This rate of growth hides the ongoing shift from grant to earned income and the increased sustainability this leads to. Currently employing three staff the business will now regularly need to recruit seasonal staff for events management and hopes to take on a full time
manager to oversee this in the New Year. Influencing the political agenda is also part of the Bright Green strategy. Indeed, Maxine Narburgh now the Chief Executive of Bright Green, considers that this may be a strong part of their future, “We are moving towards influencing the national agenda but we will always continue to deliver work on the ground and to use that experience to catalyse policy change.” Maxine has also learnt some other lessons along the way. Successful partnership working has been key to Bright Green’s success but she cautions others not to remain involved in partnerships where no progress is being made. “There are plenty of Boards and committees around that seek input from social entrepreneurs. We are much more picky now about those we commit time to.” This reflects Bright Green’s growing confidence. Looking back what would they have done differently? “Gone in harder for payment and demanded that before rather than after delivering services. But we lacked the confidence and were well aware of the risk that such behaviour could cut us off from opportunities.” Looking forwards Bright Green will expect to be paid for their services, to carry fewer loss making strands within their portfolio and to continue to increase their environmental impact. The hard work creating the diverse portfolio in the first few years is now reaping rewards as they plan for the future.
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