mfrs - merseyside fire and rescue service _09_appendix_a.pdf · contribute £8.4 billion per year...

Business Development Framework for MFRS Investment Decisions Draft V1.0 1

Contents

01 Context 3 02 Background 4 03 Scope Of Document 4 04 Key elements For Investment Policy 6 05 Social Enterprise Project Board 7 06 Market Readiness 9 07 MFRS & Social Enterprise SWOT Analysis 10 08 Project Communications 11 09 Reward Strategy 12 10 Social Enterprise Scoring Matrix 12 11 Project Initiation Document 17 Appendix 1 Project Timeline 22 Appendix 2 Project Feasibility Model for Major Investments 23 Appendix 3 Legal Structures Social Enterprise 28 Appendix 4 RAMP Model – Social Enterprise 30


01 Context We are currently experiencing an economic shift globally which has led to the scrutiny of public spending and the tightening of Central Government and Local Authority budgets. Merseyside Fire & Rescue Service (MFRS) recognises that potential income generation streams in line with the overall corporate strategy, will contribute to delivering the objective of making Merseyside a Safer, Stronger and Healthier community. Local authorities are encouraged to maximise financial positions and achieve policy objectives through new income streams, fees and charges. As a leading authority and one which is quick to embrace innovation, entrepreneurship and enterprise, MFRS has excelled in its industry. Undertaking successful delivery of the 10th World Firefighters Games in 2008 and continually leading in the field of youth engagement, community fire safety and fire support network, radical thinkers are ready to embrace the next stage of development. This document aims to propose a framework and policy by which a social enterprise can be established. It offers the strategic approach to undertaking critical assessments and offers a systematic approach to evaluating, reviewing and monitoring projects to initiation. Social Enterprise A social enterprise is a business which seeks to trade profitably with any surpluses being reinvested into socially beneficial projects. Various legal structures can be operated under a social enterprise and it is this consideration which must be applied by the Board members, see appendix 3.

Principle activities at MFRS are focused towards the education, engagement and welfare of Merseyside with a mission to make its communities safer, stronger and healthier. To develop and enhance these activities, further income streams will provide long term financial stability to increase community beneficial projects and carry this ethos into the future.

According to Government data (the Annual Survey of Small Businesses UK 2005-2007) it is estimated that there are approximately 62,000 social enterprises in the UK with a combined turnover of at least £27 billion. Social enterprises account for 5% of all businesses with employees and contribute £8.4 billion per year to the UK economy - almost 1% of annual GDP.

Financial Projections of Social Enterprise at MFRS An anticipated turnover of £3 million has been associated with this initiative, with a profit forecast of £180,000. This figure is derived from an industry norm profit margin of 6%. The £3 million turnover is expected for year one of the projects life – 2010/11. Supposing this profit margin was applied to years one, two and three the following could be assumed:

Year One Year Two Year Three 6% profit margin £3 million turnover > £180,000 profit

6% profit margin £4 million turnover > £240,000 profit

6% profit margin £5 million turnover > £300,000 profit


Essentially the investment and overheads of years two and three are likely to reduce based on ‘business as usual’ running costs rather than set up costs. To yield this profit from the projects the social enterprise board has to actively evaluate, monitor and review the project initiation documentation submitted and select only those projects deemed profitable and presenting a low initial investment. The greater the profit the extra income generated for reinvestment into socially beneficial schemes. 02 Background Risk Management is critical in the planning and selection process and a thoughtful policy, framework and scoring matrix system to avoid entering into transactions that appear low risk, but create contingent liabilities, is pivotal. The fundamental objective is to generate financial contributions to allow the reinvestment into major community initiatives. The projects will enable professional development internally and enhance the skills and knowledge of employees’ high capability. Initial projects will seek to enhance and extend core service deliverables, and new market emergence will be avoided until a significant Return on Investment (ROI) is evident. The projects must be financially viable and breakeven on all initial outlays. A limited number of potentially high reward projects that demonstrate longevity will be favoured over short term high risk projects. A fair scoring system and framework will govern reasonableness and compliance. Where core skills are absent, partnership collaborations will be engaged to meet key deliverables.

MFRS will focus on investing in projects to create a sustainable, scalable model through a social enterprise that aims to address critical social problems, rather than simply conventional philanthropy through charitable giving.

03 Scope of this Document Set on the following pages are the key principles of best practice that MFRS must follow when proposing which investments to make, to comply with a fair and process driven calculation of success.

1. Development of Project Initiation Document by MFRS employee, which is reviewed by the Social Enterprise Project Board (SEPB).

2. Ensuring the written investment policy addresses the following issues:

Investment board functions and structure; Attitude to risk and process for managing risk; Decision making; and Process for evaluating and managing investments.

3. Evaluation of the Project Initiation Document conducted via the Social Enterprise Scoring

Matrix. 4. Review by investment committee if major investment is being proposed. Key roles of the

investment committee would be to: Establish the overall methodology, processes and controls which govern investments; Ensure that robust processes are followed; and Evaluate, scrutinise and monitor investments.


5. Thorough Business Case document produced by project initiator and the Social Enterprise Manager outlining the specific details surrounding the implementation, resource and finance amongst others.

6. Committee decision to proceed with an investment and Social Enterprise Manager to mentor

the Programme or Project Developer. 7. Engagement early on in the investment evaluation process by MFRS legal advisor.

8. Consultation with external advice with previous successful experience of engaging in social

enterprise.

9. Rigorous evaluation of proposed investments using a thorough evaluation, execution and monitoring process, as described in Appendix 2.

Charging The legislative position of the Fire & Rescue Service is evolving with charging powers under the Fire and Rescue Services Act 2004 (Section 19) available to all fire and rescue authorities:

Services chargeable under Section 19 are specified in a statutory instrument. Authorities may set their own charges. Different (or no) charges may be made in different circumstances. Authorities must secure that, taking one financial year with another, income from charges does

not exceed the cost of the action for which the charges are made. A number of applications for income sources could arise from a series of charging activities addressed under the Fire and Rescue Service Act 2004, contributing to fixed overheads. Whilst the attractiveness of charging for services as general businesses activities, for instance, lift rescues or removal of water, MFRS has excelled and pioneered a number of projects in the UK market and achieved status of excellence. There is a drive and determination by employees and radical thinkers to expand the portfolio of services, and further enhance income generated from new projects and concepts. Trading Under current legislation, MFRS can only trade through a company. The appropriate legal structure that will underpin this company set up is being investigated and review of working examples will form part of this research. This report will detail the framework by which MFRS will engender and deliver an environment of change through the delivery of social enterprise set to provide financial benefits. The aim is to develop a framework to asses the feasibility, sustainability and commercial impact of MFRS project initiatives.


In summary:

Stage one: Social Enterprise Idea

Stage Two: Feasibility Model and assessments

Stage Three: Board review and decision making

Stage Four: Implementation

Stage Five: Reflection and modifications

04 Key Elements for Investment Policy MFRS will follow best practice policy to deliver social enterprise schemes, following:

(i) Investment board and structure The Investment Board will review and discuss various project initiation documents as reported by MFRS employees. The function will agree upon set objectives, performance and financial benchmarks and monitor information against compliance and scoring systems. The Board will determine the outcome of the project and the Social Enterprise Manager will work with the Project Developer to establish a business plan that details the necessary strategic objectives for execution.

(ii) Investment strategy and objectives A best practice statement of investment strategy and objectives should be addressed and identified when reviewing investment strategies as follows: 1. The objectives and principal aims of the project for the provision of income generation and the

social enterprise function of MFRS. 2. Identifies the social entities contribution to the context of MFRS wider strategic objectives. 3. Prescribes targets for income generation, returns on investment and level of financial back up

required. 4. Presents a realistic time frame for realising the desired return on investment.


(iii) Risk counteraction and management The board must take accountability for any adverse outcomes that will negatively impact on the outcome of the projects. The following major investment risks will be reviewed: 1. Strategic: risks associated with the service or product prescribed competitor presence or poor

statement of mission and objectives. 2. Political: risks posed by authority influences or changes in political environment, such as a cut in

spending or policy changes. 3. Environmental: risks associated with environmental changes or focus on resources in the local

environment. 4. Financial: risks associated with the financial structure of the business, the local authority and

wider economy. 5. Operational: Functional risks from other areas to endanger the project such as, logistics and

infrastructure, IT systems and recruitment. 6. Reputation: risks to the reputation of MFRS through bad media publicity resulting from a poor

business investment or employee/public reaction. 05 Social Enterprise Project Board (SEPB) A strong and cohesively associated board is crucial to the success of the social enterprise project. Its strength in recognising, nurturing, structuring and conceptualising the project from initiation into business as usual is critical. The Executive Leadership Team (ELT) will form the Social Enterprise Project Board. The Board will be on the frontline of accountability and need to –

Understand all aspects of social enterprise performance (goals, financial, operational). Review and monitor Project Initiation Documents promptly, with knowledge and duty to care. Create a culture where quality and innovation is taken seriously.

Notes:- 1 The Project Board, has the following duties:-

a) To provide overall direction and assessment of the project. The Project Board is accountable for the success of the project, and has shared responsibility for the project within the sphere of activity set by the Social Enterprise Manager. The board must maintain a collective and fair approach when reviewing projects.

b) The Project Board consists of the five ELT members who will be the Project Executives.


Member Role & Responsibility Project

Executives The Executives are ultimately responsible for the project, supported by the Social Enterprise Manager, Senior User and Suppliers and CLT Senior Members. The Executives have to ensure that the project is value for money, ensuring a cost-conscious approach to the project, balancing the demands of business, and other members.

Social Enterprise

Project Manager The Manager is responsible for maintaining the standards and guidelines of the board to achieve the key deliverables. The Manager will bring the final decisions to implementation and be responsible for executing the chosen project(s).

2 The Project Board will draw upon four other main bodies to fulfil it's duties:-

a) Legal Advisor. The Legal Advisor’s prime responsibility is to ensure that the project acts within the realms of its legal constitution and ensure that it is well governed. This is a fundamental position which will measure the projects feasibility and ensure trade is embarked upon with due care and diligence.

b) Project/Quality Assurance Roles. The quality assurance members will receive regular reports

from the Project Manager, but will not actively sit on the board unless called. They will offer solutions during business case review.

c) CLT Senior Members. The Social Enterprise Manager will regularly update the members on

progress and involve them in testing and scrutinising project specifications.

d) Fire and Rescue Authority. The Fire and Rescue Authority will review the business case and provide approval or recommendations for investment. The Social Enterprise Manager will prepare an update and progress status report to The Fire Authority half yearly. The first report is expected to be delivered in March 2010, or at the stage that an idea has reached business case if this comes earlier. This document will seek approval of the Authority following sign off by the Project Board.

Risk Management

The Board will have to consider opportunity-focused investments that start with the end user and the target market in mind. Risk evaluation associated with the target market will be determined by: industry issues, market structure, market size, potential growth, competitor activity, attainable market share, cost structure, breakeven point, opportunity costs, and barriers to entry. A further support tool to be used by MFRS is the Ramp Model, see appendix 4.

The best practice framework and project initiation document will flag any risks aligned with the corporate strategy to assess the riskiness of its execution. Identification and analysis of these risks through assessment will enable the Board to prioritise those risks which should be eliminated completely before progression. The framework and scoring matrix will ensure that risk is identified during initial planning stages and that enterprise is captured and developed. The development of a thorough business case will support the mitigation of risk and plan for their measurement and control through contingency planning.


Due Diligence In the current business environment with stringent review and observation over public spending, pressure to carry out due diligence is undertaken for all major business decisions. By critically assessing major investments, MFRS will be better prepared to identify and provide solutions to risks and opportunities of potential investments through a process of investigation, analysis and interpretation.

The following items present a non-exhaustive list of items to be covered by due diligence.

06 Market Readiness This section will analyse what our ‘do nothing’ position is, causing us to quantify our assets and generate a plan of action. The results indicated may offer some resolution in highlighting the reason why the ‘Do Nothing’ approach is not applicable, and present an understanding of its consequences. In summary the repercussion of doing nothing will ultimately suggest that a high revenue potential is not possible and thus greater scope of nurturing Merseyside into a ‘safer, stronger and healthier community’ is limited to the business as usual approach currently adopted.


There now follows a table outlining the repercussions of ‘Do Nothing’ in a summarised format: Consequence Reason Long term repercussion Low further development of staff in commercial area.

Lack of new projects for development.

Complacency and a culture of change is avoided.

Less attraction of external funding and grants.

Business does not grow or champion new initiatives that are seen as beneficial to community engagement, and thus investments are awarded to competitive high priority projects.

A dependency on this income source will be lost and projects funded by their donation will subside.

Poor business relations formed through lack of networking and interaction of MFRS employees with commercial industry.

Requirement to share best practise and industry knowledge is not necessary to fulfil role.

Missed opportunity to increase market knowledge and promote MFRS.

UK fire authorities diversify and pioneer new services and product offerings in the commercial market receiving status of excellence and growth. MFRS seen as relatively slow to change and adapt.

New opportunities overlooked and cautious approach taken.

May take longer and more persistence to reach target markets or offer something that is unique from that of other fire services.

Events, further training and general expenditure will have to be reduced or cut in order to keep at a business as usual level.

Only priority projects and core activities can be activated with budgets and the ‘nice to have’ activities will become obsolete.

Retention of staff in diverse roles will fall, due to lack of development. The reduction of activity in projects that could reach vast community members will be limited.

07 MFRS & Social Enterprise SWOT Analysis A SWOT Analysis is a strategic planning tool to evaluate the Strengths, Weaknesses, Opportunities and Threats involved in setting up a social enterprise. The internal factors that affect the business venture are its strengths and weaknesses, and the external factors – opportunities and threats – will deter unfavourably from achieving objectives. Below is a presentation of summarised Strengths, Weaknesses, Opportunities and Threats that MFRS faces. A thorough investigation which relies on the input of financial, management and employee opinion will be conducted over the coming weeks to enable a prescriptive and factual analysis to be achieved.


STRENGTHS

Strong brand name and reputation Trust in service and respect for firefighters Active world leading community engagement

function Successful project delivery: World Firefighters

Games 2008 Pioneering and radical thinkers pushing to

increase business potential Expertise and skills within work force to drive

and deliver business objectives Strong leadership and encouragement for

success Successful generation of income sources

through external funding and grants Good infrastructure and supplier networks Modern and well equipped facilities in prime

locations across the district An open minded and receptive fire authority

WEAKNESSES Culture of change can be slow in

some areas Resistance from employee

representatives may be strong Commercial expertise may be

lacking Public opinion about what we do

may be one dimensional Limited by regulations and law Fire Authority determine the

success of projects Political involvement can restrict

flexibility Some resistance by employees to

act independently and rely on command structure

Presence in commercial market place is limited

OPPORTUNITIES Opportunities to charge due to change in

legislation Support and experience of social enterprise

activity within fire service Opportunities to explore and penetrate new

markets Differentiation of service offering Re-branding and reaching new consumer

markets Strong technological expertise input to carry

project forward Ability to move business in direction that is

profitable To increase community engagement and

activities as a result of surplus profits To pioneer processes and be a leader in its field

THREATS Consumer resistance to product Competition provides better offering Emergence of substitute products Product positioning is misplaced Increase of barriers to entry Lower priced alternatives can be

sourced Other experts are competing Economic environment determines

spending power Change in regulations

08 Project communications Branding When taking a product or service to the market, the position at which it is branded will determine the cultural perception that is created by consumer perception. Its brand will present its trademark by which it is associated and expectations of the people that use it and develop expectations that the product or service has certain qualitative or unique characteristics.


MFRS has existing brand recognition and is easily identifiable by the marketplace and/or industry. The brand adds value to the services that it already provides. One consideration when choosing a brand name for the social enterprise is that the associative brand name is aligned – unless it is decided by the Board that a company is set up for trade. MFRS holds the branding of its social enterprise as a critical component of its projects’ success. The Board will need to decide upon a single brand identity or individually apply a brand to single projects. A marketing design company will be sourced to create an appropriate and agreeable brand name that presents optimal positioning in the market and captures the core components of the offering. The costs associated with the design and creation of a positive, inspiring and professional brand name and logo are being considered and quotations sourced for work. Once the projects to be undertaken have been chosen, this may potentially influence any designs or names considered. Updates will be provided about this. 09 Reward Strategy To achieve the objectives of the social enterprise, commercial venture strategies and project initiation documents are paramount to the drive of this function and motivation for entrepreneurship. To encourage innovation and entrepreneurship a reward strategy is being considered and proposals are being drawn by the Social Enterprise Manager and Director of People and Organisation Development. Updates will be provided about this. 10.0 Social Enterprise Scoring Matrix The scoring matrix below presents a template for inputting the summarised findings by the Social Enterprise Manager from the Project Developer. The scoring matrix document will be reviewed by the Project Board and items scored based on the financial and strategic objectives and other key considerations presenting a final grand total weighting. The weighting system is set within a fair boundary, allowing all items to receive equal evaluation and no one measure deemed as more important than the other. This process can be adapted by the Board as is seen fit. Project Manager Details Name Department Project Details Title

Brief Summary of Project Anticipated Start Date Anticipated End Date


1. Financial Appraisal

Fixed Costs 2009/10 £

2010/11 £

2011/12 £

2012/13 £

Post 2012/13 £ Total £

Total Fixed Costs

Variable Costs 2009/10 £ 2010/11 £

2011/12 £

2012/13 £


Total Variable Costs

Inputs and Revenue 2009/10 £ 2010/11 £

2011/12 £

2012/13 £


Total Revenue Inputs 2. Strategic Objectives Score 0 to +5 The score should reflect the degree to which the project meets the strategic objectives: Score Detail 2.1 Community Value provision of a better service to the community (Please give reason for score) 2.2 Health and wellbeing Improves the health and wellbeing of Merseyside community (Please give reason for score)


2.3 Social Enterprise Provides a substantial income stream worthy of an investment of time, resources and finance. (Please give reason for score) 2.4 Employee Engagement

Develops and enhances work force skills taking ownership for project and delivery (Please give reason for score) 2.5 Resources and Skills Optimises and takes advantage of in-house core skills and competencies (Please give reason for score) 2.6 Investment and initial set up Provides good potential prospects with low cost/affordable investment (Please give reason for score) 2.7 MFRS ethos In line with corporate and wider objectives set by MFRS and local authority (Please give reason for score) 2.8 Timely and Efficient Objectives can be achieved in a timely and efficient manner and meet project deadlines (Please give reason for score) 2.9 Performance Enhances performance, credibility and public opinion of MFRS (Please give reason for score) 3.0 Premises and or location MFRS has substantial premises or location to facilitate operations (Please give reason for score) Total Strategic Priorities (Weighting) 0


3. Key Considerations Score (-5 to +5) 3.1 Maintaining the assets and reserves of MFRS (Please give reason for score) 3.2 Investment payback period and ROI identified (Please give reason for score) 3.3 Implications if the project does not go ahead (Please give reason for score) 3.4 Project is in line with MFRS objectives and does not risk the public image unfavourably (Please give reason for score) 3.5 The level of internal resources required by the project (Please give reason for score) 3.6 Any additional or possible opposition considered as exceptional work obligations (Please give reason for score) 3.7 External risk factors considered and unwanted media attention as a result of project failure (Please give reason for score) 3.8 Contingency plans and risk management identified in project initiation document (Please give reason for score) 3.9 Pricing Strategy reflects competitiveness of major market players and localised suppliers Total Key Considerations (Weighting) 0


4. Other Considerations Score (-5 to +5) 4.1 Improving Service Delivery (Please give reason for score) 4.2 Any external funding/sponsorship attracted by project (Please give reason for score) 4.3 Community support required (Please give reason for score) 4.4 Insurance and legal implications acknowledged in project initiation document (Please give reason for score) 4.5 Infrastructure or facility requirements identified and deemed appropriate (Please give reason for score) 4.6 ICT implications - cost, time and infrastructure (Please give reason for score) Total Other Considerations (Weighting) 0 Grand Total Weighting 0


11.0 Project Initiation Document Project Details Project Name Project Manager Department Start Date Completion Date Document Details Version Status

(Draft or Approved)

Date Author/Editor Details of changes

Background to the proposed work Background – describe the potential change, idea, and problem. Where it fits into the wider MFRS business strategy. Why it should be done now and the implications of not doing it

Objectives SMART Objectives should provide a clear definition of what the project must achieve in order to be complete and successful. Project objectives should contribute towards and be consistent with MFRS strategic objectives.

Scope The Scope should make it clear what are the boundaries of the work, what areas of work will be included and what is outside the scope. Where work could or should be divided into phases, a definition of scope for each phase should be given e.g. who will be affected by project, the geographical impact, who will be involved in the running of the project if known.

Business Case (Benefits and Costs) What are the desired benefits to be gained from undertaking this project, the value and estimated timing for realisation of each benefit? Identify any key risks or critical success factors affecting achievement of the benefits; identify any known costs and person effort and timing. Add any other information you consider will add further weight to this justification.


Constraints Detail any that you must take into consideration during the project and may include such things as deadlines, standards, regulatory requirements, a major dependency on another project and resource constraints to limit the project delivery.

Risks, issues and dependencies A summary of the most significant threats and opportunities facing the project and how it is intended to manage them. The detail of risks and management actions could be detailed in the template below.

Risk Probability Impact Owner Mitigation strategy

Other areas of business affected Other areas of MFRS likely to be affected by the outcome of the project.

Project Quality Plan Detail the process by which quality will be managed to ensure that the deliverables are achievable and of a high quality outcome.


Strategic Alignment Using the scorecard, measure the improvements expected as a result of your project development and mark with an ‘x’ where applicable.

Improvement

Non

e

Ver

y Low

Low

Med

ium

High

Ver

y High

Social Enterprise Performance Goals 0 1 2 3 4 5 Opportunity for involvement and engagement

Interaction and communication Reduction in hoax and false alarms

Community

Health and wellbeing

Employees Skills and core competencies enhanced

Service Response Times Effectiveness & efficiency

Steady income flow Great market coverage Commercial

Viability Ability to capture new internal skills

MFRS In line with strategic vision and long term goals Reinvestment into socially beneficial projects Opportunities for expansion following project success Brand Good public image retained Better placement in heart of community Open & honest


Major dependencies This may be defined in terms of such things as products/deliverables, resources, decisions, legislation, environmental conditions, economic conditions etc.

Project Organisation Resources – give a detailed assessment of the resources you need to complete this programme or project. This should include staff, skills and also any infrastructure requirements.

Project Plan Costs – Provide detailed estimates for the cost of completing this project based. The timing and amount of major expenditure should be described.

Revenue Pessimistic Realistic Optimistic Total Monthly Revenue Total Annual Revenue

Delivery & Ongoing Costs Cost (£) Variance (+/- %) Total Delivery Cost £ Total Capital Expenditure £ Total Ongoing Cost Per Annum £ /year 3-Yr Cost of Ownership £

Any other issues specific to this project


End of Document


Appendix 1: Project Timeline – Social Enterprise

Job Ref Job Responsible

Sep-09

Oct-09

Nov-09

Dec-09

Jan-10

Feb-10

Mar-10

Apr-10

May-10

Jun-10

Jul-10

Aug-10

Sep-10

1 Prepare feasibility model and Project Initiation Document template Social Enterprise Manager

2 ELT and CLT report - Framework for establishing a social enterprise

Social Enterprise Manager, represented by Exec Director of Resources

3 Establish internal Social Enterprise board Social Enterprise Manager

4 Prepare options for social enterprise branding Social Enterprise Manager

5

Agree standard for feasibility model, scoring matrix and project initiation document Social Enterprise Board

6 Invite Project initiation documents Income stream owners

7 Assess and scoring of project initiation documents for full business case

Income stream owners & Social Enterprise Manager

8 Prepare full Business Case for potentially beneficial project selection

Income stream owners & Social Enterprise Manager

9 Business Cases Considered by Board Social Enterprise Board 10 Board Approval of projects submitted Social Enterprise Board

11 Approval by Authority for project submitted MFRS Authority

12 Set up company model and support initial investment requests MFRS Authority

13 Establish social enterprise initiatives Income stream owners & Social Enterprise Manager

14 Ongoing review and assessment

Exec Director of Resources & Social Enterprise Manager


Appendix 2: Project Feasibility Model for Major Investments

1 Preliminary Review 2 Detailed Review 3 Execution and

Monitoring 2b Conduct detailed review and due diligence

Is investment being reviewed at the right organisational level?

Does MFRS have the legal power to make proposed investment?

1a Evaluate fit with social enterprise brief

1b Conduct scoring matrix evaluation

1c Produce business case for detailed board review

2a Commit necessary and skilled board members to process review

2c Determine finance structure & potential ROI

2d Decide if investment should be pursued, renegotiated or cancelled

3a Determine project plan and expected returns

3b Deliver project

Project initiation document Board review Financial Risk Decision to Final board submitted to Social Enterprise Manager Assessment invest report


1. Preliminary Review












3b Deliver project


Checklist key components: Preliminary Review 1a Evaluate fit with social enterprise brief 1b Conduct scoring matrix evaluation 1c Produce business case for detailed board

review What is the strategy of the project? Does it comply with strategic objectives and aims of

the social enterprise brief? Does it aim to socially improve the community of

Merseyside in making it safer, stronger and healthier?

Does it present a strong case for an anticipated return on investment?

Does the project present a realistic time frame for achievement?

Does the report quantify resources required and manpower for project success?

Does the workforce present relevant skills to conduct business practice?

Will existing infrastructure, ICT and facilities enable successful delivery?

Has a preliminary breakeven plan been conducted and an expected ROI identified?

Detail the strategic obligations of the project plan Complete and evaluate the scoring matrix for projects Is this project comparative to competitive offering

that may pose too great a threat?

Is the investment affordable and does it offer longevity?

Consult with financial experts for projections and forecasts

Submit a business case prior to board for potentially successful PID’s


2. Detailed Review












3b Deliver project

Project initiation document Board review Financial Risk Decision to Final board submitted to Social Enterprise Manager Assessment invest report Checklist key components: Detailed Review 2a Commit necessary and skilled board members to process review

2b Conduct detailed review 2c Determine financial structure & potential ROI


Are all external advisors to be consulted in place?

What are the contingency plans if personnel leave or unable to attend?

Does the project plan clearly define roles and responsibilities?

Are the board members committed to acting in a fair and reasonable manner?

The board will hear only those projects which perform favorably in the scoring matrix

Have all key issues been taken in to account: finance, Staffing, infrastructure?

Has a risk assessment been completed?

Has a process for managing risk been refined?

Is a communications plan agreed? Have relevant internal and external

agents been appropriately engaged to deliver an informed PID?

Is the plan deemed potentially successful by internal management?

Carry out due diligence process

Is the project viable in terms of: initial investment, predicted turnover and in line with forecasted ROI?

Will any external funding be sourced to support?

What business model will be adopted to set up venture – subsidiary, joint venture, new company etc

Final review and decision on progress of business case.

Provide recommendations if alternative routes to be taken.

Terminate progress if idea is considered too risky or problematic.


3. Execution and Monitoring












3b Deliver project




Checklist key components: Execution and monitoring 3a Determine project plan and expected returns

3b Deliver project

Is the finance structure sound? Has it been signed off by relevant stakeholders –

board and authority? Has a communication and marketing plan been

considered? Have the following been agreed:

- Leadership structure - Investment support - Resource allocation - Legality and insurance - Conflicts of interest

Is the long-term management structure in agreement?

Is appropriate project manager in place with skills to deliver the project effectively?

Have timely objectives been prescribed to measure success?

How will the project be monitored, reviewed and evaluated?

Are contingency plans in place to redesign project if key trigger points are established?

Are all external suppliers and stakeholders ready to go live?

Appendix 3: Legal structures for projects within Social Enterprise Legal structure Summary

- most typical

features

Ownership, governance

and constitution

Is it a legal

person distinct

from those who

own and/or run

it?

Assets "locked in"

for community

benefit?

Can it be a charity and

get charitable status tax benefits?

Can its activities

benefit those who own

and/or run it?

Unincorporated association

Informal. No general regulation of this structure and you need to make own rules.

Nobody owns. Governed according to own rules.

No. Can create problems for contracts, holding property and liability of members.

Depends on own rules.

Would need bespoke drafting to achieve this.

Yes, if it meets the criteria for being a charity.

Trust

A way of holding assets so as to separate legal ownership from economic interest.

Assets owned by trustees and managed in interests of beneficiaries on the terms of the trust.

No. Trustees are personally liable.

No. The trustees/ directors cannot benefit, unless the trust, court or Charity Commission permit.

Yes, if the trust is established for community benefit.


Limited company (other than Community Interest Company)

Directors manage the business on behalf of members. Considerable flexibility over internal rules.

Yes. Members' liability is limited to amount unpaid on shares or by guarantee.

Most frequently adopted corporate legal structure. Can be adapted to suit most purposes.

Yes (but no dividends etc to members if it is a company limited by guarantee).

Would need bespoke drafting in articles (which could be amended by members).



Limited company structures for social enterprise with secure "asset lock" and focus on community benefit.

As for other limited companies, but subject to additional regulation to ensure community benefits.

Yes. Members' liability is limited to amount unpaid on shares or by guarantee.

Yes, but they must benefit the wider community as well. CICs can pay limited dividends to private investors.

Community interest

company (CIC)

Yes, through standard provisions which all CICs must include in their constitutions.

No, but can become a charity if it ceases to be a CIC.

Industrial & Provident

Society (IPS) (Co-operative)

For bona fide co-operatives that serves members' interests by trading with them or otherwise supplying them with goods or services.

Committee / officers manage an IPS on behalf of its members. One member, one vote (regardless of e.g. sizes of respective shareholdings).

Yes. Members' liability is limited to amount unpaid on shares.

Yes, but they should do so mostly by members trading with the society, using its facilities etc, not as a result of, for example, shareholdings.

Would need bespoke drafting in articles (which could be amended by members).

No. It would have to be constituted as community benefit type of IPS.

Industrial & Provident

Society (IPS)

Benefit the community rather than just their own members and have special reason not to be companies.

Like Co-op type, but new legislation provides option of more secure form of asset lock.

Yes. Members' liability is limited to amount unpaid on shares.

Must primarily benefit non-members; asset lock applies.

Yes (asset lock only survives dissolution if new statutory form of asset lock adopted).


(Community Benefit Society

(BenComm)

Charitable Incorporated Organisation

(CIO)

First ready-made corporate structure specifically designed for charities.

Similar to company but with different terminology (e.g. for "directors" read "charity trustees").

Yes. Members' either have no liability or limited liability.

Members: no. Charity trustees: only if constitution, court or Charity Commission permits.

Yes. Cannot be anything but a charity, and must meet the criteria for being a charity.

Source: Business Link


Appendix 4: The RAMP Model – Social Enterprise

MARKET Who is the target marketing? 4 P’s: product, price, promotion, place

Market positioning – market size and demand

POTENTIAL Project risk Core skills – is the team right for the business?

USP – do we offer something different?

Market readiness– is the target market ready for the product/service at this time?

What intellectual property do we own?

What market barriers to entry exist?

What distribution channel will we use?

ADVANTAGES What brand recognition do we possess?

How long before breakeven point?

Investment capital needed to start?

RETURN Discuss exit strategy

Revenues Vs Expenses? Is it profitable?
