Consider the possibility that your existing social business comprises of more than one enterprise.

Is it possible to spin these out to create two (or more) standalone social businesses?

Spinning out into separate social enterprises could make it easier for individual entities to manage themselves, raise investment and increase capacity. It could also create an opportunity to focus resources on providing an 'offer' that is simpler to explain in the marketplace. 

Social enterprises and public sector spin-outs

Social enterprises, charities and public sector organisations, such as local authorities and the NHS, have the option to create independent offshoot companies and subsidiaries. These corporations can be brand new or involve the transfer of employees and assets (e.g. buildings, equipment). Such changes can be instigated by the parent body, a funder or by the founders of the new company, who may be independent stakeholders or the employees. 

The resulting new social businesses will benefit from an element of independence. Taking control of internal management, raising their own investment and increasing capacity will help draw focus on offering the marketplace one standalone product or service. 

This method of development allows the spin-outs of the original social enterprise to utilise the shared heritage of policies, procedures, systems and tools. Meanwhile, they would each be contributing to growth by focusing their effort on bettering their specialist offering.

Social enterprise spin-out planning 

When planning a spin-out, make sure each of the new social businesses has access to all the essential assets/property/leases and central functions, such as accountancy and human resources. You can accomplish this by establishing service contract agreements between the devolved businesses and the parent.  

You will also need to address the issues of staff transfers, as well as transfer of contracts and grants. A viable business plan acceptable to the parent enterprise, funders, investors and stakeholders will need to underpin the operation.  

Before launching your spin-outs, make sure you choose the optimal future-proof legal structure and system of governance – it can be critical to the success the venture.