Community businesses - helping make places better 

From a report by Power to Change

Community businesses can be any type of business that trades products and services such as shops, transport, farms, hubs, pubs, gardens or leisure centres, run by local people for the benefit of the local community.

There’s a growing movement of communities taking back control of their local areas through business. Hundreds of thousands of people working to improve the places where they live – buying the last pub in the village, running their local football club, saving their public halls and local libraries.

Community businesses exist to help make places better. Run by local people and trading for the benefit of a community to which they are accountable, they put power in the community’s hands and are best placed to deliver solutions that work for their areas. They contribute to fairer local economies through operating, trading, and partnering locally. Compared with the private sector, a higher proportion of what they spend stays in their local community, and their trading income is invested in developing and delivering more services and facilities for local people.  

Often operating in areas of high disadvantage, social exclusion, and economic inactivity, they support financial inclusion and employability where it is most needed. They provide sustainable work for local people and build skills through volunteering opportunities, making a much-needed contribution to the prosperity and prospects of their local areas and the people living there. By strengthening the local economy, their work helps address regional inequalities, and build local community pride and purpose.

In their 2022 Community Business Market Report, research by Power to Change has provided the most comprehensive picture yet of how community businesses contribute to a fairer economy and wellbeing through community ownership.

The research estimates that there are 11,000 community businesses operating in England this year, with a total income of just under £1 billion, strengthening local places through greater community power. The hybrid model of community business typically includes earnings from trading and grants, and survey respondents had an average total income of £264,000 in FY 2020/21. Community businesses use a variety of legal structures and governance approaches to ensure they are accountable to the people they serve. Half those surveyed are either community interest companies (25%) or charities limited by guarantee (24%).

Community businesses employ more people compared with traditional SMEs – 80% of respondents said that their community business has at least one paid employee (with an average of nine paid staff), whereas 75% of SMEs in the UK have none. These benefits are felt locally as on average, 86% of their paid staff live in the local area. Community businesses involve an average of 29 volunteers and 45% of them reported they had employed someone who had no previous paid employment in the last 12 months. This is equivalent to 1,514 people. 

The research shows the resilience of the sector as they continue to adapt to meet the needs of their local communities. In 2022, there was a 10% increase in those who said that providing public-facing support services is their main activity (to 31%), and 75% said that they provide more than one such service.

Visible and accessible services for communities can attract people back into otherwise declining areas by increasing footfall and opportunity for others trading locally. Increasing community ownership of assets on the high street is one such way to facilitate community-led regeneration.

The survey data shows that 43% of community businesses are located on high streets, and 56% own or manage fixed assets. Compared with other community businesses, survey data indicates that those owning or managing building assets typically employ more staff, engage more volunteers, and generate more income.

"What we’ve always tried to do is be a safe and a welcoming space for people, so people can come, and they can enjoy the café, or do a course, or just enjoy the space. It has strengthened the community quite a lot." Anstice Trust

They are not only facing the same operational pressures on their business models as the private sector, but they are also facing increased demand for support from people in their local areas. In the survey, 77% of community businesses reported increased demand for support related to the costs of food, and 79% for support related to increases in the costs of energy. Community businesses serving economically or educationally disadvantaged people were a third more likely than others to experience greater demand for support with increases in food and energy costs.

"With their ability to adapt and respond swiftly to their communities’ changing needs, community businesses are playing an integral role in levelling up the country towards a fairer economy." Tim Davies-Pugh, CEO of Power to Change

95% of respondents said that their business’s primary purpose is generating economic and social and/or environmental benefit in the local community. 98% said they have a positive impact on health and wellbeing and 97% on reducing social isolation. 98% said that they have a positive impact on community cohesion, and 97% identified growing local empowerment and pride as a key area of impact.

A significant majority feel that the way they trade or operate makes a contribution to improving the environment or tackling climate change (72%), and 74% said that they had a positive impact on tackling injustice and inequality.

Many community businesses have been exploring, embracing, and developing their own digital technology (57%), which helps to provide innovative additional or alternative community-focused services. These flexible, novel, and entrepreneurial approaches are ensuring that the services they provide can sustainably meet the growing and changing expectations of their community, and their own future business aspirations. 

Those who have been adjusting their operating and business models to maintain or adapt their services in response to new challenges have been proving the most resilient and optimistic. However, feelings of confidence about the future are understandably mixed – at the time of the survey 50% of respondents were feeling more confident about their financial prospects over the coming year, whereas over a third (37%) felt less confident. 69% cited an increase in the cost of living as a contributory factor, and even 31% of those who felt confident about their prospects were still worried about the impact of the cost-of-living crisis on their business. 

The community business sector consistently demonstrates that with the right kind of coordinated help, it can help deliver the collective ambitions for community health and prosperity it shares with government and public services across the country, providing much-needed help to tackle pressing national and global challenges.

Read the full report here.