Why community businesses are bucking the trend

Date: 30 April 2019

Employee of a community business serving clients

Community-based grassroots enterprises are outpacing the small business sector as a whole, according to new research.

A report published by independent trust Power to Change in the run-up to Community Business Weekend (16-19 May) reveals that the community business sector is growing and showing increased levels of confidence.

Community businesses are run by members of the community and trade for the benefit of that community. They include pubs, shops, libraries, clothing manufacturers, cafés, leisure centres, housing trusts and solar farms.

The study shows that there were 7,800 community businesses in England in 2018, compared with 6,600 in 2017 and 5,650 in 2015. In contrast, the SME sector as a whole contracted by 0.5% in 2017-18.

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The report estimates that community-run businesses contributed a total market income of £1.05 billion to the economy in 2018 and hold £690 million in assets. The community business sector employs an estimated 33,600 people with an additional army of 125,200 volunteers.

Power to Change polled community businesses and found:

  • 66% are confident about their financial prospects - up from 63% in 2017 and 47% in 2016;
  • 50% say they will employ more paid staff this year;
  • 75% expect their income from trading or contracts to increase as a result of expanding or diversifying;
  • 53% say they are active in at least two additional areas beyond their primary business purpose, such as training local people or providing health and social care services.

"Our figures show that community business is fast becoming a strong, viable and essential business sector, helping to drive a shift towards responsive local leadership, entrepreneurship and economic renewal," said Power to Change ceo Vidhya Alakeson.

"As community businesses expand their work to deal with the many complex challenges being faced by communities across the country, we're calling on everyone to get involved in shaping the future of their local area by supporting this year's Community Business Weekend."

Written by Rachel Miller.

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