What happens when local business and the local community sector work together?

All too often it is assumed that businesses and the voluntary and community sector have little in common; and indeed there are those who argue that they should stay apart. This is a deeply short-sighted and flawed view.

Of course, there are major and multi-dimensional differences between large corporates and small local community organisations – but this is not necessarily true for small businesses and small local community organisations. Yes, there will be differences in terms of ownership, purpose and mission – and in some other ways too. However, the reality is that there are also many similarities, especially in the current economic conditions. The facts are that:

• small businesses share many of the same challenges as social enterprises. And community enterprises are very much part of the voluntary and community sector.
• both the voluntary and community sector and many small businesses face the same challenges for their survival – what revenue can they secure and where from; will they be sustainable; is their cash-flow adequate; can they grow if that is their ambition; where will they find the right people to contribute to their success; and many more.
• many and perhaps all the ‘back office’ support services such as payroll, financial administration, IT and HR strategic advice required by small businesses are the same as those needed by small voluntary/community organisations. Yet there is little shared service provision within the separate sectors, let alone across them.
• the voluntary and community sector requires trustees and volunteers. Local business sector employers may be able to offer both as well as support services in kind. Such arrangements should and can be two-way.
• both sectors have to be entrepreneurial in the current climate. They have shared interests in fostering and nurturing talent, and have the potential to work with local schools, colleges, training providers and employment bodies to offer employment opportunities and shape provision.

Small organisations in whatever sector have, by definition, limited resources with which to address strategy, build relations and seek new partnerships. Yet these are essential activities for any organisation that is going to thrive and survive.

Increasingly local authorities and their public sector partners are seeking to be more inclusive in their decision making and in some places are devolving budgets, commissioning and services to local communities and neighbourhoods. Such approaches must, if they are ever to be truly meaningful, involve local businesses, and local community and voluntary groups.

The public sector really does need to recognise that it has a fundamental responsibility to ensure that its policies and approaches are geared towards enabling real and ‘genuine’ involvement, which is both achievable and affordable for participants and which has the potential to enable partners to have sufficient trust and confidence to fund new investment and local employment opportunities. I absolutely believe that local authorities must prioritise funding the development of local capacity to facilitate this. There is no more new money coming from central government – so local authorities must look increasingly to the resources in their own area and local economic players.

When it comes to bidding and contracting with the public sector, both business and the voluntary and community sectors find themselves confronted by the same barriers. Typically, neither has the resources to write complex bid documents; to build long term relations with public sector commissioning and procurement officials; to have a comprehensive analysis of public policy; or to participate in lengthy and complex procurement exercises. Few have the large balance sheets necessary to underwrite large bonds or finance cash flow for contracts based on payment by results. And new entrants from both sectors find themselves unable to demonstrate a long (or any) track record of public service contracting. Location may also restrict their ability to bid beyond (or certainly, much beyond) their own local authority.

I feel very strongly that whenever contracted to provide services or goods, the voluntary and community sector and small businesses must be adequately remunerated on reasonable terms that enable them to invest for the future, innovate and pay staff decent wages. They should not, as so often happens, be bullied and intimidated by procurement officials into unrealistic and unsustainable contracts.

Of course, most public bodies at national and local level laudably state their commitment to contract with local SMEs and in particular, very small businesses, social enterprises, and voluntary and community organisations. The reality, however, is very different, and the facts demonstrate that all too often, public procurement practice is totally at odds with the political rhetoric. The irony is that sadly, the consequent losers are not only the potential providers but also service users and local communities.

Then there are the prime contractor/sub-contractor procurement models which may sound fine in principle but the experience from the work programme and elsewhere is that it can all too easily leave the small sub-contractors from the business and the voluntary sectors feeling squeezed and marginalised – as well as financially exploited. Public bodies should not see this model as the best of way of offering contracts to small companies and the voluntary sector. And if they do deploy the model, they need to contractually ensure that prime contractors respect and treat their supply chain well.

There are ‘some’ good examples of local business groups and the voluntary/community sectors working together; sharing resources; and finding common cause to speak to local authorities and others. One such example which I applaud and urge readers to research further is the partnership between Merton Voluntary Service Council and Merton Chamber of Commerce. There could and should be many more such alliances and collaborative arrangements at the local level. And the national sector bodies ought to be working much more closely together on shared agendas and encouraging their local members to do the same.

Collaboration between small local businesses and the voluntary/community sectors can only be mutually advantageous and has the potential to add hugely to local economic and social wellbeing. This collaboration can and does take make many forms – it can be collective or it can be between two individual organisations from each of the sectors. It can address local strategic place-shaping or public service commissioning and procurement. It can enable joint bids for public service and other contracts. And most easily of all, it can be about sharing people and their expertise. The opportunities are truly enormous.

The voluntary and community sector is value driven and rightly proud and protective of its values and mission. Collaborating on the right terms and for the right reasons with the small business sector does not diminish these values. As with all cross-sector collaboration, the focus should be on outcomes, and the relationship based on mutual trust, respect and confidence.

Localism will only flourish where there is good human capital and capacity. Places are the sum of their people, resources and assets. In finding common cause, I am in no doubt that small businesses, and the voluntary and community sector can most certainly enable the growth of people, local economies and communities.