Evaluating the Success Factors for Establishing a Thriving - Scottish ...

Voluntary Issues 

Evaluating the Success Factors for 

Establishing a Thriving Social 

Enterprise in Scotland 

Case Studies to Inform and Inspire

EVALUATING THE SUCCESS FACTORS FOR 

ESTABLISHING A THRIVING SOCIAL ENTERPRISE 

IN SCOTLAND 

CASE STUDIES TO INFORM AND INSPIRE 

Jonathan Coburn 

Rick Rijsdijk 

EKOS Ltd 

Scottish Government Social Research 

2010

This report is available on the Scottish Government Social Research website 

only www.scotland.gov.uk/socialresearch. 

The views expressed in this report are those of the researcher and 

do not necessarily represent those of the Scottish Government or 

Scottish Ministers. 

© Crown Copyright 2010 

Limited extracts from the text may be produced provided the source 

is acknowledged. For more extensive reproduction, please contact the 

Queens Printers of Scotland, Admail, ADM 4058, 

Edinburgh EH1 1NG. Email: licensing@oqps.gov.uk

Table of Contents 

INTRODUCTION 4 

CASE STUDY 1: IMPACT ARTS 6 

CASE STUDY 2: KIBBLE EDUCATION AND CARE CENTRE 17 

CASE STUDY 3: ABERDEEN FOYER 28 

CASE STUDY 4: ALLOA COMMUNITY ENTERPRISES (ACE) 38 

CASE STUDY 5: THE CLAVERHOUSE GROUP 49 

CASE STUDY 6: DIAL A COMMUNITY BUS BUCHAN 58 

CASE STUDY 7: THE NORTH HARRIS TRUST 69 

CASE STUDY 8: OUT OF THE BLUE 79 

CASE STUDY 9: POLLOK CREDIT UNION 89 

CASE STUDY 10: THE ISLE OF SKYE FERRY CIC 100 

CASE STUDY 11: THE BREAD MAKER 110

INTRODUCTION 

Context 

1.1 The Scottish Government has identified the important contribution of the third 

sector to sustainable economic growth, and through its Enterprising Third 

Sector Action Plan has attempted to create an environment in which social 

enterprise can thrive. Considerable resources have already been provided to 

achieve this, including direct funding for business support and a package of 

investment and business support. 

1.2 Despite much progress, the current period of public sector financial austerity 

means that the future scale and scope of support to social enterprises is 

uncertain. The full implications of the economic downturn on social enterprises 

are also still to be realised. 

1.3 It is against this backdrop that the Scottish Government’s Third Sector Division 

commissioned research to help understand the characteristics that are 

fundamental to the success and resilience of social enterprises, and the ways 

in which these characteristics might be encouraged and supported more widely 

in Scotland. 

1.4 This qualitative research study was conducted between September 2009 and 

July 2010 and was based largely on a case study research design. The full 

findings from the study have been presented elsewhere in the report 

‘Evaluating the Success Factors for Establishing A Thriving Social Enterprise in 

Scotland’. 

1.5 This supplementary report has been produced to provide a full account of the 

case studies examined as part of the study. 

Method 

1.6 The case study research explored the experiences of a diverse group of 11 

high profile, and ‘successful’ social enterprises. Three main methods were used 

as part of the research. 

A. Desk-based research 

1.7 Documents and data were examined relating to each of the case study social 

enterprises. This was intended to develop a first-level account of the origins, 

development, and characteristics of each. 

B. Organisational ‘life history’ interviews 

1.8 Initially the founders and leaders from each of the case study social enterprises 

were interviewed. A tailored ‘life history’ method was used whereby 

interviewees were invited to look back over the life of their organisations in 

chronological order and share points of learning at each stage. These semistructured, 

face-to-face interviews were used as a creative way of developing 

4

insights into the factors that underpin organisational success and resilience 

over time. 

C. Follow-up stakeholder interviews 

1.9 Follow-up interviews were then conducted with a variety of stakeholders; 

people inside and outside of the organisations that were well placed to help 

build up a rounded picture of factors that have contributed to success and 

resilience. These included a mix of board members, staff, partners, funders, 

customers, suppliers, and advisors. A total of 106 semi-structured interviews of 

varying durations were carried out; this involved an average of 10 follow-up 

interviews per case study organisation. 

This Report 

1.10 This report provides an account of the development, experiences, and learning 

from each of the 11 case study social enterprises. 

1.11 Each case study report provides: 

• the story of the development of the social enterprise, outlining key learning 

points at each life stage; 

• a diagram summarising the main internal factors and external influences 

that were identified as critical to the success of the social enterprise; and 

• a timeline charting in chronological order the main milestones and 

achievements in the life of the social enterprise to date. 

5

CASE STUDY 1: IMPACT ARTS 

Profile of Success 

Social purpose 

Impact Arts was founded in 1994 as a small commercial arts management company. 

It was established by an entrepreneur with a community education background, and 

a strong interest in the visual arts, music and drama. The company set out to use the 

arts as a catalyst for positive, lasting change in people’s lives. It uses arts, music, 

drama, dance and technology to bring out individual creativity and potential. 

Business model and structure 

Impact Arts is a charitable company governed by a board of trustees. It has 

developed into a sustainable social enterprise through securing a mix of commercial 

commissions and publicly funded arts projects and programmes. 

Markets 

Impact Arts specialises in youth arts, employability, and regeneration. Its principal 

market is the central belt of Scotland, although it provides services to third sector and 

public sector clients nationally and in the north of England. It delivers programmes 

that benefit young people, older people, and communities. 

Resources and assets 

Impact Arts operates with 42 core staff and around 60 freelance workers, based at 

offices in Glasgow (its main base, the Factory), Edinburgh, and Ayrshire. It holds a 

growing portfolio of property assets, including its main premises and four shop units 

in Glasgow. In developing a strong brand and range of trademarked programmes, 

Impact Arts holds a variety of intellectual assets which it is actively exploiting, 

Achievements and recognition 

Impact Arts is now recognised as a leading community arts company in Scotland. 

Over time it has developed a range of high-profile flagship programmes including 

Creative Pathways, Fab Pad, Gallery 37, and Home (Furniture). During 2008/09, it 

delivered 90 projects across 14 local authority areas, involving more than 4,800 

beneficiaries. During the year it also delivered almost 2,300 workshops, exhibitions, 

and performances. 

Financial performance 

Impact Arts has experienced a period of incremental then accelerating financial 

growth, with turnover across its operations having increased from £45K during 1995 

to more than £1.8m in 2009 (generating an operating surplus of over £300K). This 

period of substantial financial growth, culminated in 2009 with a seven-year, £4.1m 

investment from the Inspiring Scotland Fund. 

6

The Story of Success 

The jumping off point 

1.12 The story of Impact Arts began in 1994, when the idea for a new profit-making 

venture was made a reality by a young, ambitious entrepreneur. 

1.13 The venture was founded by a 24-year-old with a community education 

background and a strong interest in the visual arts, music and drama. It was 

conceived as a small company that would use arts as a tool to bring out 

individual creativity and potential within Scotland’s most disadvantaged 

communities. 

1.14 The ‘jumping off point’ from which the idea was turned into a business was 

triggered by a number of main influences: 

• the earlier redundancy of the founder, which was viewed as a positive 

opportunity to take control and create work and an income on her terms; 

• an increasing recognition on the part of the founder of the potential to use 

the arts to bring about transformational change in people’s lives; and 

• a growing interest in community-based arts practice, together with an 

emerging public sector market for this; and 

• an ongoing desire by the founder to start her own business, having 

previously researched a number of options before focussing on this one. 

1.15 The opportunity therefore arose to marry the social passion held by the founder 

with the business and project management skills that she had developed 

through previous employment in delivering arts-based employability 

programmes. 

1.16 Combined with this social passion, a number of innate entrepreneurial 

characteristics have been identified as critical in the formation and eventual 

success of the venture: a frustration with status quo and willingness to 

challenge it; significant ambition and determination to succeed; a readiness to 

take calculated risks; a strong competitive streak; a commercial outlook and 

general interest in business; the ability to quickly spot opportunities; and a ‘cando’ 

attitude, with a focus on solutions rather than problems or obstacles. These 

together with a strong sense of self-reliance and confidence were developed in 

formative years, being brought up in an entrepreneurial family and having lived 

and studied independently in Europe as a young adult. 

1.17 This alchemy of factors led to the creation of a new venture that drew its 

inspiration from both the private sector and other established voluntary sector 

arts organisations. It started modestly, with the founder operating as a sole 

trader and the business operating from her home – not the way in which a 

social enterprise is conventionally understood to become established. 

1.18 As a private business that provided an income to its founder, the importance of 

profitability and self-reliance was built in from the outset. While delivering public 

good came naturally to Impact Arts, the commercial focus of the business is 

reported by the founder to have provided it with greater independence and 

7

flexibility to pursue this goal than other publicly funded arts organisations at that 

time. As an arts organisation not established by someone from an arts 

background, the company also started to carve out a reputation for thinking and 

acting differently from the competition. 

1.19 Like other new start businesses, however, Impact Arts started off slowly. It was 

not until some two years later that the reputation and income of the company 

grew sufficiently for the founder to take a full-time salary, and eventually 

modest profit, and to consider the next stages of development. 

Organic early growth 

1.20 Impact Arts grew steadily, or as the founder describes “organically”, over its 

first five years trading with various “growth spurts”. 

1.21 Over time the business model became more fully formed, with Impact Arts 

acting as an arts management company that: 

• delivered value by creating opportunities for freelance artists, using arts to 

support community work, and delivering quality projects to 

commissioners/funders; and 

• created value by charging a management fee to design and manage artsbased 

programmes and contracts. 

1.22 During this early period Impact Arts reached a number of important milestones. 

In 1995 it took a lease on its first premises. It recruited its first full-time staff 

member in the same year and in 1997 secured its first £50K plus contract (a 

commission in support of the Glasgow 1999 City of Architecture and Design). 

Each milestone was important in creating confidence and credibility in the 

potential of the business. 

1.23 This early success is attributed to a number of factors, including: 

• the range of services being offered (e.g. art, drama, design, etc.); 

• the growing track record and reputation for quality; 

• the more solid partnerships that were being developed; and 

• the capacity created to take on larger contracts and the ability to grow “just 

in time” to respond to greater demand. 

1.24 This growth was fuelled by the ability of Impact Arts to create a ‘market’ – 

despite the declining availability of traditional arts budgets – by convincing 

others of the potential to use the arts as a tool for regeneration and finding 

creative ways to finance this work. Thus meant: 

• selling the concept – it became adept at communicating the benefits of the 

arts as a tool for social change making clear, for example, the contribution 

to desired local outcomes around youth and regeneration; 

• creating market demand – it focused on educating potential clients about 

opportunities, designing projects and programmes on a partnership basis, 

and matching proposals to the funding becoming available to clients; and 

8

• ensuring delivery - it developed a strong focus on delivering carefully 

tailored projects that met or exceeded client expectations – long-standing 

clients have highlighted the responsiveness and flexibility of Impact Arts, the 

professional and businesslike way in which relationships are managed, and 

the ability to take on board feedback and constantly improve. 

1.25 As a result, the business grew approximately 50% year-on-year up to 1998/99, 

at which point turnover reached £195K and it had four staff and another 25 

freelance workers. 

1.26 At this stage Impact Arts remained a small but growing private business, with 

reasonably low profit levels. The concept of ‘social enterprise’ was in no-one’s 

vocabulary at this point. 

A period of readjustment 

1.27 The year 1999 was a pivotal one for the fledgling company due to the changing 

personal circumstances of the founding owner-manager; the individual around 

which the business was built and still depended. At this time business priorities 

gave way somewhat to family responsibilities. 

1.28 Although the business continued to flourish during the period, this and other 

factors triggered a change in structure, approach, and ownership between 

1999-2003. 

1.29 Structurally Impact Arts developed as two distinct but linked entities. This 

included the continuation of the private trading company and set up of a smaller 

‘sister’ charity: 

• in 2001 a charity was set up as a spin-off venture although it did not 

become fully operational until 2003 – this was designed to incubate and 

deliver new projects that fitted with Impact Arts social purpose and to enable 

access to contracts and funding not usually directly available to private 

businesses; and 

• in 2003 the commercial operations of Impact Arts (until then a sole trader) 

were transferred into a new corporate entity (a share limited company) – 

this was designed to give two other staff central to its success a financial 

stake in the company and to create a sustainable management structure for 

the growing business. 

1.30 The structure reportedly provided the freedom and flexibility required for a 

social enterprise and was a way of reconciling its often competing social and 

financial objectives. In this unconventional structure, the commercial company 

provided key support functions to the charity for a management fee, enabling 

the charity to deliver public good efficiently and the company to pursue its 

commercial goals. 

1.31 This transition to a new structure went hand-in-hand with strengthened 

leadership and capacity within the organisation. 

9

1.32 The new structure enabled the formation of a new business partnership at the 

top of Impact Arts, one between the founder and a new senior 

manager/shareholder. Described as a “formidable team” by one client, these 

individuals brought a shared vision, together with equal determination and 

dynamism, and a complementary set of skills. The capabilities and strength of 

this team is widely regarded as the single most important factor in the 

subsequent success of the social enterprise. 

1.33 This ushered in a revolution in leadership. Supported by participation in the 

Common Purpose leadership programme, the management team at Impact 

Arts worked hard to build on their existing leadership skills, developing the 

qualities required to see the need for change, find the solutions, and encourage 

others around them. With this came the development of professional networks, 

influence, and partnerships with like-minded people. 

1.34 The leaders in the organisation recognised the importance of surrounding 

themselves with the right people. Great emphasis went into recruiting staff, 

based both on the skills that they brought as well as their commitment to 

community-based arts practice and the values of the organisation. This brought 

together people from different backgrounds and disciplines, but ensured a 

shared sense of purpose and supportive team culture. 

1.35 This period of consolidation and refocusing saw turnover rise to around £460K 

by the end of 2002, with 11 core and 40 freelance staff working for Impact Arts. 

It kick-started new service innovations, such as the development of the high 

profile Fab Pad Programme, and provided the basis for the next phase of rapid 

growth. 

Managing the take off 

1.36 From 2003 the growth of Impact Arts accelerated and the organisation began to 

reach new heights. One senior staff member describes the emergent strategy 

as one of “planned, organic, opportunistic, and risky growth all at once”. 

1.37 Significant service diversification and expansion was evident. Reactive smallscale 

commissions increasingly gave way to large flagship programmes (e.g. 

Creative Pathways, Fab Pad, Gallery 37, Home, etc.); these used the arts as a 

tool for employability and housing-led regeneration. This created the 

opportunity for grants and contracts of a significantly greater scale, and 

positioned Impact Arts as a leader in new niche markets. 

1.38 Physical and geographic expansion followed. Initially, the organisation took on 

significantly larger premises in Glasgow (the Factory) before adding a second 

facility in the city (Creation Zone). Further bases were subsequently 

established in North Ayrshire and Edinburgh, driven by new partnerships and 

projects in these areas rather than any planned strategy of geographic 

expansion. 

1.39 By 2009 turnover had increased to £1.82m, with 35 core and 80 freelance 

workers. Modest sustained levels of profitability were being achieved. 

10

1.40 Staff, directors and partners have pointed to a number of main factors that 

underpinned this period of growing success for Impact Arts: 

• the driven, ambitious, and entrepreneurial leadership in the organisation, 

centred on a willingness to take calculated risks and do things differently; 

• a strong and unique product/service offering, of value to funders and 

commissioners outside of the arts field; 

• the ability to ‘sell’ the benefits of arts work, using tools such as Social 

Return on Investment to demonstrate impact; 

• commitment to excellence in the arts and focus on quality of delivery, 

described as “a feel of quality throughout” by one client; 

• the ability to continually think creatively about new ways of meeting 

customer needs; 

• forming and managing effective relationships with like-minded partners and 

customers around areas of mutual benefit; 

• committed and flexible staff, that are nurtured and made to feel valued and 

part of larger ‘family’; 

• considerable commercial acumen and a “product-driven approach”, evident 

in the development, trade-marking, and selling of new programmes; 

• a self-critical stance, where management continuously strives for 

improvement, with the mantra “you’re only as good as your last project”; 

• a non-hierarchal, non-bureaucratic structure where ideas are encouraged, 

and constant innovation and change evident; 

• an openness to new ideas and business practices, taking inspiration and 

learning from the private sector in particular; and 

• a mission-driven approach, and as one senior manager describes it 

“focusing on how we can best achieve outcomes, rather than achieving 

organisational stability or protecting jobs or position”. 

1.41 While it might be suggested that Impact Arts has benefited from a number of 

‘lucky breaks’, including an increasingly supportive policy and funding 

environment, there is a sense as one director describes that “the harder you 

work the luckier you get”. Impact Arts has proven adept at spotting 

opportunities created by new public sector policies, initiatives, and funds and 

turning these into programmes of value. 

1.42 These factors contributed to a period of rapid, if unbalanced organisational 

growth. The programmes delivered through the charitable arm of Impact Art 

expanded rapidly, bringing with them new staff and resources. Conversely, the 

private trading arm was deliberately and steadily wound down, although the 

company was retained to allow commercial flexibility. 

1.43 This period brought the need to keep up with the pace of change. Challenges 

have been reported by the management team in juggling competing agendas, 

keeping artistic quality high, maintaining a dynamic work environment, 

communicating across a larger organisation, staying true to founding values, 

delivering on customer expectations, and continuing to innovate while running a 

profitable and growing social enterprise. 

11

1.44 This period required determined action to steer a steady path to growth. 

Insiders and outsiders to the organisation have commented on the incredible 

drive, determination, and focus demonstrated by the leadership of Impact Arts 

during this period. 

1.45 This was accompanied by investment in the infrastructure required to help 

manage a growing business (e.g. IT, financial, HR systems, etc.) – what one 

senior staff member describes as “making the right investments at the right 

times”. 

Investing to reach the big league 

1.46 The latest period in the life of Impact Arts has been based on another 

significant increase in scale and capacity, brought about by a package of 

outside investment. 

1.47 By 2008 Impact Arts began to outgrow the organisational structure established 

in 2003. The business model had also shifted to one based more on charitable 

and publicly funded work. The fast growth in turnover was not matched by 

growing profitability, given the low profit margin possible on the programmes 

delivered. This meant that the organisation, despite significant scale and 

success, had become increasingly undercapitalised and held insufficient capital 

reserves. 

1.48 All alternative means of building financial strength were explored, including 

asset acquisition, service franchising, etc. At this point an important strategic 

decision was taken to further ramp-up the scale of business, open up new 

income streams, and strengthen the balance sheet of the organisation. This 

decision to ‘go for growth’ is typical of what has been variously described as 

“instinctive”, “tough”, and “courageous” decision-making at the top of the 

organisation. 

1.49 The ideal ‘investment partner’ to help bring forward plans was identified as 

Inspiring Scotland – an independent venture philanthropy investor born out of 

the Lloyds TSB Foundation for Scotland. This investor was able to provide 

significant, long-term, and outcome-based funding. A flexible £4.1m grant was 

provided over seven years (as part of a £13.7m investment package). 

1.50 This substantial investment provided a financial platform on which to grow the 

organisation in line with agreed income targets. It provided ‘front-loaded’ 

funding that enabled Impact Arts to bring forward at once all of the main 

elements of its ambitious development plan. It also ‘catapulted’ Impact Arts to a 

different scale, and further raised its profile as an ambitious and growing social 

enterprise. 

1.51 This investment has triggered a process of major restructuring in the 

organisation. Governance and management arrangements have changed, with 

the private trading arm of Impact Arts being wound up completely and all 

operations directed through the charitable company. 

12

1.52 As part of the arrangements senior staff members (the original directors of the 

trading company) will continue to serve as executive directors of the charitable 

company (an unusual but by no means unique structure in the third sector). 

This is regarded as important to provide continuing sense of ‘ownership’ and 

responsibility among the senior staff, and ensure a close working relationship 

between senior staff and other voluntary directors. This is seen as the right 

structure to release rather than constrain the entrepreneurial talents of the 

management team. 

1.53 This builds on the platform already provided by highly capable and mature 

voluntary board of directors. Senior staff have reported the expertise and 

networks of board members as central to the success of Impact Arts during this 

stage of its development. 

1.54 External support through this period of transition is regarded as important by 

senior staff, whose approach has always been to draw on available 

professional advice where available and beneficial. Current support valued by 

the organisation includes: 

• change management support from CEiS to the Impact Arts board, this 

offering particular expertise in social enterprise growth; 

• business advice from Scottish Enterprise, supporting Impact Arts as a 

growing business like any other; and 

• continuing guidance and advice from Inspiring Scotland performance 

advisors, providing a highly engaged and supportive funding relationship. 

Managing in a time of recession 

1.55 The impact of the recent economic recession has triggered a much more 

challenging operating environment for Impact Arts. 

1.56 Senior staff have monitored closely the changing economic conditions and any 

resulting changes in purchasing behaviour of public and third sector customers. 

Some detrimental effects began to emerge during 2009, with planned projects 

not being initiated and some existing ones cancelled. This suggested some 

‘tightening of belts’, with one public sector partner also highlighting that funders 

and commissioners had began to increasingly “look for more bang for their 

buck”. 

1.57 As a result Impact Arts began to introduce tighter financial controls, monitor 

cashflow more closely, and streamline costs where possible. At the same time 

it secured major financial investment from the Inspiring Scotland Fund, which 

provided a cushion on which to build financial strength, and one which would 

help guard against any short-term financial shock. 

1.58 However, the recent rapid growth of Impact Arts and the formation of 

associated investment plans occurred against the backdrop of the looming 

recession. With turnover approaching £2m, and ambitious income targets 

‘locked in’ for subsequent years, this brought a new form of pressure – as one 

staff member puts it “we now need to be on top of our game”. This has been 

brought into stark focus as the full scale of the reduction required in public 

13

spending has become clearer, and given the vulnerability of the arts as a 

discretionary area of spending. 

1.59 Impact Arts has reacted to these challenges in a buoyant and optimist fashion: 

• the management team in the organisation have chosen to focus on the 

opportunities (rather than threats) likely to arise from the ‘shake out’ in the 

market and the loss of capacity or outsourcing possible in the public sector; 

• staff have highlighted the ability of the organisation to adapt positively to 

change suggesting that, “we are always able to roll with the punches” and 

“we have an ability to problem-solve at an incredible rate”; and likewise 

• partners and funders have reported an underlying resilience on the part of 

Impact Arts that is likely to see it thrive during difficult times, citing its 

determination and self-reliance and noting that “they don’t act like victims, 

and don’t ask for hand outs, they just get on and deliver”. 

1.60 Most importantly, Impact Arts has reacted decisively. New plans, programmes, 

partnerships, and propositions have been developed quickly. Aggressive sales 

plans are in place and are now set in motion. 

Looking to the future 

1.61 Over the medium term, Impact Arts will pursue a strategy based on continued 

growth and development. 

1.62 Key elements of the strategy will include: 

• scaling up – including the roll out of proven programmes and services to 

new local authority areas and clients; 

• new enterprise activities – exploring opportunities to develop new social 

enterprises, franchise established services, or acquire new businesses; 

• organisational infrastructure – developing premises, strengthen branding, 

improving IT, and introducing new core staff posts; 

• asset acquisition – purchase of the main Impact Arts base in Glasgow, 

together with other property holdings to create an appreciating asset base, 

reduce indefinite rental costs, and generate longer term rental income (from 

sub-letting arrangements); and 

• innovation – investing in the development of new ideas that will be the big 

programmes of the future, this as part of Innovation Space programme. 

1.63 This is a strategy that is likely to lead to Impact Arts operating on a stage 

covering the whole of Scotland and beyond. Impact Arts continues to remain 

open to all possibilities for service and geographic expansion. 

14

Summary of Key Success Factors and Influences 

15

Timeline 

Timeline Event 

1994 Impact Arts established as private business 

1995 Part office leased in community centre in Maryhill 

1996 Contract secured to research art and regeneration at Strathclyde University 

1996 First full-time staff member employed 

1997 Lottery funds used to create opportunities for new arts projects 

1997 First high-profile public art project delivered - Woodland Mosaic Project 

1998 First Department of Work and Pensions (DWP) contract secured for Artworks 

1998 Two-year project supported by Glasgow 1999 City of Architecture and Design 

1999 First 3-year project delivered with Lottery funding 

1999 Major 3-year contract secured by from Glasgow City Council 

1999 Fab Pad project initiated 

2000 Current Director appointed as a staff member 

2001 Formation of an unincorporated charity as part of Impact Arts group 

2001 Investment in leadership through Common Purpose Matrix programme 

2003 Expansion into a new leased building 

2003 Impact Arts trading operations incorporated as a shared ltd company 

2003 Impact Arts charity incorporated 

2003 Expansion into the Factory – a 7000 sq ft rented property in East Glasgow 

2003 Head of Development appointed – larger scale multi annual projects secured 

2004 Creation Zone established through significant 2-year DWP innovation funds 

2005 North Ayrshire team established 

2006 Internal restructuring, with a senior staff member appointed as Director 

2006 Edinburgh Base established with project with Castle Rock Edinvar HA 

2007 SROI Report published on North Ayrshire Fab Pad project 

2007 Edinburgh office established 

2007 Development of growth plan in preparation for bidding to Inspiring Scotland 

2007 Alliance formed with Cassiltoun HA and arts studio created in Castlemilk 

2008 First year of Caring Christmas Trees Social Franchise 

2008 Ayrshire office established 

2008 First Craft Café programme for older people established 

2008 Seven year investment funding secured from Inspiring Scotland 

2009 Purchase of Factory and 4 other project bases in Glasgow 

2009 Creation of corporate services team dealing with finance, HR and Operations 

2009 Roll out of Fab Pad, Gallery 37 and Creative Pathways across the country 

2010 Organisational restructure with private trading company wound down 

2010 Further property acquisition and social franchising of key programmes 

2010 Launch of Urban Green, new creative environmental programme. 

2010 Borders office and team established 

16

CASE STUDY 2: KIBBLE EDUCATION AND CARE CENTRE 



In its earliest incarnation in 1857 Kibble was established as a farm reformatory 

school as a result of a charitable endowment from a wealthy Paisley textile family. 

Despite many changes over subsequent years, the mission of Kibble remains the 

same; to provide a stable, purposeful, safe and happy environment for young people 

in trouble. 


Kibble operates as a Company Ltd by Guarantee with charitable status. It is wholly 

owned by the Kibble Trust, and pursues the charitable objectives of the Trust. 

Services are provided on a fee paying basis to local authorities across Scotland and 

the north of England. Income is also generated through 13 new social businesses 

that trade on the skills and products created by young people in its care. 

Markets 

Kibble provides services to young people from throughout Scotland who have a 

complex mix of social, emotional, educational and behavioural problems. It provides 

a uniquely integrated array of specialist services including secure accommodation, 

intensive residential and community services, a full educational curriculum, specialist 

fostering and integrated transitions with training and employment. It operates in a 

highly regulated and scrutinised market, subject to inspection in relation to residential 

care, education, health and safety, and environmental standards. 


Kibble holds tangible assets of around £12.6 m, bound up in its 18 acre campus that 

contains residential units, day units, educational, recreational, and leisure facilities as 

well as a range of off-site facilities (a Community House for care leavers and 

employment training workshops). It draws on the skills of a workforce of 322 FTE 

staff members, including a senior management team of five experienced individuals. 


Kibble is one of Scotland’s largest social enterprises, which supports in the region of 

150 vulnerable young people each year. In recognition of its achievements, it has 

previously received a range of awards including Scottish Business in the Community 

Social Enterprise of the Year Award, the Enterprising Solutions Young Social 

Enterprise Award, and the Upstarts Social Enterprise of the Year Award. 


Kibble is firmly established as a social enterprise with approximately 93% of turnover 

from trading income. Its turnover now exceeds £19m per annum, derived largely from 

those fees paid by 26 Scottish local authorities and supplemented by a blend of 

grants, gifts, and donations. Annual profit equates to around 1% of income, with £7m 

currently held in reserve. 

17


An early form of social enterprise 

1.1 The story of the Kibble Centre starts not in recent decades, but in the middle of 

the 19 th Century, when state provision was largely absent 

1.2 The Kibble Reformatory Institution (a farm school reformatory) was founded in 

1857 by a charitable endowment from Elizabeth Kibble who came from a 

wealthy Paisley textile family. In her last will and testament of 1840 she laid 

down that the money be used to “found and endow in Paisley an Institution for 

the purpose of reclaiming youthful offenders against the laws.” 

1.3 Kibble in its earliest incarnation survived by providing trades training to young 

offenders, charging placement fees to ‘Boroughs’ (Councils) across Scotland 

and generating income through the sale of products from the farm and 

workshops. 

1.4 Over time Kibble appears to have operated successfully with a strong local 

identity and independent governance by prominent local trustees. This strong 

community ‘grounding’ has continued seemingly uninterrupted for more than 

150 years, and is reported by staff at Kibble as contributing factors in the 

organisation’s success. 

1.5 Despite gaps in the archive, an oral history project exploring the story of Kibble 

has suggested that the school has always been innovative in its approaches 

and methods. Kibble has also continued on its original site, holding true to its 

ethos of offering care, education and support to young people in trouble. 

Public sector influence, dependence, and decline 

1.6 For almost 80 years, until the 1930’s, Kibble operated as an early form of social 

enterprise before becoming increasingly dependent on public funding, 

legislation, and support. 

1.7 A turning point came with the Children and Young Persons (Scotland) Act 1932 

when reformatory schools were re-designated as Approved Schools and 

regulation transferred to the Scottish Education Department. This, along with 

the central funding that was introduced, provided greater uniformity and stability 

to the services that Kibble provided but greatly reduced its independence and 

flexibility. 

1.8 For most of the 20 th Century, central and local government grants funded 

Kibble's work. During this period of public sector influence and control, it seems 

likely that the ability to retain strong influence and connections with the public 

sector became increasingly important to the success of Kibble. 

1.9 Despite taking various forms over the years in response to the changing 

Government policy, another key change occurred in 1986 when responsibility 

for funding to Kibble was handed over to Strathclyde Regional Council. 

Subsequent changes in social policy and the community care agenda together 

18

with a reduction in Government funding for the residential school sector then 

led to a decade of public under-investment in Kibble buildings, resources and 

staff. 

1.10 The early 1990’s saw Kibble with, as one staff member serving at the time 

describes, a “stagnant organisational culture” slow to grasp opportunities. 

When new Executive leadership was put in place in 1993, there was said to be 

a “dawning realisation” of the precarious position of the organisation in light of 

the profound changes around it. 

1.11 The make or break moment for Kibble came in 1 April 1996 when Strathclyde 

Regional Council ceased to exist and new unitary authorities were created. 

This meant that Kibble lost its sole funder and its ‘block grant’, which one senior 

staff member describes as providing “stability and comfort”. It also meant the 

loss of logistical and administrative support (e.g. access to vehicles, accounting 

and HR services, etc.) on which Kibble had come to depend. 

1.12 Members of the Executive Team at Kibble at the time variously reflect on this 

crisis point as a ‘sea change’ where the “rules of the game changed overnight” 

and the safety net of grants was gone. This, as with earlier changes in Kibble’s 

operating environment highlights the profound influence and impact of a 

sudden change in public policy, legislation, or structure. 

1.13 This did not provide fertile ground on which to grow a new social enterprise. At 

this point, facing closure, Kibble was left with ageing dormitories and low staff 

ratios, an occupancy rate of only 50%, an outstanding debt of £80K to pay, 

annual costs of £1.4m to cover, and a staff team of around 60 to support. 

Social enterprise or bust ... the struggle for survival 

1.14 The position Kibble found itself in during 1995/96 left it with a straightforward 

choice; to either close the organisation, or vigorously ‘sell’ its education and 

residential care services to local authorities throughout Scotland. 

1.15 Senior staff and directors chose the latter; a courageous decision at the time 

given the plight of the organisation, and one which demonstrated a strong 

instinct for survival among staff. It was a decision that eventually led to the 

transformation of Kibble from a grant dependent voluntary organisation into a 

successful social enterprise. 

1.16 This resilience in the face of adversity is attributed by those in a position of 

responsibility at the time as being largely due to the influence of a group of likeminded 

and experienced senior staff members at Kibble, with: 

• strong and practical experience of the education and care sector; 

• a belief that there was “something worth saving” in Kibble; 

• an understanding of the importance of operating Kibble as a business; 

• a strong range of business skills (e.g. two of the four senior managers held 

MBAs), which was relatively uncommon in the voluntary sector at the time; 

• an adaptive and flexible attitude combined with a shared sense of purpose 

and an ability to take the ‘long-view’; and 

19

• an underlying perseverance and courage to see changes through. 

1.17 Kibble staff members and outside agencies credit the current Kibble Chief 

Executive (appointed in 1993) as a vital catalyst to change. This individual has 

been characterised as having a range of socially entrepreneurial 

characteristics, including leadership, drive, ideas, connections, knowledge, 

business acumen, and a social passion. He has also been variously described 

as bringing “vision and a renewed purpose” as well as “energy and sense of 

adventure”. 

1.18 Also credited as critical during this period, and subsequently, is the role and 

expertise of Trustees. These prominent and well connected individuals, mainly 

from the business community, provided confidence in and support to staff at 

vital times. They also provided a range of commercial, legal, and business 

development skills. This seems to build on a long tradition of strong 

Trusteeship from local business leaders and officials over the course of the 150 

year history of Kibble. 

1.19 Senior staff and Trustees worked closely together through this period to 

redesign and restructure Kibble. Key steps were required to re-assert the 

independence of Kibble and create a social enterprise that was fit-for-purpose: 

• extensive consultation with existing stakeholders (including the bank) and 

development of a business plan focused on ensuring survival in the short to 

medium-term; 

• the creation of a company limited by guarantee with charitable status to act 

as the operating arm of Kibble and creation of an Executive Board (a model 

unusual in the third sector) – in this new structure the four senior staff 

became Executive Directors, providing as one describes it “a sense of 

ownership” and enabling close and direct communication with Trustees; 

• the development of an organisational infrastructure – in-house HR, finance, 

ancillary, ICT, fundraising, communications, etc. – that reflected Kibble’s 

new independent status; and 

• revitalising the organisational culture by appointing new staff in key 

positions, empowering them to lead change and improvement within their 

service area, developing new ways of working, and instilling a more 

commercial focus. 

1.20 The transformation of Kibble was a process that required time. Concerns for 

the next five to six years were dominated by the day-to-day struggle for 

survival. This period has been characterised by senior staff as a period living 

“hand to mouth”, involving a “complex” and “messy” process of change, and 

one that required great determination to overcome daily challenges. Survival 

was considered the ultimate test of success during this time when many other 

residential schools were closing. 

1.21 The critical challenge was to form productive new business relationships with 

local authorities. During that period Councils were coming to terms with budget 

limitations following reorganisation, were unwilling to give up the ability to set 

the price for services from the third sector, and were unfamiliar with forming 

20

contracts with social enterprises. Kibble was also starting to “swim against the 

tide” of social policy which favoured community-based alternatives to 

residential care. Together these influences meant that prospective local 

authority purchasers were determined to stop using Kibble where alternative 

arrangements could be found. 

1.22 This led to ongoing and long-running negotiations and tensions with local 

authorities who for the time being remained dependent on Kibble services. This 

required Kibble to assert its independence and stand ground on negotiations 

around price and service specifications. It meant saying ‘no’ to important 

Council customers and withholding services, where they were unable or 

unwilling to pay an economically viable price or where the resulting quality of 

the service would be comprised. Perseverance eventually resulted in a 

breakthrough whereby Kibble was able to set prices and admission policies, 

and agree ‘spot purchasing’ arrangements with a growing number of local 

authorities. 

1.23 During this prolonged period of hardship, the ability of the Executive team to 

make quick and effective decisions was critical. One account from a senior staff 

member notes that “what was most encouraging was how much we got right – 

and many of the things that we got wrong were because we underestimated 

demand and the scale of changes coming”. 

1.24 While the attention of managers was on survival in the early years following 

1996, the focus gradually shifted to the long-term measures that would be 

required to strengthen the position of Kibble in the new market environment. 

Unprecedented investment and growth 

1.25 Kibble began to as one manager describes it, “shift up a gear” from around 

2002 and realise the full potential of the now rebranded and reconfigured 

Kibble Education and Care Centre. 

1.26 In the period from 1996 to 2010 turnover at Kibble increased from £1.4m to 

over £18m, staff numbers have reached 322 FTE, and the number of Scottish 

local authorities it is serving has grown from six to 26 (of 32). 

1.27 This unprecedented period of growth has been enabled by a strategy based on 

significant investment. It was acknowledged by senior staff and directors from 

an early point that major investment was required in three areas to create a 

step-change in the prospects of Kibble: 

• Investment in facilities. After years of underinvestment in its 18 acre 

campus, it was recognised that the facilities that it had to offer potentially 

provided a unique competitive advantage. This signalled an investment of 

over £20m since 1996 in continuous renovation and development, including 

the opening of an £11m secure unit (the Safe Centre) in 2007. This 

provided among the best equipped facilities of its kind in the UK. 

• Investment in services. There was also recognition that to be successful 

Kibble had to provide the type of services that responded to young people’s 

21

needs and were required by local authority purchasers. This meant 

significant and ongoing innovation, development, and reshaping of services. 

It has led to a spectrum of linked, and child-centred, services that meet the 

range of difficulties faced by at-risk young people as they develop. Services 

now span intensive residential and community services, secure care, 

specialist interventions, alternatives to custody, a full educational 

curriculum, intensive fostering, enterprise and employment, throughcare, 

and aftercare. KibbleWorks was also introduced as a significant new 

enterprise and employment hub, where young people work and train 

alongside an adult who is running a commercially viable and sustainable 

social business. This combination of specialised services is unique in 

Scotland to Kibble and central to its competitive advantage. 

• Investment in people. There was recognition that staff needed to be fully 

equipped to deliver these relatively specialist services, in a field which was 

becoming increasingly regulated. Managers claim to have been extremely 

diligent in recruiting the brightest and most committed staff available. 

Tailored training programmes were also developed and there is a significant 

commitment to investing in formal and informal learning opportunities for 

people at all levels of the organisation. This has helped to create what has 

been described as a highly competitive, specialist, and adaptable workforce. 

Described as “the Kibble way” by one staff member this culture of learning 

now seems to have become embedded and has reportedly resulted in high 

levels of commitment and low levels of staff turnover. 

1.28 The willingness to make such investments appears to have created a virtuous 

cycle of growth for Kibble. New facilities, skills, and services created demand 

from local authorities, which translated into sustained occupancy (and waiting 

lists) for placements. The combination of unique services and full occupancy 

drove turnover and profitability, which as a result enabled further investment in 

staff, services, and facilities. 

1.29 Linked to the investment and growth of Kibble, a number of associated factors 

have been reported by managers, staff, and partners as instrumental to this 

period of sustained success: 

• The ability to secure pump-priming – Kibble has become increasingly adept 

at securing ‘blended’ investment packages (grants, loans, and fee income) 

that has provided the basis for the investment strategy; 

• Reaching ‘critical mass’ – Kibble has been able to reach a scale in the 

market, and offer an accompanying spread and mix of services and income 

streams, which helps to safeguard against unexpected drops in demand for 

individual services; 

• Niche positioning – Kibble has made a deliberate choice to offer 

increasingly specialised services to an at-risk client group, thereby offering 

a solution that other providers in a crowded market could not and 

commanding higher fees to reflect this; 

• Shaping market demand – Kibble has led or participated in a number of 

high profile national and international research projects and learning 

22

initiatives that is reported to have influenced policy, shaped professional 

practice, and positioned it as a leader in its field; 

• Enterprise orientation – Kibble has a strong focus on enterprise (e.g. 

Kibbleworks) and demonstrated a willingness to take calculated risks, and a 

can-do culture summed up by one staff member in relation to new ventures 

as “if we can say ‘yes’, we will say ‘yes’”. 

• Constant innovation – Kibble has created a culture of openness and 

adaptability to change, encouraging and supporting staff ideas, and 

ensuring that it has been an ‘early adopter’ of new approaches, technology, 

and practices; and 

• Maintaining profile – since around 2003 Kibble has been increasingly active 

in sharing its ideas, learning, and successes, which have in turn helped to 

raise its profile as a leading social enterprise and opened up new 

opportunities. 

1.30 Staff and partners have also highlighted as of central importance, the 

continuing and strong leadership within the organisation. The core of the senior 

management team at Kibble has been in place for over a decade and 

attempted to draw leadership practices from the public, private, and charitable 

sectors. Despite this continuity, managers have guarded against complacency 

by encouraging a culture of learning and investigation right up to the most 

senior levels. 

1.31 The influence of outside support is less discernible. Kibble has, as one senior 

manager commented, “outgrown and outlived” the influence of any single form 

of external support. Its growing scale has enabled Kibble to build up a 

significant body of in-house expertise (e.g. strategy, finance, HR, etc.), 

although it continues to draw strength from a number of sources, e.g. 

• a long and productive commercial banking relationship; 

• the goodwill, connections and expertise within the local community and 

prominent supporters; 

• shared learning and collaboration with a range of national and international 

partners; and 

• specialist social enterprise business advice and professional expertise 

brought in ‘as and when required’. 


1.32 Over the last decade the growth of Kibble has been positively influenced by 

buoyant economic conditions, and the associated growth in public sector 

spending. At the same time this has resulted in competition from a variety of 

sources (i.e. private, public and voluntary sector) and alternative forms of 

provision (e.g. prisons, community interventions, preventative measures). As 

one Kibble senior staff member describes it, “a rising tide that has lifted all 

boats”. 

1.33 After a period of economic difficulties in consumer markets, public sector 

spending is now beginning to contract. A trend that is likely to accelerate, 

deepen and spread throughout the public sector over coming years. 

23

1.34 Since the start of the current economic downturn in 2008 Kibble has largely 

been sheltered from its worst effects. Local authority purchasing budgets have 

not yet reduced substantially, and Kibble remains the provider of choice for its 

key customers – evidenced by sustained occupancy rates and profitability. 

1.35 There is strong recognition now, however, on the part of staff, directors, and 

partners that uncertain market conditions are likely to put growing pressure on 

the Kibble business model. The inevitable rise in youth unemployment and 

offending during recession is potentially creating additional demand for 

services. At the same time Kibble continues to remain largely dependent on the 

purchasing decisions of a relatively small number of local authorities, each of 

which will be seeking out ways to make financial savings, and each of which 

will be faced with possibly cheaper (if less appropriate) forms of service 

provision. 

1.36 This is combined with an evolving public sector procurement agenda, which 

may usher in larger scale, block purchasing arrangements in residential care 

services. This conceivably challenges the flexibility, independence, and scope 

for innovation that has driven much of the growth at Kibble. 

1.37 This has created an increasingly precarious and uncertain operating 

environment for Kibble; an environment in which survival may depend on a 

number of continuing strategies, such as: 

• the widening of specialisms and therefore income streams; 

• a commitment to negotiate and win business on the basis of quality not 

price; 

• flexibility to alter service offerings in response to changing customer needs; 

• price increases to reflect service enhancements and maintain profit 

margins; 

• a willingness to end underperforming or economically unviable services; 

and 

• a continuing desire to deliver services efficiently and effectively. 


1.38 Kibble recognises that what has worked in the past will not ensure success in 

the future, and is committed to constantly reinventing itself. Critical, however, is 

the ability to evolve and change in ways that are consistent with the social 

mission that has driven the organisation since the middle of the 19 th Century. 

1.39 The current five-year strategy for the organisation has set a broad future 

direction that will see Kibble: 

• remain a national resource developing a range of individualised and 

specialised approaches for young people at risk; 

• concentrate its principal activities in Renfrewshire but develop a range of 

partnerships nationally to ensure service continuity and effectiveness; 

• aim to be a flagship organisation in its field, leading the agenda, 

collaborating, and sharing knowledge in an open way; and 

24

• continue to operate as a leading social enterprise using a fee-for-service 

model to sustain its operations. 

1.40 Given the future challenges and uncertainty Kibble plans to examine creative 

and radical possibilities for delivering on its mission in different ways, perhaps 

involving new forms of governance, new collaborations, and new operational 

structures. 

1.41 Given the scale and maturity of the organisation, long-term succession 

planning is also likely to become more of a consideration after a period of 

lengthy and continuous leadership that has given rise to much of its success. 

25


26

Timeline 


1841 Endowment set up on the death of Miss Elizabeth Kibble 

1845 Kibble grounds purchased in Paisley from the Endowment 

1859 Kibble Reformatory School is opened 

1932 Re-designation as Scottish Office supported Approved School 

1971 Becomes a ‘List D’ school under Social Work (Scotland) Act 

1986 Responsibility for funding handed over to regional authorities 

1993 Appointment of Graham Bell as Headmaster 

1995 Kibble established as a Company Ltd by Guarantee 

1995 Kibble becomes CETSW approved provider 

1996 Grant funding ceases on local government reorganisation 

1996 Kibble Education and Care Centre opens for business 

1999 Kibble achieves Investors in People Accreditation 

1999 Kibble becomes an SQA approved provider 

2000 Construction of two specialist residential units on campus 

Lottery supported 

2001 Kibble hosts first international conference on residential care 

2002 Active approach to research and development begins 

2003 Strategic decision taken to promote the work of Kibble 

2003 Opening of special educational needs centre - The Robertson 

Trust Centre 

2004 Kibble named UK Social Enterprise of the Year 

2004 ESF supported Men Can Care initiative launched to tackle 

gender imbalance 

2004 A unique Intensive Fostering Service established 

2005 Funding, Marketing and Communications department formed 

2005 KibbleWorks gets off the ground 

2006 £4m capital campaign launched 

2007 First commercial borrowing/loan of £7m taken on 

2007 Kibble Internal Audit Team established 

2007 Opening of the £11m Kibble Safe Centre, an 18 bed secure 

unit 

2007 Opening of the Lifeskills Centre and Robertson Trust Trades 

Learning Centre 

2009 Kibble celebrates its 150 th anniversary with a range of events 

2010 Launch of Specialist Intervention Services offering 

comprehensive assessments and support to young people 

2010 Launch of KibblePlus offering work experience and training 

for disadvantaged young people 18 to 24 

2010 Completion of 2 Education Suites and The Gannochy Hall (A 

Centre for Expressive Arts) 

27

CASE STUDY 3: ABERDEEN FOYER 



Aberdeen Foyer was established in 1995 as a charitable organisation working in the 

Aberdeen/Aberdeenshire area to prevent and alleviate youth homelessness and 

unemployment through providing supported accommodation and a range of education, 

training and employment opportunities. 


Aberdeen Foyer was initially established as a Charitable Trust but converted to a Company 

Ltd by Guarantee with Charitable Status in 1998. This company delivers contracts for the 

public sector and voluntary sector and runs grant-funded services. Foyer Enterprise, 

established in 1997, is the commercial arm of Aberdeen Foyer. The company set out to fulfil 

three aims to support the work of Aberdeen Foyer i.e. to generate profit; to raise the profile 

of the Foyer’s work in the community and where possible to offer young people a chance to 

gain work experience, training and employment. Foyer Enterprise is a company limited by 

shares, wholly owned by Aberdeen Foyer and donates its profits to the parent company. 

This company runs a range of social enterprises. 

Markets 

Aberdeen Foyer and Foyer Enterprise work across Aberdeen and Aberdeenshire. The 

Foyer delivers contracts in the fields of housing & housing support, health and health 

promotion and education, training and pre-employment support. Foyer Enterprise runs a 

range of social enterprises, including 2 restaurants, a cafe, a gallery, a graphics business, a 

property maintenance service and a driving school. 


The Foyer Group does not own any property. It is able to leverage a range of intangible 

assets bound up in the knowledge, skills, and experience of 15 voluntary directors, a staff 

team of 150 and more than 30 volunteers. 


The Foyer Group is one of the largest social enterprises in the country. The Foyer has 

won many awards throughout its lifetime. Some particular highlights were the award of 

Social Entrepreneur of the Year (2004), MBE (2006) to the Chief Executive and Foyer 

Enterprise won SBC Social Enterprise of the Year (2007). 


The Foyer Group is one of the largest social enterprises in Scotland and has demonstrated 

ongoing and incremental financial growth. In the financial year 2008/9 the combined Foyer 

Group had a turn-over of £4.9 million, of which £3.55 million from Aberdeen Foyer and 

£1.35 million from Foyer Enterprise. The combined group had net assets of £509k. 

28


The Idea 

1.1 The Foyer movement in the UK was inspired by the more established network 

of Foyers which started in France after the Second World War, providing hostel 

accommodation, with canteen and basic recreational facilities to young workers 

moving from the countryside to the cities. Over time the French Foyer 

movement began to shift its focus to promote social inclusion and to facilitate 

the induction of young people to the adult world and labour market. 

1.2 The story of Aberdeen Foyer started in 1992 when Grampian Regional Council 

became involved in exploring new ways of responding to issues and concerns 

of a number of young people involved in a Council run Youth Project. The 

young people were presenting a range of inter-related problems of 

homelessness, rooflessness, unemployment, addiction issues, and poor 

educational attainment. At this time the Foyer Federation in the UK had just 

been set up by Shelter to promote a new response to youth homelessness 

through the ‘Foyer’ concept. The model seemed to fit well with the issues being 

considered by the Council. The Foyer model being promoted at the time did not 

necessarily include social enterprise but the Council influenced by its positive 

experiences with the community business movement, included this as a key 

part of the business planning for Aberdeen Foyer. The Foyer’s current and 

founding Chief Executive was involved in this planning process as a Local 

Government Officer. 

1.3 Grampian Regional Council led the planning and development phase for the 

Foyer from 1992 to 1995. The initial set up was heavily dominated by a 

number of local authority representatives and interests and ended up being a 

rather large committee not un-similar to local authority committee structures. 

1.4 However, this long and thorough planning stage has contributed to the longterm 

success of the Foyer and ensured that the Foyer was set up the right way 

and had the proper support needed for long-term survival. 

1.5 From the start two elements have been built into the fabric of the Foyer, that 

have proven to be instrumental to its success: a polished and professional 

public image and a broad base strategy for funding. The organisation was very 

much ‘pump primed’ by the local authority but also drew on funding support and 

in-kind support from other public bodies supportive of the venture. 

1.6 Throughout the years the Foyer’s public image and reputation, which even 

developed to an international level, has been a key factor to its success. 

1.7 The fact that the Foyer is not dependent on a single source of income makes 

them strong as a business. The loss of one source of income will not threaten 

the sustainability of the organisation. Also the fact that the Foyer undertakes 

activities in different policy fields makes it flexible to react to opportunities when 

they arise. 

29

An Empty Vessel 

1.8 In 1995 the Aberdeen Foyer was purposefully set up as a separate 

organisation from the Council as a ‘working partnership’ between different parts 

of the public sector and young people. This allowed the organisation to grow 

and develop independently from the public sector but with its support. The 

organisation, unincorporated at that time, was at this stage more a structure 

through which different public bodies co-ordinated their activity than an 

independent organisation. The Foyer did not employ staff and did not 

undertake separate activities. This situation was described by the Chief 

Executive as ‘an empty vessel’. 

1.9 But all the partners were determined to make the Foyer a success and worked 

on behalf of the organisation. 

Realising the Idea 

1.10 In 1996 it was decided that to take the idea forward and realise the 

achievement of the vision articulated in the business plan, the organisation 

needed staff. The current Chief Executive was employed to develop the Foyer 

and 4 other members of staff were employed to support this. 

1.11 A significant change in legislation provided the first real opportunity for growth. 

In 1996 there was a judicial review of housing benefit that ruled that payments 

through Housing Benefit other then rent were deemed to be illegal. But a whole 

system of community care and support services was built on the back of the 

housing benefit system that could not be dismantled. Government undertook a 

review of housing benefit, which led to the introduction of Transitional Housing 

Benefit scheme in 2000 and ultimately to Supporting People in 2003. 

1.12 With this review and revised funding mechanism there was a real opportunity 

for the Foyer, in co-operation with the local authority, to grow. 

1.13 Another public policy change provided the second break for the Foyer. In 1997, 

one or the first things the new Government did was to launch the New Deal 

programme, which provided another major opportunity for the Foyer to grow. 

The announcement of the New Deal was made at the Camberwell Foyer in 

London that enforced the close alignment between the Foyer model and 

Government policy. 

1.14 Having knowledge about national and local policy development has enabled 

the Foyer to react quickly to changes in the public policy environment and 

make maximum use of the opportunities that arise. Having this knowledge has 

been a key contributor to the success of the Foyer throughout the years. The 

Foyer gets this knowledge by being proactive in developing and maintaining 

excellent relationships and active participation in networks and fora. 

1.15 In this period a range of significant events happened that spurred the growth of 

the organisation. In March 1997 the Foyer opened the Marywell Centre. Later 

that year in December Foyer Enterprise Ltd , the commercial trading arm of 

30

Foyer Aberdeen, was established and in 1999 started its first two ventures: 

Foyer Graphics and Foyer Restaurant and Gallery. 

1.16 The opening of the two new social enterprises is a good example of the 

entrepreneurial spirit of Foyer and the calculated risk-taking that is embedded 

in the organisation. This was also exemplary for the life stage the Foyer was in. 

The Chief Executive commented: “Taking risks was easier because there was 

not so much to protect or lose”. 

1.17 The Foyer also developed in this period. In 1998 the Foyer opened its first 

supported accommodation in Trinity Court. The same year also saw the 

establishment of Foyer Music, with a fully fitted recording studio and rehearsal 

space. The next year saw the opening of a second supported accommodation 

in Victoria Road. Also in 1999 the first of the Foyer’s Education and Training 

Team was appointed through a secondment from Grampian Careers, but part 

funded by Aberdeen City Council and Aberdeen College. In response to the 

opportunities being made available through the Government’s New Deal, the 

Foyer, along with other local agencies formed a new Consortium with the 

intention of jointly tendering to run the Gateway To Work programme on behalf 

of Government. The next year, 2000, a new supported accommodation was 

opened in South Aberdeenshire and the first Lifeshaper programme was 

delivered. 

1.18 By the end of 2000 the Foyer had experienced a period of rapid growth and 

employed around 60 people. It had fulfilled its original business plan and 

decided that there was more to do and reformulated its vision in a new strategic 

plan for the organisation. 

1.19 The Foyer has pursued growth because they felt that it was important for the 

organisation to reach a sufficient scale to be able to compete successfully with 

the private and public sector. 

Stable Growth 

1.20 In this period growth happened at a slower pace than in the preceding period. 

The housing plans of the Foyer were fully realised, with the opening of the 

schemes in Stonehaven, Banchory, Peterhead and Fraserburgh. 

1.21 In 2001 the Foyer started its first community health service, which led to the 

establishment of Foyer Health, now considered one of the main elements of the 

Foyer’s service provision. 

1.22 The fact that the Foyer decided from the start that it would not ‘put all its eggs 

in one basket’ has resulted in a unique mix of complementary services in the 

field of Housing, Health, Education and Employability. This has made the 

organisation stand out from its competitors and, at the same time, made it more 

resilient and able to manage changes in funding and policy direction. 

1.23 In this period the Foyer also had to deal with the loss of some key staff 

members and some disagreement with public sector partners, which in the end 

made the organisation more resilient, by reinforcing that the organisation 

31

should not be dependent on individuals or single partners. The Foyer has been 

able to continue to grow because the organisation has always been flexible and 

innovative in developing new services. 

Consolidation 

1.24 The organisation had experienced a period of significant growth and reached 

the size and scale it considers sustainable in the longer term. The Foyer’s 

housing aspirations were fully achieved and the opportunities arisen from public 

policy and legislation were time-limited. From 2005 onwards the focus has 

shifted from growth to consolidation and improving the quality of the services 

and adding more value by aligning the housing services better with the Foyer’s 

learning, health and employment services. 

1.25 The quality of the internal structure has been improved with a more robust 

organisational structure and a more sophisticated management structure. The 

organisation has invested in specific expertise to the organisation, such as HR 

and financial management and marketing and PR. 

1.26 As part of the drive for improved quality of services the Foyer undertook a 

review of the organisational strategic plan in 2008 which led to a restructure of 

its management team. The Foyer created two Executive Director posts for 

Housing and Learning and employed its first Commercial Director to reflect an 

increased emphasis on enterprise activity. 

1.27 Since 1995 there has also been a series of changes to the Foyer Board 

composition. Originally the Board was large with a dominance of public sector 

representatives with an elaborate sub-committee structure. Over time the 

Board has been slimmed down and number of sub-committees reduced to two 

(Resources Management Committee and Service Review Committee). In 2006 

the number of Board members was brought back to 15 with a maximum of 5 

public sector representatives, a further 2 places are taken by the Foyer’s 

partner Housing Association, Grampian Housing Association. Other 

appointments have been increasingly made from the world of business and 

commerce. 

1.28 In 2008 the Board of Foyer Enterprise was also strengthened with the 

appointment of 4 new Directors all successful in business locally and all 

bringing further business skills to support Foyer Enterprises activities. 

1.29 In this period 3 new social enterprises were established. In 2006 the Foyer 

started a Ben and Jerry’s Partnershop in the busy Bon Accord shopping centre 

in Aberdeen’s City centre. In 2008 the Foyer Restaurant and Cafe in His 

Majesty’s Theatre opened its doors and Foyer Enterprise took a 50% share in 

Roadwise Driver Training, a private sector driving school. Foyer was doing 

regular business with Roadwise through the Foyer Drive initiative. An 

opportunity arose to acquire a 50% share hold interest in the company and 

Foyer Enterprise saw this as an exciting if challenging opportunity. 

1.30 In 2009, driven by the planned refurbishment of the shopping centre and the 

less than expected financial return, the Foyer Enterprise Board took the 

32

decision to close the Ben and Jerry’s Partnershop. This was not an easy 

decision, but necessary to help ensure the financial sustainability of the whole 

organisation. 

1.31 In this period of consolidation the Foyer has become more selective and less 

opportunistic in bidding for public sector contracts. 

1.32 Throughout its history the Foyer has always sought to promote an open culture 

that encouraged learning. The Foyer listens to its clients, staff and stakeholders 

and uses this to shape its planning and development. The Board feels it is 

listened to and its advice is always considered seriously. This has been a 

source of inspiration and motivation for staff as well as Board members. 

1.33 As the Foyer internally listens to its staff and Board members, it is also very 

customer focussed and listens carefully to its clients and commissioners to 

ensure they keep addressing their needs in a satisfactory way. 

1.34 Another key component of the Foyer’s success is its focus on delivering high 

quality services, which has built the reputation of the Foyer as a credible 

provider and partner. 

1.35 Foyer Enterprise also focuses on quality. Like every business they benefit from 

delivering high quality services for a competitive price. The social enterprises 

of the Foyer purposely aim at the higher end of the market. The social 

enterprises of the Foyer compete on price/quality within the private sector and 

they feel it is important that customers do not notice that the business is a 

social enterprise and avoid the ‘feeling of a charity’. 


1.36 The economic recession has had a mixed impact on the Foyer so far. On the 

one hand there have been lower sales at the Foyer Restaurant and Gallery and 

demand for driver training is reduced. These are not unique to the Foyer’s 

business. Additionally some public funding streams have come to an end or are 

due to cease. On the other hand there have been some new opportunities that 

the Foyer has identified that have led to new service developments and 

increased business. 

1.37 Overall there has been a ‘tightening of belts’ and while some aspects of the 

Foyer’s business have been adversely affected others have not. It is however 

anticipated that the position will get more difficult over the next few years. 

1.38 The market place for public contracts has become more price sensitive, but the 

Foyer believes it can benefit from the situation by keeping unit costs 

competitive and by providing additional social benefits. 

1.39 Another positive from the recession has been the growth of interest in social 

enterprise as a business model and the Foyer has entered into discussions 

with the public and private sector to capitalise on this development. 

1.40 The recession has had an impact on the Foyer’s restaurant businesses. People 

are not spending money so easily on eating out and businesses, an important 

33

customer group, are spending less on corporate expenses. However, this is not 

different from its competitors in the up-market restaurant sector. Foyer 

Enterprise is tackling this by trying to increase the efficiency of the restaurant 

(staffing) and improve marketing, which was needed anyway and has only 

brought to the forefront by the recession. 

1.41 Aberdeen Foyer has reacted to the recession by “sharpening its pencil”. With 

the help of external support through Scottish Enterprise it has looked critically 

at the whole organisation and made some efficiency savings by reducing 

staffing and tighter control of resources. 

1.42 Being based in Aberdeen, the Foyer always has had a special relationship with 

the business community including the oil and gas sector, whether as customers 

or as sponsor/funders. The Foyer has always cherished and nourished this 

relationship and has reaped many rewards from it and it is helping the 

organisation to weather the economic turbulence. 

Looking to the Future 

1.43 Aberdeen Foyer believes it is well placed for the future, because it helps public 

agencies to meet statutory requirements. But, because of the expected 

squeeze on public budgets, it is anticipated that tenders will become even more 

price competitive in the future. 

1.44 Until now the majority of the services the Foyer provides are when young 

people meet with a crisis and emergency intervention is required. For the future 

the Foyer wants to develop new services aimed at prevention and early 

intervention and work with a younger client group and their families. 

1.45 Mergers and acquisitions seem to be a way forward for social enterprises, but 

the Foyer feels there should be caution as well. Growing brings ‘pains’ that 

need to be managed. The 3rd sector also often finds new ways of working, 

innovations, and more cooperative ways of working that bring ‘scale and 

efficiencies’ that are less likely to happen in the private sector. 

1.46 As with many social enterprises, the Foyer has been dependent on strong 

leadership from its Chief Executive, who has been with the Foyer from the start. 

Because of the strong leadership, Foyer has been able to attract the right 

senior staff and Board members, which has been essential for its growth and 

success. 

1.47 The strong leadership of its Chief Executive has also been a key factor in 

developing relationships and networks that have been very advantageous for 

the organisation. Although the Chief Executive has been instrumental in the 

development of those relationships, over the years investment in developing 

and sustaining partnerships and relationships has become ‘learned behaviour’ 

for the whole organisation. 

1.48 Worries over succession planning have been expressed and it is felt that this 

should be managed carefully, as having the right leader has been so important 

for the Foyer. 

34

1.49 The reason the Foyer has been so successful is that they have carefully 

balanced their social and business objectives. The Foyer has always kept true 

to its values to make a change in the lives of disadvantaged young people. 

35


36

Timeline 


1992 Start of Foyer movement in UK 

1992 Initiative taken on by Grampian Regional Council 

1994 Foyer Working Group established 

1995 Young People's Project established using Foyer concept 

1995 Aberdeen Foyer established 

1997 Official opening of Marywell Centre 

1997 First Prince's Trust programme run from Marywell Centre 

1997 Foyer Enterprise Ltd established 

1998 Trinity Court accommodation completed 

1998 Music recording studio fully operational 

1999 Foyer Graphics established 

1999 Foyer Restaurant and Gallery opens 

1999 Supported accommodation opens at Victoria Road, Torry 

1999 Education and Training team established 

1999 New Deal Consortium established 

2000 Supported accommodation opens in South Aberdeenshire 

2000 Lifeshaper programme starts in Aberdeen 

2001 First Community Health service established 

2002 Stonehaven supported accommodation opens 

2002 Peterhead/Fraserburgh supported accommodation opens 

2002 Gateway to Work contract awarded 

2002 New Deal Innovation Fund Projects commenced 

2002 Prince's Trust Team and Lifeshaper to North Aberdeenshire 

2003 Progress2Work and Ambition Construction contracts awarded 

2003 Introduction of Supporting People 

2003 Opening of refurbished IT suite 

2003 Literacy and Numeracy project began 

2004 Chief Executive wins Scottish Social Entrepreneur of the Year 

2005 Start Build and Train programme 

2005 Delivery partner for Opportunity Gateway Partnership 

2005 New supported accommodation opens in Stonehaven 

2006 Opening Ben & Jerry’s Partnershop 

2006 Introduction of Platform to Work 

2006 Launch of Opportunity Gateway Partnership 

2006 Launch of Scottish Pilot Learning programme 

2006 Start of Amplified regional music competition 

2007 Pilot Property Maintenance Team 

2008 Opening Foyer Restaurant and Cafe at His Majesty’s Theatre 

2008 Restructuring of Senior Management Structure 

2008 Winning Jobcentre Plus Gateway to Work contract 

2008 Appointment of Commercial Director 

2008 Acquiring a 50% share in Roadwise Driver Training 

2009 Closure Ben & Jerry’s Partnershop 

37

CASE STUDY 4: ALLOA COMMUNITY ENTERPRISES (ACE) 



Established in 1984, Alloa Community Enterprises (ACE) is one of Scotland’s oldest 

community recycling businesses. Its main objective is to provide a convenient, cost 

effective and integrated multi-material recycling service to meet the needs of its 

customers. It also aims to protect the environment by diverting as much material from 

landfill as possible. 


Alloa Community Enterprises (ACE) Limited has been established as a charitable 

company. It operates a profitable waste management business (ACE Recycling 

Group) that provides training and employment, improves employability, increases 

environmental awareness and returns profits to support the social needs of the 

communities in which it operates. The ACE Recycling Group has been established 

as a Community Interest Company. 

Markets 

The focus of ACE is on providing environmentally sustainable waste recycling 

services. It works with Scottish local authorities to help meet their recycling targets. It 

provides waste management services to businesses and helps them to minimise 

waste and save money. It works directly with local communities to get them more 

involved in reducing waste, recycling more, and use resources sustainably. 


Over many years ACE has build a large and successful waste management 

business. ACE Recycling operates with an expert board that comprises 8 individuals, 

operates with fleet of 23 vehicles, leases premises in Alloa, and supports a local 

workforce of 44 full time employees. It manages its resources and operations to ISO 

9001 and 14001 standards. 


ACE has a strong track record of achievement. It works in six local authority areas; 

recycles over 19,000 tonnes of waste every year; provides furniture packs to over 

350 households each year; providing kerbside recycling services to over 50,000 

homes; and providing services to over 700 businesses. The achievements of ACE 

have been widely recognised – it is a former UK Community Recycling Project of the 

Year (National Recycling Awards) and Best Large Scottish Social Enterprise (Social 

Enterprise Coalition Awards). 


Despite operating in challenging market conditions ACE Recycling has commanded 

a turnover of £1.5 million in 2009/10 and returned a profit of £25,000. Currently more 

than 95% of its income is from trading activities, with only small amounts of grant 

funding used as seedcorn capital for new ventures. ACE operates with a strong 

balance sheet, including net assets of £600,000. 

38


Starting out 

1.1 The story of Alloa Community Enterprise (ACE) began in the spring of 1984 

when a group of local volunteers successfully raised funds to furnish a halfway 

house in Clackmannanshire; a facility which provided training and support to 

assist long stay patients in a nearby psychiatric hospital to reintegrate into the 

community. This was the beginning of a journey which has given rise to 

arguably the most successful community recycling business in Scotland. 

1.2 Due to the success of their fundraising venture the volunteers recognised the 

need for an ongoing business that would create local jobs and help alleviate 

poverty in this high unemployment area. 

1.3 With the help of a £1,000 Small Business Grant and one employee, ACE was 

launched in 1984 and later incorporated as a charitable company in 1985. Its 

first venture was to establish a furniture reuse project that would provide 

affordable household items for local residents. 

1.4 According to one founding member of the group, a number of main factors 

during this formative period were instrumental to the later success of the 

organisation: 

• the strong social purpose of the organisation, which fitted well with the local 

needs and priorities in Clackmannanshire at the time; 

• the productive relationship with the local authority which was formed early 

on, and which developed over time to bring a range of mutual benefits; 

• a determination from the beginning to exist without ongoing public subsidy, 

a principle that charted a course for ACE as a social enterprise; and 

• what has been described as the “good fortune” to get involved in recycling, 

an emerging market that later went on to create many new opportunities. 

1.5 Others have pointed to the importance of introducing the right business 

expertise into the organisation early on. One agency partner involved with ACE 

at the time described the organisation’s “first real break” as recruiting a highly 

capable chairperson. This retired businessman brought vital business acumen 

and skills. He is credited for having provided the drive behind the organisation, 

accelerating its early progress, and instilling important commercial disciplines. 

This individual has provided a continuing influence throughout the life of the 

organisation to date. 

1.6 During the early phase of its life, ACE focused on a single business activity – 

furniture recycling. This service was provided within the relatively small local 

authority area of Clackmannanshire and largely to low income communities. 

There was therefore a real limit to the level of financial surpluses and level of 

social benefits that could be achieved by ACE locally. 

1.7 Despite the limitations in what was possible through furniture recycling activities 

alone, ACE operated as an increasingly successful social enterprise largely in 

the same vein for its first 6-7 years. 

39

Growing up in an emerging market 

1.8 Over subsequent years new markets opened up for ACE. Driven by EU 

directives and UK legislation a wave of waste management targets and 

incentives were introduced – these set down the challenge for local authorities 

to find new ways of diverting waste from landfill and created opportunities for 

suppliers that could help to deliver effective recycling solutions. 

1.9 Key to the success of ACE was the way that it began to lead the community 

response to these issues. One outside agency representative from this period 

commented that ACE “started to become unusual [unlike other community 

businesses at the time] when it started to branch out into new areas of activity”. 

1.10 Glass recycling emerged as an early opportunity. When its colour separated 

glass collection scheme was launched in 1991, ACE collected around four 

tonnes of glass per week. Since then it has gone on to become one of 

Scotland's biggest collectors of post consumer glass from public bottle banks 

and commercial premises throughout the Central Belt. 

1.11 Over the years ACE diversified into other areas of recycling, including cans, 

paper, and textiles. This was a time of trial and error. As one agency partner at 

the time commented “we were all finding our way through a soup of new 

legislation” and an ACE director reported that “we learnt as we went along by 

trying things out and seeing what was possible”. 

1.12 This diversification was driven by willingness to innovate and experiment. This 

track record for innovation is evident in many respects. For example, ACE was 

both the first organisation in Scotland to introduce a colour-separated glass 

collection and to provide multi-material kerbside collections. This placed ACE 

‘ahead of the curve’ in an emerging market, with a strong competitive 

advantage. 

1.13 This led to a sustained upward growth. As one insider describes “success bred 

success”, where the early innovations introduced by ACE and its achievements 

helped to raise profile, which in turn led to growing customer interest and new 

opportunities. The growing commercial income of the organisation, along with 

the availability of publicly provided seedcorn capital, also enabled ACE to 

diversify into new forms of recycling, and make the investments required to 

operate at a growing scale (e.g. fleet, equipment, etc.). 

1.14 Much of this ability to capitalise on emerging market opportunities appears to 

have been due to the combined inspiration and determination of the two main 

figures that led the social enterprise for many years. Others have commented 

on the: 

• commercial acumen and entrepreneurial drive of volunteer chairman; and 

• sales skills, charisma, and ‘can do’ attitude of its long-serving manager. 

1.15 This was reportedly backed up by the skills and commitment of a relatively 

stable workforce. 

40

1.16 Where possible, ACE sought to recruit or build any required professional 

expertise in-house (either among staff or voluntary directors) rather than rely on 

outside advisors or business development support. As one founding director 

put it “we have always largely made our own way” and another staff member 

“we’ve always been ahead of the game”. However, ACE has benefited from 

playing an active role in a variety of networks in the community enterprise and 

community recycling fields (e.g. Community Recycling Network Scotland). 

1.17 The influence of Clackmannanshire Council was also critical to development of 

ACE. Various ACE insiders have talked about the importance of the foresight of 

key individuals within the local authority, who were able to see the potential of 

recycling services and who had the confidence in ACE to deliver on this vision. 

This formed the basis for a strong and mutually beneficial partnership: 

• for ACE the relationship created opportunities to test new services, helped 

secure capital funding through the Landfill Tax Credits Scheme and other 

sources, and brokered important connections with commercial partners; and 

• in return ACE provided a flexible solution to the Council’s limited internal 

capacity to respond to the emerging requirements being placed on it, and 

helped place the Council at the forefront of recycling in Scotland. 

1.18 Critical also in its development was the ability of ACE to work equally 

comfortably with commercial partners as well as the public sector. For example, 

its early expansion was assisted by a commercial collaboration formed with a 

glass recycling plant based in Alloa. The agreement it then struck with ALCAN 

(now Novellis) saw ACE become Scotland’s only processing centre for the 

world’s largest aluminium can recycler. 

1.19 While the pursuit of financial viability led ACE to increasingly deliver services 

across the central belt of Scotland, it has always worked hard to retain its ‘local’ 

grounding in Clackmannanshire’. Where possible it has attempted to return 

benefits to local communities. This has mainly been through local employment 

benefits (taking on higher staff numbers and wages than is the industry 

average, recruiting locally, and taking on a large proportion of workers from 

disadvantaged backgrounds and with additional support needs). It has also 

directly supported a range of community activities including charitable 

fundraising (e.g. the Cash for Cans service which started in 1993) and work 

with young people (e.g. schools recycling initiatives). 

1.20 However, like most other business, bottom line financial performance has 

fluctuated with ACE often operating at the margins of breakeven. One director 

pointed to “some good years, some bad”, which meant that “it was seat of the 

pants stuff at times”. 

1.21 A number of limitations/obstacles to sustained growth and profitability have also 

been reported including: 

• the ability of ACE to make the substantial capital investment necessary to 

take on larger service delivery contracts; 

• logistical problems in providing services to other local authority areas in 

which ACE had no base and looser local ties; 

41

• the willingness of some local authorities to contract with a community 

recycling organisation based in another areas (although this parochialism is 

now reported to have lessened); and 

• the higher costs and lower productivity borne by ACE in pursuit of its social 

objectives e.g. higher staff numbers, wages, and employee support than its 

commercial competitors. 

Growing pains 

1.22 This period of continuing diversification and growth was sustained for many 

years. However, a defining moment for ACE came after 18-20 years in 

operation. During this period it struggled with what the current Managing 

Director describes as “growing pains”. 

1.23 Difficulties for ACE became evident during the “explosive growth” of a new 

kerbside collection contract. This single contract led to a rapid expansion in the 

scale of operations, adding a fleet of six new vehicles, many new staff, and a 

substantial increase in the volume of waste materials being collected. At one 

point this contract accounted for around three-quarters of the commercial 

turnover of ACE, and placed significant financial and operational pressure on 

the organisation. 

1.24 During this period of rapid and uncontrolled growth ACE overextended itself. 

One agency partner described ACE as being “thin in terms of management” at 

that point, with financial management systems and controls inadequate. These 

difficulties were heightened when the organisation’s long-serving manager of 

17 years stepped down to take retirement, and his immediate successor (in 

post for less than 18 months) failed to take effective control of the growing 

business. 

1.25 This took ACE to the brink of collapse in 2003/04. One director has described 

the organisation at this time as being “six months away from going out of 

business”, while another has commented on the “dire financial straits” that ACE 

found itself in. 

1.26 From 2004 ACE began to turn things around and the long-term prospects of the 

organisation were eventually transformed. A number of actions made this 

possible: 

• the useful input of a firm of accountants who were brought in to assess and 

support improvements in financial performance; 

• the temporary return of the original ACE Manager for a period of two years, 

to aid the recruitment and transition of a new Managing Director in 2005; 

• the appointment of a new Managing Director with the expertise and 

determination to make the changes required to stabilise ACE; 

• the targeted appointment of new board members with vital professional 

skills, including one individual with an industrial accounting background; 

• the introduction of an improved IT infrastructure and strengthened 

management reporting systems; and 

42

• a strategy to cut back where necessary, drop loss-making activities, and 

consolidate the operations of ACE. 

1.27 Throughout this challenging period, the inner resilience and determination of 

the leadership of ACE came to the fore. The voluntary directors that served on 

the ACE board rose to challenge. As one former director has described it “no 

one for a moment ever thought about giving up”, all showed determination to 

safeguard jobs and services. 

1.28 During this period the priority was on survival and restructuring, and ACE was 

not at that time in a position to capitalise fully on opportunities for further 

growth. While opportunities were missed, the measures taken during this 

testing time enabled ACE to come back stronger than ever before. 

A maturing business 

1.29 Over subsequent years, ACE has continued to rebuild, gain new business, and 

as a result its reputation has gone from strength to strength. 

1.30 The business strategy of ACE in recent years has focused on: 

• increasing its customer base in the commercial sector, e.g. waste 

management services to SMEs; 

• reducing dependence on any one client (e.g. the proportion of income from 

Clackmannanshire Council declined from 70% to 15% from 2005 to 2010); 

• expanding geographically to deliver services across the central belt of 

Scotland, with ACE now operating in six local authority areas; and 

• continual innovation in the ACE service offering and product lines. 

1.31 A high profile initiative developed during this period was a joint venture with the 

ECT Group (a high profile London-based social enterprise). This was intended 

to bring together the combined expertise of partners to create Scotia 

Environmental Services Ltd and provide integrated recycling and waste 

collection services across the whole of Scotland. Although the deal collapsed in 

2008 due to the financial difficulties and eventual sale of ECT, this partnership 

process did bring two important benefits for ACE: 

• it secured proprietary ownership of a new integrated management system; 

and 

• it provided ACE with the impetus required to secure ISO 9001 and 1400 

quality accreditation. 

1.32 At the same time ACE continued to build its strength and capacity, with: 

• considerable investment in managerial capabilities and systems; 

• the establishment of ACE Recycling Group as a Community Interest 

Company to take over the commercial operations; 

• continued strengthening of the professional skills on its board; 

• the addition of new fleet and equipment; and 

• a more commercial focus and stronger pricing structure. 

43

1.33 ACE has also continued to cultivate a strong and committed workforce. One 

informed observer has commented that ACE now “feels like a family business, 

with strong personal commitment and energy”. It has been characterised by 

staff as a “caring and sympathetic employer”, and has brought about a strong 

team spirit (“everyone pulls together”), a sense of pride in the company (“we’re 

proud to work for ACE”), and a strong commitment among staff (“the staff 

would do anything for ACE”). As a result the Managing Director has pointed to 

low levels of staff turnover and absenteeism and a high level of productivity. 

1.34 The continuing investment in people, infrastructure, and capacity means that 

ACE is able to respond quickly to new opportunities as they arise. 

1.35 Levels of operational effectiveness and efficiency have also grown 

substantially. This was tested when the premises that ACE occupies were 

recently destroyed by fire, and it was able to recover the situation within 48 

hours with no discernable interruption to service. This has been variously 

described as highlighting the ‘can do’ attitude, determination, teamwork, 

responsiveness, and professionalism of the organisation. 

1.36 Customers have recognised the improvements in operational capacity over 

recent years and highlighted the growing track record and achievements of 

ACE. Public sector and commercial customers alike have praised: 

• the ability of ACE to meet service targets; 

• its focus on the delivery of quality services; 

• its emphasis on putting customer needs first; 

• its excellent contract management and communication; 

• its quick decision-making and rapid response to challenges; 

• its forward thinking ideas and solutions; 

• its professionalism, consistency, and reliability; and 

• the added value that ACE brings to contracts. 

1.37 Customers have variously described ACE as standing “head and shoulders 

above other community recycling operations” and being able to “compete with 

the private sector on its own terms”. In this respect ACE is recognised by 

customers first and foremost as a highly valued and reliable supplier, 

regardless of its status as a social enterprise or the added community benefits 

that it can bring. 

1.38 As a result ACE has been highly effective in winning recycling contracts. Its 

customer base has widened substantially and it has won a number of major 

public contracts during the last two years in Angus, Falkirk, and 

Clackmannanshire. That said it has also narrowly lost out on contracts where it 

has been unable to compete with larger private sector competitors on price and 

where the community benefits that it can bring reportedly haven’t been taken 

into account in the evaluation of tenders. 

44


1.39 During the last two years difficult economic conditions have affected all in the 

waste management industry. This has meant that despite its many successes 

ACE has had to overcome challenges from a number of sources. 

1.40 There have been substantial fluctuations in commodity values for waste 

materials over recent years. A crash in some global commodities markets (e.g. 

aluminium, steel, etc.) during 2008/09 rendered high volumes of the waste 

material collected by ACE effectively worthless. This together with continuing 

fluctuations has required the commercial decision-making of ACE to become 

even sharper, in order to sell the right materials at the right times. 

1.41 In parallel, the commercial market served by ACE has itself been affected by 

the recession. Many commercial customers (e.g. pubs, clubs, factories, etc.) 

have been going out of business, defaulting on payments, or become 

increasingly thrifty in their use of recycling services. This has forced ACE to 

redouble its sales effort, with a deliberate strategy adopted that every customer 

lost as a result of the recession another would be secured. 

1.42 During the same period there has been a growing shift towards commissioning 

waste recycling contracts on the part of local authorities. This has meant that 

ACE has had to compete even harder on the basis of price, quality, and added 

value to counteract a number of trends: 

• services of a greater volume/scale are now being commissioned, covering 

larger areas and more households; 

• contracts are typically ‘service only’ specifications, meaning that value of 

waste materials collected returned to the authority rather than contractor; 

• authorities are reviewing their waste management strategies, with some 

contracts slow to come onto the market or not coming onto the market at all 

(where the decision is being made to bring services back in-house); and 

• achieving value for money is an increasingly important consideration, with 

decisions increasingly made on the basis of price as local authority budgets 

contract. 

1.43 At the same time there has been increasing competition in the recycling sector. 

In particular, ACE reports the growing market presence of large-scale national 

and international waste management companies – contractors with commercial 

advantages of scale, delivery capacity, and financial strength. As one observer 

has commented “the recycling market is going mainstream ... the big players 

are increasingly trying to roll over the small players” and as recognised by 

another local authority customer “ACE is competing in an increasingly cut 

throat market”. 

1.44 This ‘perfect storm’ of influences brought on by volatile economic conditions 

has created enormous challenges for ACE. It has meant that turnover during 

2009 was around £1m less than anticipated as contract values were squeezed, 

commodity prices plummeted, and contracts were lost to large-scale 

competitors. 

45

1.45 One public sector customer has noted that in the current market “survival is a 

success in itself”. Nonetheless there is great confidence on the part of those 

that know it best that ACE is well placed to come through these difficult times: 

• it is aware of the main risks to its business; 

• it is in control of the critical aspects of its business; 

• it continues to innovate and to diversify into new areas; 

• it has been able to maintain a reasonably broad customer base; 

• it is keeping a tight control of its cashflow; 

• it has kept overheads and operating costs low; and 

• it has maintained a wide network of partners, advisors, and supporters. 

1.46 The evidence suggests that in the face of adversity the ACE business model is 

a resilient one. 


1.47 At this stage the future prospects for ACE look positive. 

1.48 While economic conditions are predicted to remain difficult for the foreseeable 

future, public policy is likely to remain supportive. The policy agenda set out in 

Scotland’s Zero Waste Plan stresses the long-term drive towards reducing 

waste, recycling more, and using resources sustainably. 

1.49 For ACE the continuing focus will be on sustaining its current business model 

during challenging times. The goal is to generate a sustainable financial surplus 

that provides scope to reinvest for growth, sustains quality employment, and 

enables ACE to put something back into its local community. There is 

recognition, as one director has put it, that “social impact must always follow 

business success for ACE”. 

1.50 To achieve this goal, the focus for the next few years will be on: 

• promoting the benefits of recycling and of social enterprise; 

• extending the community’s role in the collection of recyclable materials; 

• developing new business opportunities arising from the ‘reuse’ of materials; 

• continuing to innovate its service offering and product lines; and 

• building the scale and capacity required to compete for larger contracts. 

1.51 The key challenges in this are twofold - navigating a steady course during 

uncertain and difficult economic conditions and finding appropriate capital 

investment to move into new markets and upscale sufficiently. 

1.52 Despite these challenges ACE maintains its strong sense of self-reliance and 

confidence in its ability to grow a sustainable business. 

46


47

Timeline 


1984 ACE established with £1,000 Small Business Grant 

1985 ACE incorporated as a charitable company 

1990 ACE begins recycling fridges 

1991 ACE begins a computer recycling operation 

1991 Introduction of a colour separated glass collection scheme 

1993 Aluminium recycling operation set up in partnership with 

ALCAN 

1997 ACE launches Glass Bring Site service in Clackmannanshire, 

Falkirk and Stirling 

2001 ACE moves to 1 st main Industrial premises in Alloa 

2001 Scotland’s first Kerbside Recycling Collection service 

established by ACE and Clackmannanshire Council 

2002 ACE relocates to larger premises 

2003 Original Manager of ACE steps down 

2004 ACE suffers a severely challenging financial situation 

2005 ACE launches Kerbside recycling trials in Glasgow 

2005 Original Manager brought back in on Caretaker role for 2 

years 

2006 ACE launches Kerbside glass service in North Lanarkshire 

2007 New managing Director appointed 

2007 ACE forms Scotia Environmental Services Ltd as a joint 

venture 

2008 ACE Recycling Group registers as a Community Interest 

Company 

2008 ACE secures INCREASE funding to launch Commercial & 

Industrial recycling service across Central Scotland 

2009 ACE relocates to larger premises 

2009 ACE launches Falkirk Kerbside recycling scheme 

2009 ISO 9001 and 1400 quality accreditation secured 

2009 ACE full-time employment goes over 50 for the first time 

2009 Social Enterprise Coalition Social Enterprise of the Year award 

2010 Successful tender to Clackmannanshire Council for Kerbside 

contract 

2010 ACE suffer serious fire at premises 

48

CASE STUDY 5: THE CLAVERHOUSE GROUP 



Established in 1983 as Dundee Training for Employment and Enterprise Project 

(DTEEP), the Claverhouse Group is a provider of government funded training 

programmes. Claverhouse is committed to providing high quality guidance and support 

to unemployed adults, enabling them to access sustainable employment opportunities, 

thus having a positive impact on the local community. 


The Claverhouse Group was established as a Company Ltd by Guarantee with 

Charitable Status. The Claverhouse Group operates two trading subsidiaries, 

Claverhouse Training that delivers public service contracts and the Claverhouse 

Services which delivers commercial training and examining services. Both these 

trading subsidiaries are set up as a company limited by guarantee and Claverhouse 

Training is also a registered charity. 

Markets 

The Claverhouse Group works from its premises in Dewar House with clients from 

across Tayside. Claverhouse delivers government funded training programmes that 

support unemployed people into employment. Claverhouse has also set up a number 

of social enterprises that provide employment opportunities to its clients. 


The Claverhouse Group does not own any property. It is able to leverage a range of 

intangible assets bound up in the skills, knowledge and experience of 10 voluntary 

directors and a core staff team of 55. 


Claverhouse holds a number of accreditations, including ISO9001:2000 Quality 

Management Standard, Investors in People, Jobcentre Plus Accreditation as well as 

being an approved Learn Direct Scotland Centre. 


The Claverhouse Group is a sizeable company with a turn-over of almost £2.5 million 

in 2008/9. The Claverhouse Group had net assets of about £400k. 

49


Birth 

1.1 The story of the Claverhouse Group started in 1983 when the Dundee Training 

for Employment and Enterprise Project (DTEEP) was established that ran pilot 

programmes for the Manpower Services Commission, the government agency 

that implemented employability strategy. DTEEP was funded by grant funding. 

1.2 In 1985 DTEEP developed two new programmes that created employment. 

The first employed local unemployed people to produce aids for disabled 

people and the second programme produced clothing for disabled people that 

would not attract attention to their disability. 

1.3 In 1986 the DTEEP started to deliver training linked to the Community 

Programme, which led to the New Job Training Scheme (NJTS) in 1987. At that 

point it was clear that the training arm should be set up as a company limited 

by guarantee, which was achieved in 1987 under the name Workstart Limited. 

Early growth 

1.4 In 1987 a third Community Programme project aimed at improving the 

environment was launched and in the same year two exchange programmes 

with Zimbabwe were set up. In1988 the Community Programme was replaced 

by the Employment Training programme, and Workstart was appointed as the 

sole training agent for Tayside and also won the same contract for Ayrshire. 

1.5 In 1990 Workstart adopted an innovative American programme to get people 

work ready based on the needs of employers. This programme was not funded 

and relied on sales of the service to interested employers. 

1.6 Also in 1990 the company won tenders with the Employment Service to deliver 

Restart and Job Club. This was also the year they managed to get European 

funding under the URBAN programme. The turnover increased to over £1 

million in this year. 

1.7 In 1991 the company had grown to employ 41 staff members. But later that 

year they had to reduce the number of employees by 13 due to the end of the 

Training Agent role in Tayside and the loss of several Employment service 

contracts. In November of that year they also lost the Ayrshire Training Agent 

contract and the total number of staff was reduced to 25. 

A focus on quality 

1.8 In 1992 a new Chief Executive was appointed, which led to a major change in 

the direction for the company from a typical voluntary sector organisation to a 

more professional training provider with a strong focus on improving quality. It 

was described by the chief executive as a change “from the woolly jumper 

brigade to a culture of quality”. 

50

1.9 The name Workstart had become synonymous with the benefits system and it 

was decided to re-market the company as WS Training. Although the term 

‘social enterprise’ was not used, the company was more business focused. 

1.10 The drive for quality resulted in the company achieving two recognised quality 

assurance accreditations, ISO 9001:2000 Quality Management Award and 

Investors In People, in the middle of 1993. 

1.11 In 1993 the company purchased its first premises, the White Building, followed 

by the Red Building in 1997, after a long negotiation process of over two years. 

1.12 In September 1994 WS Training was asked by the Board of Heat Development 

(Dundee), a private training company in home insulation that received ESF 

funding to employ trainees, to provide them with management advice to assist 

them with their financial difficulties. It was soon established that the quality of 

Heat Development’s work was sub-standard and the work practices were 

insufficient. 

1.13 WS Training assisted Heat Development for over two years and renamed it 

HEAT 2000, replaced the trainees with employees and improved the quality of 

its work significantly. In 1995 WS Training took over HEAT 2000 and early 

1996 WS Training, WS Services and HEAT 2000 merged into the Claverhouse 

Group, incorporating Claverhouse Training and a trading subsidiary 

Claverhouse Services. 

1.14 The take-over of HEAT 2000 shows some of the main characteristics of 

Claverhouse that makes it successful as a social enterprise. Claverhouse has 

never been risk-averse, as many third sector organisations are, but have also 

measures in place to control and manage the risks. Throughout its history this 

controlled risk-taking attitude has resulted in substantial growth over the years. 

A period of growth and profitability 

1.15 In the period 1996-1997 the company grew and increased its reputation as a 

quality training provider by delivering more and more contracts for employment 

training. At that time the company was operating from various sites across 

Dundee, but these became too small. In order to improve the efficiency of the 

operations the Board decided to run all operations from one site and started 

looking for new premises. In January 1998 the Claverhouse Group moved into 

its current premises and relocated all their services under one roof. The 

building had been seriously neglected for a number of years and it took till May 

2000 to complete the refurbishment. 

1.16 The growth in this period was driven by a number of factors. After the initial 

financial pressure of the take over and reorganisation of HEAT 2000 the home 

insulation business generated surpluses. Also Claverhouse was able to lever in 

training money on the back of the home insulation business. 

1.17 New government policy was another key contributor to the growth and stability 

of the Claverhouse Group. In 1998 the government launched its New Deal 

programme, and Dundee was selected as one of the Pathfinder areas for New 

51

Deal. The Claverhouse Group quickly became the main provider of New Deal 

services in the area, which spurred the growth of the company. 

1.18 Because there was a cross over between training and commercial activities, 

Claverhouse operated the home insulation service throughout this period as a 

trading arm under the name Claverhouse Services. All the surpluses generated 

in this period were reinvested in the premises. 

1.19 The number of staff grew from 40 to around 70 in this period, but the growth 

was for the main part based upon New Deal. 

1.20 At around 2000 the Board started to change. Originally the Board was 

predominantly made up by public sector representatives and elected members, 

but there was a realisation that different skills were required and from 2000 on 

more people with a business background were attracted to the Board to 

increase the income generation capacity of the company. 

Crisis 

1.21 In 2005 the financial position of Claverhouse took a turn for the worse. In the 

financial year 2005/6 the company recorded a heavy loss that put the survival 

of the company at risk. The management of finances was not tight enough and 

the company continued loss-making operations for too long, in particular the 

home insulation activities of Claverhouse Services. It became clear that the 

financial reporting systems were not adequate and the Board did not receive 

enough information to deal with the arising challenges. Strong leadership, by 

the Chief Executive, has been instrumental to the success of the organisation, 

but has also contributed to the problems in this period. The Board trusted the 

Chief Executive too much and did not exercise its controlling role well enough. 

It did not ask the right questions and did not insist on getting answers. 

1.22 Once the Board realised the scale of the problems, they wound down 

Claverhouse Services and took measures to turn the company around. It 

realised that the governance system was not working well enough and that they 

had to change their role. This led to changes in the Board and a new Chair took 

over. The new Board undertook a complete overhaul of the policies and 

procedures of the company. The Board agreed a rescue plan for the 

organisation and insisted on new financial management systems and very tight 

financial reporting. The role of the Board changed from ‘rubberstamping’ to 

strategic leadership. 

1.23 In 2006 the serving Chief Executive, and also his intended successor, retired. 

Because of the precarious financial situation, Claverhouse was forced to recruit 

from within the organisation and came up with a joint Chief Executive model, 

which was in place until 2007, when one of the Chief Executives left the 

company and the current Chief Executive took over the leadership. 

1.24 Because the losses were mainly caused by the trading arm Claverhouse 

Services operating at a loss, the board took the decision to wind it down in 

2006, which resulted in the redundancy of 14 staff members. The Board has 

learned since that appropriate information is essential to make the right 

52

decisions and the decisions made should make first and foremost business 

sense. 

1.25 Another contributing factor to the problems was the insufficient communication 

between the Board and the company’s auditors. This has greatly improved with 

an active partnership between the management team and the current auditors. 

1.26 Also in 2006 some major contracts came to an end and major changes were 

needed in the way Claverhouse delivered its services. 

1.27 Although the situation was serious, the company did not go under, which can 

be contributed to: 

Recovery 

• the strong relationships the company has built over the years, which 

ensured that creditors were co-operative; 

• the strong reputation as a professional deliverer of quality services that 

achieves outcomes for unemployed people meant that partners did what 

they could to support the company; and 

• the strong responsibility the staff and Board felt to the clients of 

Claverhouse, which caused them to persevere. 

1.28 In 2007 Claverhouse was still trading at a loss, but this was solely caused by 

the redundancy cost involved in closing down HEAT 2000. However, 

redundancy and restructuring turned things around and the company was back 

on track and profitable from 2008 onwards. 

1.29 Because of the problems in the past years, Claverhouse has become even 

more aware of the value of relationships and partnerships and Claverhouse is 

investing more time and effort in building and maintaining these. 

1.30 Since the recovery of the company has been secured, Claverhouse has been 

looking at the wider possibilities of social enterprise. Due to the recession there 

are fewer jobs available, so Claverhouse is increasingly looking at creating 

these jobs themselves by setting up social enterprises. 

1.31 Again Claverhouse has used the opportunities arising from government policy 

change, with Future Jobs Fund that came into being in 2009 as the 

government’s reaction to the recession being pivotal. The subsidy provided by 

the Future Jobs Fund makes the social enterprises break-even in the start-up 

period. 

1.32 The first social enterprise that was established focussed on property 

maintenance. The second social enterprise was created when Tayside Police 

and local authorities agreed to donate bicycles held in lost property or at civic 

amenity sites and Claverhouse set up a bicycle refurbishment company. On the 

back of that business Claverhouse also started a white goods recycling 

business. Claverhouse also opened three sales outlets to market the bicycles 

53

and white goods. These enterprises were started by Claverhouse and selffinanced, 

but have been able to grow and diversify with the assistance of 

Future Jobs Fund. 

1.33 A timber recycling business has been established to salvage and re-work 

timber from a number of major construction projects in Dundee, and a Market 

Garden venture has been launched, again with the prime objective of creating 

employment. A number of other ventures are planned over the next 12 months. 

1.34 These social enterprises all have as common characteristics that they: 

• were set up in reaction to opportunities that arose from Claverhouse’s 

relationships and reputation; 

• have the potential to employ long-term unemployed people; 

• have the potential to reach a scale that will make them sustainable in the 

longer term; and 

• use the Future Jobs Fund to achieve break-even in the first year. 

1.35 The way that Claverhouse is using the Future Jobs Fund is a testimony to the 

company’s ability to innovate and adapt to new situations. It also shows that the 

company has an open culture that listens to its wide range of stakeholders and 

is geared up for learning. 

1.36 Scale is seen as essential for the ultimate success of the social enterprises. 

Claverhouse has set these social enterprises up to create employment 

opportunities for their clients, so the larger the enterprise, the more 

employment opportunities. Also the social enterprises need to break-even at 

least. To achieve this they should grow to a significant size and scale to 

recover the relatively high overheads. 


1.37 Claverhouse’s core business is the provision of employability support services, 

which is, due to the recession, a growth industry. 

1.38 There are more and more people becoming unemployed, and it is becoming 

increasingly difficult to find employment for Claverhouse’s clients, especially 

because the majority of clients are people with extra barriers to the labour 

market. This group is experiencing growing competition for jobs from people 

who have just been made redundant due to the economic downturn and who 

have fewer additional barriers. The trend is that Claverhouse is getting more 

referrals and their success rate is slightly decreasing. 

1.39 There is also a continuing trend for contracts to attach the greatest financial 

reward to sustainable job outcomes. In the past, contracts rewarded activity, 

not related to whether the beneficiaries actually get a job. Nowadays the main 

elements of funding are only paid if the beneficiary is in employment for a 

certain amount of time. In the light of the current economic climate and the 

54

esulting situation on the labour market, it will be harder to find employment for 

the people Claverhouse works with, and thus have an impact on financial 

performance. One of the strategies Claverhouse is deploying to address this is 

the establishment of social enterprises to create jobs. 

1.40 With the introduction of the Work Programme by the coalition government it is 

possible that 100% of the funding will only be payable when the beneficiary 

actually finds a job. Claverhouse is preparing for this, showing they plan ahead 

and are pro-active to changes in public policy. 

1.41 The improved financial and management information systems play a vital role 

in accurately predicting job outcomes and plan and track activity, which will 

become more important as payment will be more related to job outcomes. 

1.42 Claverhouse is also scrutinising all its operations and making them operate as 

tightly as possible and optimise resources. The recession has so far not led to 

redundancies and the financial performance of the company is still satisfactory. 


1.43 At the moment Claverhouse is dependent on two DWP contracts for more than 

80% of its turnover. This makes the company vulnerable to changes in 

legislation or policy that will change the size, scope or nature of these contacts. 

1.44 From summer 2010, the new Work Programme will be let for tender and the 

continuing success of the organisation depends on success in this round. 

1.45 This also presents another change for Claverhouse. Until now they have 

always been the main contractor with the DWP in Tayside. The drive for 

efficiency with DWP has led to larger and larger contracts, in value and 

geographical area. This means that Claverhouse, and other similar social 

enterprises, are unable to bid for these contracts independently, because they 

lack the capacity to deliver nation-wide contracts. They need to team up with 

one of the large, mainly commercial, providers as a local sub-contractor. 

1.46 Due to its excellent reputation and relationships, Claverhouse was accepted as 

a sub-contractor, to a greater or lesser extent, in all bids that covered Tayside 

under the Flexible New Deal 2 procurement exercise which has only recently 

been abandoned. The fact that Claverhouse managed to negotiate a part in all 

bids is another testament to the importance of reputation and relationships. 

1.47 The change from prime contractor to sub-contractor has the potential not only 

to change the roles and responsibility of Claverhouse and decrease the extent 

to which they achieve their social objectives (represent the interest of 

unemployed people), but also means that Claverhouse misses out on the 

substantial management fees attached to the role of main contractor. 

1.48 One of the main challenges for Claverhouse will be to diversify their services in 

the future. 

55


56

Timeline 


1983 Start Dundee Training for Employment and Enterprise Project 

(DTEEP) 

1987 Company Ltd by Guarantee set up under the name Workstart 

1988 Workstart Training Agent for Tayside and Ayrshire 

1990 Workstart wins Restart and Job Club contracts with 

Employment service 

1991 Loss of Training Agent contracts for Tayside and Ayrshire 

1992 Ken Fagan appointed Chief Executive 

1992 Name changed to WS Training 

1993 Achieve ISO 9001:2000 accreditation 

1993 Achieve Investors In People accreditation 

1993 Purchase of the White Building 

1995 Take over of HEAT 2000 

1996 Merger of WT Training, WT Services and HEAT 2000 into the 

Claverhouse Group 

1997 Purchase of the Red Building 

1998 Move to current location 

1998 New Deal launched 

2005 Colin Rennie took over as Chairperson 

2006 Retirement of Ken Fagan as Chief Executive, start of joint 

Chief Executives 

2006 Closure of Claverhouse Services 

2007 Investment in Social Enterprise 

2007 Alastair Cameron appointed as Chief Executive 

2007 Start of Cycle Stop and Connect social enterprises 

2008 Microsoft IT Academy accreditation 

57

CASE STUDY 6: DIAL A COMMUNITY BUS BUCHAN 



Buchan Dial-A-Community-Bus (DACB) is a growing social enterprise focusing on 

reducing social exclusion through the provision of high quality community transport and 

support services. DACB started in 1993 as a group of volunteers and has grown over 

the years into one of the main public transport providers in the area. DABC has set up 

a separate trading arm DAB Plus to provide commercial transport services and 

transport related training. 


DACB was established as a Company Ltd by Guarantee with Charitable Status in 

2001. DACB does not charge its clients directly, but aims to recover its costs by 

operating contracts on behalf of local authorities and other public agencies. It also uses 

the profits of DAB Plus, a Community Interest Company (CIC), to further subsidise 

community transport. 

Markets 

DACB originally served the population of the Buchan area in North East 

Aberdeenshire, a rural community of around 40,000 with a relatively large share of 

elderly people, but it is expanding its services to the whole Grampian area. DACB 

strictly operates in the transport sector and has little opportunities to diversify its 

services. DAB Plus provides transport related training services and has the potential to 

grow geographically. 


DACB does not have a large asset base. It owns 6 vehicles and rents its premises. It is 

able to leverage a range of intangible assets bound up in the knowledge, skills, and 

experience of five voluntary directors/management committee members and a staff 

team of fourteen. 


DACB is in a sense a ‘typical’ community transport organisation, providing 

transport to mainly elderly and disabled people in a rural area for a nominal fee. 

But the entrepreneurial approach and the growth of the scale of its operations, 

makes DACB a unique example of using the social enterprise model to provide 

community transport. During 2008/9 DACB offered transport to 540 individuals 

and groups and provided over 36,000 passenger journeys. 

DACB is well embedded in the local transport infrastructure and is recognised as a 

best practice example by the Scottish Government and the Community Transport 

Association. In 2007 DACB won SCVO’s ‘Charity of the Year’ award. 


DACB has demonstrated ongoing and incremental financial growth, with income 

reaching £230K in 2008/09, of which £170k (75%) is grant funding. Of this £107k is a 

Rural Community Transport grant, which could be seen as core funding for rural 

community transport schemes. It is expected that 2009/10 will see a significant shift 

from grant funding to earned income. DACB has a small general reserve of £28k and 

net assets of £49k. 

58


Birth 

1.1 The story of the Buchan Dial-A-Community-Bus (DACB) started seventeen 

years ago in 1993, with a group of local community members who wanted a 

shopping service to help elderly and vulnerable people in the rural setting of 

Buchan to access the high quality and more affordable shops in Aberdeen and 

Peterhead. They engaged with Aberdeenshire Council’s Social Work and 

borrowed a bus from them. They found off duty police officers to drive it and 

started a weekly shopping trip. 

1.2 The initiative was a success with the local people. The uptake of the service 

was more than expected and the comments received by the staff and Board 

were very positive. But when the Council bus broke down, they realised that if 

they wanted the service to continue, they should raise money for their own 

vehicle. This was the start of the idea to operate on a different scale. 

1.3 In 2000 the group applied for and received a grant from the Rural Community 

Transport Initiative (RCTI) to purchase two minibuses and employ a part time 

co-ordinator and full time driver. The organisation was incorporated and 

awarded charitable status in 2001. 

1.4 This was the moment that DACB expressed the ambition to become a more 

substantial player on the public transport market for the first time and can be 

seen as the birth of DACB as a social enterprise. 

The Innocent years 

1.5 The early years of DACB have been characterised by the manager as “the 

innocent years”, where the only aim of the organisation was to operate the two 

minibuses and provide transport for vulnerable clients. The manager describes 

this as “learning, dreaming and having fun”. The financial security was provided 

by the RCTI grant and there was not a lot of consideration given to future 

development and growth. 

1.6 The start of these innocent years was marked by the employment of a 

Development Worker, who is now the General Manager, and has been the 

driving force behind DACB’s development as a social enterprise. She has all 

the characteristics of a social entrepreneur: an excellent networker with passion 

and vision, a strong leader that inspires success and a keen eye for what 

customers need. 

1.7 DACB had to learn the technical aspects of running public transport and had to 

come to grips with the fact that they were employing staff. DACB Board and 

staff were very inward looking and the only responsibility they felt was to the 

clients, and did not include the organisation itself, the staff or the funders. 

1.8 From its early years, DACB has become an essential service for elderly and 

disabled people in the rural Buchan area and plays an important role in keeping 

young people in the area. This highlights the importance of offering services 

59

that meet local needs and stresses the requirement to remain responsive to 

these needs. 

1.9 From the outset, DACB has also been locally owned and governed, without 

interference from outside bodies. This is seen as a strength of the organisation 

by both internal and external stakeholders, as it allows DACB to be flexible in 

its approach and respond to local need. 

1.10 Its strong community base also enables the fundraising capacity of DACB, 

which raises additional money for DACB’s services, improves its public image 

locally and improves community cohesion. 

Childhood 

1.11 In 2003 DACB started to look at new opportunities and got involved in its first 

contract for Aberdeenshire Council. This required a fundamental shift in 

approach and attitude for the whole organisation. 

1.12 DACB had heard of a new round of tendering opportunities with Aberdeenshire 

Council and made the decision that they “wanted a piece of the action” and 

started negotiations with the Council to deliver Demand Responsive Transport. 

1.13 When eventually successful in winning the tender, DACB in the first instance 

did not realise it was then subject to a contract that was fundamentally different 

from grant funding. The contract stated defined activities that had to be 

delivered as described in the contract as opposed to grant funding where 

DACB had the freedom to deliver services as they seemed appropriate. 

1.14 The organisation realised it had an additional responsibility to Aberdeenshire 

Council as its client and that it had a responsibility to fulfil the terms and 

conditions of the contract. With the new contract came the need to 

professionalise and to ensure that contractual obligations were met. 

1.15 In 2001 DACB was awarded the Investors In People award, and has 

successfully renewed it in 2004. The renewal process helped the organisation 

to plan better and get the necessary structures in place. 

1.16 From the outset DACB has had a strong community base. All of its community 

transport services are based on local community need. After a negative 

experience in 2004, where DACB delivered a service that the local authority 

wanted to provide, but the community did not need, they made the decision to 

never deliver services that are only based on public officers’ perceived need for 

communities, regardless of the financial benefits for DACB. 

1.17 As time progressed, life for DACB started to become more serious and the 

organisation started to look more outwards and forwards. DACB had a desire to 

learn and willingness to take calculated risks, without the fear of failure. 

1.18 As time went on DACB developed an increasing range of partnerships that 

became a key component of its success, especially Aberdeenshire Council and 

Grampian Police. These relationships are at two levels: strategic and personal. 

60

1.19 During the early years, and since, DACB’s objectives have had to align closely 

with the Council’s strategic objectives: alleviation of rural deprivation, improved 

access to services in remote areas and decrease transport deprivation in rural 

areas. DACB meets these objectives that, for a variety of reasons, statutory or 

commercial services cannot meet. 

1.20 From the start DACB has had a special relationship with Grampian Police and 

this relationship has developed over time. DACB delivers training to the Police 

cadets before providing community placements for them, while the Police offers 

support to DACB in many ways and many officers volunteer for the 

organisation. 

1.21 DACB from the outset has also helped to increase community capacity and 

community cohesion in the areas it operates in. In that it builds on the Council’s 

community capacity building work and adds to it. 

1.22 DACB’s Board and General Manager have also developed excellent 

relationships with key people on a personal level. DACB also makes an effort to 

keep in touch with people that have moved on (staff and Board), which has 

created a lot of goodwill and local support. One of the Board members 

described it as “an unofficial friends of DACB”. 

Growing Up 

1.23 2005 was an important year in the life story of DACB. It was the end of the 

RCTI initiative that had funded DACB up to that point and the loss of this 

funding stream emphasised the need to do forward planning and DACB began 

to think about itself as a business. The main question that needed to be 

answered was how can DACB exist without grant funding, or at least how can 

they minimise the dependence on grant funding. The need for more efficiency 

in the operations was also recognised. 

1.24 During its development it became apparent that the growth and success of 

DACB was due to key staff, in particular the skills, drive and enthusiasm of the 

General Manager, who has been with the organisation from the outset. The 

organisation at this point was still strongly driven by its manager. All ideas and 

plans were in her head. Although essential for the initial success, there are also 

some risks for the organisation in this dependency on one key staff member. 

1.25 Changes in DACB’s Board were also crucial in this. Some of the old Board 

members, who did not want to be involved in running DACB as a social 

enterprise, were replaced by more ‘business-minded’ people. They instigated a 

more strategic thinking within the Board and started to do strategic planning. 

1.26 2005 was also the year that DACB ‘professionalised’ the way it managed its 

staff and volunteers. Until then the relationship with staff and volunteers was 

based on trust and local relationships, but a serious incident with a volunteer, 

taught DACB that it should manage it human resources on business principles, 

supported by appropriate policies and procedures. 

61

1.27 This process also led in 2006 to a Strategic Plan and the decision to set up a 

wholly owned trading subsidiary, DAB Plus, to generate independent income to 

subsidise its core work of providing affordable transport to the community. 

DAB Plus started operating at the end of 2007. In setting up DAB Plus the staff 

and Directors began to realise that DACB itself was actually a social enterprise 

in its own right. 

1.28 DACB did not take on a commercial license because it did not want to compete 

with commercial transport operators; rather it continued to provide additional 

complementary services targeting social need. If there is a commercial bus 

available, DACB will not take the client. 

1.29 DAB Plus, however, applied for an Operating License, so it could undertake 

commercial contracts, such as private hires. DAB Plus has a separate Board, 

with two DACB Board members and one independent. In its first year of 

operation DAB Plus returned a small profit. 

1.30 The creation of DAB Plus is a prime example of DACB’s innovative working in 

developing new services. 

1.31 In 2006 DACB hired a finance administrator to set up and manage the finances 

of the company. Having appropriate financial systems in place enabled the 

company to provide adequate financial information when required, which is 

essential for the Board and management to base strategic direction on. 

1.32 Public image was identified as a key element of DACB’s early business 

success and it has invested considerable time and effort in building and 

maintaining this since. In 2007 DACB won the first ever Scottish Charity of the 

Year award, which was a huge boost to the morale of the organisation. It gave 

DACB credibility with public agencies, funders and commissioners and was a 

huge support in the development as a social enterprise. 

1.33 It also stressed the commercial importance of the organisation’s reputation. 

Winning the award opened many doors and has contributed to a range of new 

contacts and relationships. It has got DACB noticed with “the big boys in the 

Central belt” as the manager describes. 

1.34 DACB also recognised the value of involvement in regional and national 

community transport structures. It is a founder member of the Aberdeenshire 

Community Transport Forum (ACTF) and a member of the Aberdeenshire Bus 

Forums (where it builds relationships with the main commercial transport 

providers). DACB now also represents the ACTF with NESTRANS (the regional 

transport partnership) and is an active member of the Community Transport 

Association, Vice-Chair of the CTA Scottish Committee and involved in a range 

of local and regional organisations and forums. DACB has invested heavily in 

these relationships that has built their reputation and have created a wide 

network of support. 

62

Graduating 

1.35 In November 2007 the Scottish Government decided to transfer the Rural 

Public Passenger Transport (RRPT) grant to local authorities without ring 

fencing it. Local authorities were free to spend their RPPT grants on whatever 

rural public transport services they wanted, including introducing new services 

and upgrading or maintaining existing services. This was a great shock to 

DACB, who had expected that the money would be going to the Regional 

Community Transport Partnerships, with whom DACB had already built a 

relationship. 

1.36 This meant that the planned three year core funding that was indicated by the 

Scottish Government did not come through and DACB had to renegotiate this 

funding with Aberdeenshire Council. This caused real concern for DACB and a 

renewed determination to become less dependent on government grant 

funding. 

1.37 In a series of meetings between the Manager and the Board it was decided to 

take action. Over the years responding to the commissioners and funders 

needs had become more and more important, but from now on this became the 

first priority of the organisation. 

1.38 The commercial potential of DACB’s operations has been increasingly realised 

and in 2008 DAB plus won a substantial contract with Jobcentre Plus, which 

changed the organisation further. The pressure on delivery of this contract 

contributed to the professionalization of the management of staff and 

volunteers. 

1.39 The change from a voluntary sector organisation to a social enterprise was 

hard, especially for the Board and staff members alike. Some within the 

organisation could not accept that the services were run as a business. In 2009 

this came to expression in staffing issues and in solving these DACB lost some 

Board members and staff. But this process was essential for the development 

of DACB as a social enterprise in the long term. 

1.40 The role of the Board of Directors has changed over time. With the growth of 

the organisation and the shift to social enterprise a new type of Board was 

needed with different, more business-oriented skills. A ‘governing’ Board has 

been put in place, focused more on strategic direction and financial control. 

These necessary changes in Board membership happened and were not 

without conflict. The Board now recruits its members in a highly structured and 

targeted way and recruitment to the Board is now seen as a key strategic 

priority. 

1.41 With a robust organisational infrastructure in place, DACB’s business has gone 

from strength to strength. For example, in 2010 DACB won its first competitive 

tender with the NHS and subsequently won four competitive tenders with 

Aberdeen City Council (but only accepted three of them) and three with 

Aberdeenshire Council. 

1.42 The growth of the organisation has also highlighted the need for external 

support. The General Manager has a business mentor from the private sector 

through a Scottish Enterprise sponsored programme. This has helped the 

63

organisation in rational business decision making and helped strengthen 

change management. 

1.43 While DACB has struggled with human resource management at certain points 

of its life it has now also hired Empire HR, a human resource consultant to 

support the General Manager. 

1.44 The Scottish Social Enterprise Coalition is another valued support to DACB in 

providing information and best practice on social enterprise development, legal 

issues and national and local policy and strategy development. 

1.45 It is this willingness to draw on and learn from the support available that has 

enabled it to grow from a small voluntary organisation to a community transport 

provider that can compete with commercial providers. As DACB has 

recognised the importance of learning from others, it has also committed itself 

to sharing what they have learned with other community transport organisations 

and social enterprises. 

1.46 The General Manager said about this period: “In the beginning work was fun 

and play, but now it is still fun, but increasingly challenging and stressful”. 

However, when asked about its success, every stakeholder agreed that the 

success of DACB is first and foremost that it delivers on its social objectives 

and through the whole period of growth has always kept true to its values. 


1.47 DACB saw the recession coming and took some cautionary measures, such as 

adjusting their bank accounts to not exceed the maximum guaranteed levels. 

1.48 The real pressure, however, is expected next year, when the aftermath of the 

recession will fully impact on public budgets. This will potentially have two 

effects on DACB: 

• reduced core funding; and 

• increased use of DACB services by public bodies and services (without 

paying for it). 

Both these effects will have a negative impact on DACB operation; more 

demand for less money. 

1.49 DACB is preparing for this in the following ways: 

• tendering for commercial contracts; 

• tendering for contracts with Aberdeen City Council; 

• increase in training services and associated income; 

• changes in its reserves policy to increase its resilience; and 

• production of a Contingencies Plan. 

1.50 One effect of the recession has been felt already. Aberdeenshire Council has 

noticed DACB that its A2B contract (a demand responsive door-to-door 

transport service), will not be renewed, due to lack of funding. It has been made 

64

clear that this is not a reflection on DACB, but the Council does not have the 

money to continue the service. 


1.51 There are a number of issues that are critical to the success or failure of DACB 

in the future. 

1.52 DACB’s business model has a number of limitations and difficulties: 

• DACB provides services that commercial transport providers deem to be 

not-profitable; and 

• the value of the public service contracts is limited, not based on full cost 

recovery, while there is a potentially unlimited demand and, true to its social 

values, DACB will avoid turning people away. 

1.53 In the beginning, the General Manager was taking care of all aspects of the 

organisation: operational, financial, and strategic development. With the growth 

of the organisation this is no longer feasible and DACB is in the process of 

developing a management structure with appropriate middle managers. This 

process is not easy and initial resources are an issue. The organisation needs 

an improved management structure to manage growth, but can only afford it 

after they have achieved the growth. 

1.54 Succession planning has been recognised by many as an important issue for 

the future. 

1.55 There is still an inequality in concessionary fares. Community Transport groups 

are not able to access the concessionary fares scheme, which means that 

although they hold a concession card, they still have to pay a fare on DACB 

services, that only exist because there is no other form of public transport. 

These subsidies, only given to commercial operators, do not solve the problem 

in a rural area, where there is only a very irregular bus service or the bus 

service not accessible to vulnerable groups. 

1.56 In HR management there is a discrepancy between the social aims of the 

company and its commercial objectives. As a social employer DACB wants to 

employ local people that are unemployable or not quite ready to access the 

labour market and give staff and volunteers all the support and protection 

required. As a business it is competing in a commercial environment, with 

competitors that are solely focused on their customers, and implement a 

rigorous HR policy. 

1.57 A professional attitude to staffing and recruitment has improved the 

performance of the organisation and enables it to compete with the private 

sector. In the beginning DACB grew their own people and tried to “put square 

pegs in round holes” which inevitably did not work. Now new staff members are 

recruited through a systematic process. 

1.58 In general DACB is very positive about the future and has a strategic plan to 

ensure success in the long term, including: 

65

• DACB is planning to work across Aberdeenshire and the City; 

• DAB Plus, the training company, will work Grampian wide and contribute to 

subsidising transport for vulnerable groups; 

• DACB has plans to build a new accommodation, including space for rent 

and a garage; and 

• There are plans to set up new social enterprises. 

1.59 One of the key success factors of DACB is that it is growing to reach a scale of 

activity that can make the organisation financially sustainable. Without a proper 

scale of activity, the organisation will always be very vulnerable and dependent 

on others for its survival. DACB has recognised this and has grown its activities 

in scale, diversity, and geographical coverage. Importantly, this growth 

continues to occur in a measured and controlled way where DACB alternates 

periods of growth with periods of consolidation in which the internal structure is 

adjusted to the new scale of activity. 

1.60 DACB’s professional and business attitude is widely recognised as a key factor 

to its future success. This attitude ensures DACB delivers what it promises, 

which is essential to its reputation of a transport provider in a commercial 

environment. 

1.61 DACB will continue to be pro-active in its operations and not averse of 

controlled risks. There are numerous examples where the organisation saw an 

opportunity and grabbed it. 

1.62 In the words of the General Manager: “DACB has grown from unconscious 

incompetence (bright ideas and naivety), via conscious incompetence (you 

know what you don’t know) to conscious competence (you get it right, but you 

constantly have to think about it). The next step would be unconscious 

competence (doing the right thing without thinking about it)”. 

66


67

Timeline 


1993 DACB service starts 

1999 Grant RCTI 

2000 Bought first 2 minibuses 

Employment Co-ordinator and full-time driver 

2001 Charity Limited by Guarantee 

Charitable status awarded 

Investors In People award 

Introduced MIDAS training 

First Business Plan produced 

2003 First contract with Aberdeenshire Council 

2004 Investors In People award renewed 

First contract with Aberdeenshire Council 

2005 End of RCTI funding 

2006 Strategic Plan produced 

2007 Start of DAB Plus 

Scottish Charity of the Year 

2008 DAB Plus wins contract Jobcentre Plus 

2009 Hire Empire HR 

Start Business Mentoring support 

2010 First competitive tenders won 

Contracts won with Aberdeen City Council 

68

CASE STUDY 7: THE NORTH HARRIS TRUST 



The North Harris Trust was established in 2003 to enable the community buy-out and 

management of the 55,000 acre North Harris Estate (and subsequently the 7,500 acre 

Loch Seaforth Estate), a large part of the Isle of Harris. Its purpose is to reverse the 

long-term depopulation in North Harris through providing affordable housing, rebuilding 

the fragile economy, and creating opportunities to retain young people. It is custodian of 

the land with its role to manage, develop and conserve this asset. 


The Trust is a community-controlled social enterprise that was established as a 

Company Ltd by Guarantee with Charitable Status. The Trust generates various income 

streams from the land and assets it holds (e.g. leases with fish farming, 

telecommunications & sporting interests and a conservation management agreement) 

and reinvests any surpluses for the benefit of the North Harris estate and its residents. It 

has established a trading subsidiary to take forward promising business ventures, 

including energy projects. 

Markets 

The Trust serves a population of around 700 people, distributed across some 130 crofts 

and 17 townships. Its operations touch on a range of markets including tourism, 

housing, fish farming, renewable energy, recycling, conservation, land management, 

leisure and sport. 


The Trust makes use of fixed assets with a balance sheet value of £2.6m, including 

62,500 acres of land, various properties, two vehicles, items of equipment, and 

investments. It is able to leverage a range of intangible assets bound up in the 

knowledge, skills, and experience of ten voluntary directors and a staff team of seven. 

Volunteer work parties contribute significantly to land management and conservation 

activities. 


The North Harris Trust represents a unique collaboration between the community, 

conservation interests and the private sector and offers a new approach to community 

led natural resource management. It has initiated the first affordable housing project in 

Harris for seven years, negotiated an agreement to manage the conservation 

designations on the estate, secured a contract to manage a recycling centre, and has 

initiated a wide range of economic and environmental projects on the Estate. 


The Trust has demonstrated ongoing and incremental financial growth, with income 

reaching £288K in 2008/09. Although still reliant on outside grant funding to initiate new 

projects, this now accounts for only 22% of all income. Each year the Trust has returned 

a healthy financial surplus, which peaked at £97k (compared to less than £40K in its 

first year of trading). This has enabled the Trust to build up a financial reserve of £206K 

and net assets of £2.86m. 

69


The community buy out 

1.1 The story of the North Harris Trust began in late April 2002 when news reached 

the local community that the 55,000 acre North Harris Estate on which they 

lived was to be put up for sale on the open market. Within four days of this 

members of the community had mobilised, within five months they had in place 

a detailed business case and funding commitments of £2.11m towards 

purchase of the land, and within 11 months (after protracted negotiations) they 

had made the purchase and established a financially viable social enterprise to 

manage it. 

1.2 The story centres on a traditional crofting community’s close association with 

the land, and its desire to own and control this important asset. Beyond this, an 

‘alchemy’ of influences came together to create what is now a successful social 

enterprise. 

1.3 The community itself provided ‘fertile ground’ on which to establish a successful 

rural social enterprise. Building on a history of a strong voluntary sector there 

was a desire to have a greater control over its own future and at the same time 

to halt the critical depopulation of North Harris that galvanised the community. 

There was also, what has been described by various people inside and outside 

of the Trust as, a “togetherness” within the community and a “gentle manner” 

that left it open to new possibilities. This was accompanied by the existence of 

a clearly defined ‘community’ of 700 people, the nucleus of which was 

concentrated on the main settlement Tarbert. 

1.4 From within this community a small group of socially entrepreneurial leaders 

emerged, with what has commonly been described as the “right balance” of 

professional and business skills, commitment, determination, credibility, and 

connections. Importantly they brought a hard headed realism to the process 

and a sensible, measured, and long-term perspective; as one local agency 

representative put it “their hearts never ruled their heads” and another that 

“their feet were firmly on the ground”. This core group understood the skills and 

capabilities that they were able to draw on among the local population, as well 

as where they needed to draw more heavily on outside expertise to progress 

their ideas. 

1.5 This was combined with a timely set of influences that made the buy-out and 

subsequent social enterprise start-up possible: 

• the Scottish Land Reform Act was passing through Parliament, providing a 

strong endorsement for community ownership and management of land; 

• there was a willingness on the part of the estate owner to engage with the 

community as preferred bidder and to negotiate a fair price for the land; 

• there was a history of successful community action on North Harris (e.g. 

bringing about a new road and a new leisure facility to the Island), which 

provided confidence and belief that “anything was possible”; 

70

• there was learning to be drawn from the earlier experience of major 

community buy outs, including on Eigg, Knoydart, and Assynt; 

• there was the availability of substantial grant funding from the Scottish Land 

Fund and other sources that could finance the venture; 

• there existed Harris Development Ltd (a community development 

company), which was able to provide intensive, ongoing and expert support 

to the fledgling steering group; and 

• there was immediate and ongoing “often daily” professional expertise made 

available from the Highlands and Islands Enterprise (HIE) Community Land 

Unit and an independent community land activist/lawyer. 

1.6 Finally, a unique partnership formed with a private investor proved instrumental 

in the venture proceeding. This partnership involved a joint bid for the Estate, 

whereby Amhuinnsuidhe Castle (regarded as a liability, or at least a risk, by the 

community) and associated fishing rights within the Estate was taken into 

private ownership, and the remainder of the Estate transferred to the Trust. 

This unique collaboration provided the financial strength required by the Trust 

and an appropriate balance of risk and reward. 

1.7 In March 2003 the Trust completed the successful £2.2m purchase of the 

Estate, by which time it had established a social enterprise to manage the 

asset. 

“Learning what we had taken on” 

1.8 Once the sense of achievement and euphoria had diminished a new phase of 

activity commenced. This required a different set of skills and disciplines. 

1.9 The priority for the next year or more was to make sense of the scope and 

financial position of the assets that the Trust had purchased on behalf of the 

community, and to form plans to maximise the income and benefits from these 

assets. To have full control of the land and associated assets was said by one 

Director as having “trebled the horizons” of the Trust and introduced a range of 

new ideas and possibilities. 

1.10 This process was greatly assisted by the recruitment of a full-time project 

officer and part-time administrator in May 2003; posts funded for three years 

(and subsequently extended) by the Community Land Unit of HIE as part of the 

package of capital funding to enable the project to proceed and become 

sustainable. 

1.11 The learning curve was significant, with knowledge and capabilities having to 

be developed quickly by the fledgling Trust to move into the position of land 

owner and manager. The ‘aftercare’ advice provided by the Community Land 

Unit (and more recently HIE ‘account managed’ support) also help to 

accelerate the learning and confidence of Trust directors and staff. 

1.12 The process of putting in place the basic infrastructure, systems and processes 

to govern and manage a social enterprise with a ‘day one’ balance sheet value 

of over £2m was an important one. This took some time and is an ongoing 

process. 

71

1.13 Early attention was paid to the structure and governance of the Trust. 

Measures were taken to ensure the Trust’s board was robustly constituted and 

accountable to the wider community. In late 2004 the Trust also formed North 

Harris Trading Company Ltd to take forward new business ventures (principally 

energy projects), while safeguarding the Trust’s charitable status and 

minimising its exposure to risk. 

1.14 With a robust structure in place, the overriding priority for the Trust was to 

deliver on its stated purpose and to cultivate a range of earned income streams 

from the land and assets in its ownership. It explored all options and 

demonstrated a willingness to assess all business ideas on their merits. 

1.15 Agency partners have highlighted the early, open, positive, and proactive 

engagement on the part of the Trust, leading to the exploration of new 

opportunities and subsequently a very productive and mutually beneficial 

working relationship. 

1.16 The decision was taken to concentrate initially on eight main areas of potential 

that were identified in the feasibility study from the previous year: 

• Whaling Station 

• Property 

• Energy projects 

• Leases 

72 

• Land management 

• Crofting development 

• Deer herd 

• Land release 

1.17 These areas of focus were consistent with the business case set out in the 

Trust’s earlier feasibility study and business plan. This highlights the 

importance of investing sufficient time in advance of start-up to establish a 

robust business plan. 

Early organic growth 

1.18 The Trust was established with a strong ethos of self-reliance and a strong 

focus on achieving financial sustainability. There was a collective 

understanding that it was important not to become over-reliant on short-term 

funding from others, as the community had relied on the benevolence of 

absentee landlords in the past. 

1.19 In its early years the Trust followed a business strategy based on what has 

been described by staff members as “organic growth”. This meant: 

• progressing small-scale projects likely to generate new income and become 

self-sustaining after a period of up to three years of grant subsidy; 

• taking on new ventures only when resources permitted, with financial 

‘prudence’ the watchword; and 

• only taking on activities that were likely to generate a ‘social return’ for the 

community, and which commanded clear community support. 

1.20 While this approach meant that visible achievements were not seen quickly by 

the wider community as some projects took time to come to fruition, the

commitment by the Trust to the strategy has been unswerving. This is said by 

one director to be “on the Trust’s own terms and at the right pace for the 

community”. 

1.21 Some ‘quick wins’ were achieved by the Trust to strengthen its financial 

position. The principal example related to the renegotiation of lease 

agreements (e.g. payments for telecommunication masts on the Trust’s estate), 

which yielded a significant increase in annual turnover at no additional outlay 

by the Trust. This showed that with active management of the Estate, the Trust 

was able to realise the full financial potential. 

1.22 Another significant milestone occurred in 2006 when, after two years of ground 

work, the Trust assisted a local steering group to purchase on its behalf the 

7,500 acre Loch Seaforth Estate. This brought the landholding of the Trust up 

to 62,500 acres, and meant that the whole of North Harris was subject to 

community ownership and management. This buy out was again driven by a 

strong community leader in what was a dispersed and sparsely populated area. 

1.23 There was also evidence of the ability of the Trust to come up with innovative 

and pragmatic solutions (described by an outside agency representative as a 

“willingness to do things differently”). For example, the Harris Hind Stalking 

Club was created to enable community access to the exclusive sport of deer 

stalking and a cost effective way for residents to be trained in, and provide a 

quality deer management service; something that was unique. 

1.24 Early activity quickly led to small but cumulative achievements. From the outset 

these income streams (some more substantial than initially envisioned) enabled 

the Trust to create a modest but growing year-on-year financial surplus. 

1.25 This growing financial strength created the opportunity to establish a 

Community Development Fund in early 2005 that returns more than £10k in 

grant funding each year to local groups implementing small-scale activities and 

improvements to across the Estate. This provided an important way of 

reinvesting for community benefit, and a sign of tangible local benefits arising. 

1.26 In addition, ongoing communication and consultation with the wider community 

was an early and ongoing feature of the work of the Trust. One agency 

representative described this “inclusive approach” as vital throughout. Directors 

within the Trust also considered it important for the Trust to remain ‘close’ to its 

community and provide residents and crofters with a meaningful influence on 

the Trust’s decision-making. Community accountability has also been ensured 

through democratic representation of people from all parts of the Estate on the 

Trust’s board. A Friends of North Harris group was also formed to extend 

communication and the base of support for the Trust. 

1.27 Equal emphasis went on developing relationships with key partners, most 

notably Scottish Natural Heritage (SNH) and the John Muir Trust (a 

conservation body, which works closely with local communities to retain wild 

natural environments). These partners characterise the Trust as an open, 

willing, professional and effective partner. 

73

Realising the potential 

1.28 Over time the organisational ‘infrastructure’ of the Trust has continued to 

develop and early groundwork in developing projects has come to fruition. 

1.29 Over time the confidence of the Trust in its abilities and its assets has grown. 

With this confidence, has emerged a clearer twin-track strategy: 

• maximising income from the land-based activities of the Trust; and 

• beginning to exploit the potential from renewable energy, through the 

Trust’s trading subsidiary. 

1.30 This period saw the Trust with the confidence to take on projects of a larger 

scale, with some key projects also coming to fruition including: 

• the opening of a community recycling centre, managed by the Trust on 

• behalf of the local authority, Comhairle na Eilean Siar; 

• the first affordable housing development constructed on Harris for more 

than a decade, taken forward with Hebrides Housing Partnership; and 

• a management agreement with SNH to manage protected land on the 

estate, together with establishment of a Ranger Service. 

1.31 Each of these projects provided a significant contribution to the social purpose 

of the Trust, and bring new income streams and staff capacity. 

1.32 The organisational capacity of the Trust has been enhanced significantly with 

the introduction of new staff, who are widely regarded as “skilled” and 

“committed”. Each has been set the challenge of creating a sustainable trading 

income to sustain their own employment beyond the initial term of grant funding 

for their post. 

1.33 Organisational culture and governance has also had to change. The initial 

‘hands-on’ board of the Trust has become a ‘governing’ board, where the 

operational work previously taken on by voluntary directors is now undertaken 

by staff. A strong collective “can do” culture is widely reported by those 

consulted inside and outside of the Trust. This has been created throughout the 

organisation, with a flat staff structure put in place, and staff working as equals 

and directly accountable to the Trust’s Chairperson. At this point the position of 

Chief Executive has not been deemed necessary. 

1.34 These growing achievements and capacity have represented to others a sign of 

the growing track record of the Trust. On the part of agency partners this 

created confidence in the ability of the Trust to deliver further services on their 

behalf and has opened further opportunities for collaboration. 

1.35 A stronger financial position has been reached, where the Trust has been able 

to reinvest its surplus, using this as leverage to attract external project funding. 

For every £1 generated by the Trust itself it has been able to attract outside 

finance of £3 to initiate new ventures. 

74

1.36 This latest period in the Trust’s development has also revealed the only major 

difficulty experienced since its establishment; the abandonment of proposal by 

the Trust to establish three wind turbines. Despite having invested significant 

financial and human capital in the development (with support from Community 

Energy Scotland), and having securing endorsement from over 90% of support 

from the community and commitment of £900,000 from the Big Lottery Fund, 

the proposal was shelved due to technical feasibility issues in December 2009. 

In the face of adversity this revealed two important points: 

• the sound business judgement of the Trust to abandon a key project, where 

the identified risks outweighed the apparent benefits; and 

• the resilience of the Trust to rapidly recover from the knock and go on to 

test the feasibility of a range of hydro-electric projects. 

1.37 These successes and difficulties have been regarded as a learning experience, 

and difficulties have not dented the drive or momentum created by the Trust. 


1.38 Since the economic downturn started in 2008, the Trust has been in the 

fortunate position of being guarded against its worst effects. 

1.39 The assets taken under the control of the Trust have naturally placed it in a 

number of markets, each of which have been buoyant during the economic 

difficulties felt throughout the UK: 

• tourism on Harris has been strong, with a 14% increase in visitor numbers 

in 2009 buoyed by ‘stay at home’ tourism, a strong Euro, and other factors; 

• the renewal energy market has created strong opportunities for the Trust, 

which are now beginning to be exploited; and 

• the farmed salmon market has remained unexpectedly strong with new 

entrants creating competition and ensuring rental levels to the Trust remain 

high. 

1.40 Long-term contracts have also been secured e.g. for telecommunications 

masts, land management agreements, etc. This will provide a stable and 

guaranteed income for a number of years, cushioning it against shocks in its 

other markets. 

1.41 During this period a strategy of what has been described by one director as 

“financial prudence” has been evident. The decision was taken by the Trust to 

build up a financial reserve of around £100K, as a financial cushion to guard 

against instability in any of the Trusts key income streams, and not to 

overextend itself by taking on borrowing in pursuit of major projects. This was 

based on recognition that the Trust was highly dependent on income from 

aquaculture sources, and therefore vulnerable to a financial shock in this 

market. 

75


1.42 There is now strong optimism regarding the future prospects of the Trust and 

for a positive change in fortunes for the community itself. There is a sense that 

the future of the community as one director described it “is now in its own 

hands”, and protected for future generations. 

1.43 The Trust can now take a long-term and strategic perspective extending to a 50 

year planning horizon. This long-term perspective is as a result of the 

independence and control that the ownership of land and assets on Harris. 

1.44 In the short-term, core staff posts at the Trust are no longer reliant on grant 

funding, and the majority of income comes from a variety of trading activities 

(rather than grants, gifts, or donations). 

1.45 A range of new ventures are in the design stage, some small-scale and some 

large. An early initiative will see the Trust construct a new office base (including 

housing units) in 2010. This will include residential accommodation that will 

create a further source of rental income. 

1.46 There is a strong ambition to develop the Trust’s Ranger Service further. This 

has been regarded by staff as a critical method of engaging and developing the 

appreciation of young people, locals, and visitors in the land. 

1.47 There is a continued focus on the long term goal of stabilising the population 

through affordable housing, employment, and opportunities for young people, 

with potentially a growing emphasis on business development and cultural 

provision in North Harris. The ability to maintain a strong focus on its core 

purpose was highlighted as vital by a range of people involved with the Trust. 

1.48 The business model and strategy is likely to remain constant with measured 

and incremental growth, at a pace that will provide a balance of social and 

economic returns while ensuring responsible stewardship of the communities 

land interests. 

1.49 There is acknowledgement that the forthcoming period of financial austerity in 

the public sector will create challenges in financing new initiatives, and 

recognition that the Trust itself will need to put up more risk capital for new 

ventures. The track record and achievements of the Trust to date have given it 

confidence to make such investments. 

1.50 The track record and skills of the Trust in securing seed corn funding and 

productive business relationships with key agencies will position the Trust well 

to capitalise on opportunities that are available. The potential of renewable 

energy to more than double the turnover of the Trust is also now a clear 

prospect. 

76


77

Timeline 


April 2002 Announcement of sale of the North Harris Estate 

May 2002 North Harris Community Steering Group established 

August 2002 Feasibility Study report finalised 

September 2002 Community ballot in favour of buy-out 

September 2002 Formation of North Harris Trust Ltd 

September 2002 £2.11m funding package secured 

November 2002 Joint bid for the Estate between Trust and Ian Scarr Hall 

March 2003 Ownership of the Estate transferred 

March 2003 Inaugural General Meeting of the Trust 

April 2003 Development Officer and Project Administrator appointed 

February 2004 Feasibility Study into wind energy project reports 

March 2004 Loch Seaforth Community Steering Group formed 

June 2004 Friends of North Harris Trust established 

November 2004 North Harris Trading Company Ltd set up 

February 2005 Community Development Fund established 

October 2005 Harris Hind Stalking Club formed 

January 2006 Two year extension of funding to 'core posts' 

February 2006 Buy-out of the Loch Seaforth Estate completed 

October 2006 Land Manager appointed 

2007 Review of leases held by the Trust 

February 2008 Conservation Plan for the Whaling Station produced 

2008 Five Year Land Management Plan for the Estate prepared 

June 2009 Energy Development Officer into post 

June 2009 Recycling Centre opened and two staff appointed 

October 2009 Ranger Service established and staff member appointed 

December 2009 Affordable housing project gets underway 

December 2009 Wind turbine project at Monan shelved 

78

CASE STUDY 8: OUT OF THE BLUE 



Out of the Blue is an arts and education trust that rents out artist studios and 

performance space, runs multi-form art classes, organises projects, events, 

performances, exhibitions, training, seminars, and arts markets. Out of the Blue also 

runs the Bongo Club, a cafe, exhibition and rehearsal space during the day and a 

nightclub, theatre and performance space by night. 


Out of the Blue Arts & Education Trust was established as a Company Ltd by 

Guarantee with Charitable Status in 2002. The Bongo Club, a fully owned trading 

subsidiary of Out of the Blue is a private Company Limited by Shares. 

Markets 

Out of the Blue works from its 3 premises in Edinburgh: the Drill Hall in Leith, the 

Powerhouse in Portobello and the Bongo Club in Holyrood Road. 

Out of the Blue is unique in the sense that it combines products and services in three 

different markets: space rental, leisure/entertainment and regeneration. 


Out of the Blue has bought its main premises, the Drill hall in Dalmeny Street, 

Edinburgh. It is able to leverage a range of intangible assets bound up in the 

knowledge, skills, and experience of 4 voluntary directors, a staff team of 15 in Out of 

the Blue and 15 in the Bongo Club and 6 volunteers. 


Out of the Blue was awarded the Social Enterprise Mark recently and The Bongo Club 

is a well-known club in Edinburgh that attracts around 90,000 visitors per year. 


Out of the Blue is a large social enterprise with an annual turnover of around £950k 

(2009) and total assets of around £1.6 million. 

79


Birth – Blackfriars Street 

1.1 The story of Out of the Blue started when two Edinburgh artists who had been 

travelling in Europe came back to Edinburgh. On their travels they had seen 

projects in Berlin and Paris, where artists could work and show their work, and 

they wanted something like that at home 

1.2 They hired a small shop on Blackfriars Street, in the centre of Edinburgh, where 

they opened a small gallery with meeting space, where artists could come 

together. The gallery was used during the Edinburgh Festival as a performance 

space. 

1.3 The overall aim at that time was to make artists more accessible, although they 

did not have a clear idea what that would look like in reality. 

1.4 Out of the Blue was set up as an unincorporated voluntary association (trust) 

with charitable status. The people who initially set up Out of the Blue were 

familiar with the working of the voluntary sector and managed to secure a grant 

from the Council. In this period the company operated on a mixture of grant 

income and rental fees. 

1.5 From the outset Out of the Blue aimed to be more than just an arts organisation 

and use the arts as a tool for community development and regeneration. 

Already at the end of 1994 they started to deliver arts workshops in Barlinnie 

prison and in 1995 they delivered various youth projects. All these projects 

were funded through grant funding. 

Uncontrolled Growth – New Street 

1.6 In 1996 Out of the Blue saw the opportunity to move to a bigger property and 

they rented an aging, dilapidated bus station on New Street in Edinburgh. It 

started to rent out studio space to artists as a means of generating income to 

make improvements to the building and it developed the building as the money 

came in. 

1.7 This shows that, although Out of the Blue was not set up as a social enterprise 

from the outset, the entrepreneurial mind-set of its founders and the need for 

funds made the organisation become a social enterprise at an early stage in its 

life. 

1.8 Much of the work on the refurbishment of the New Street building was done by 

using training schemes for local unemployed people (training for work 

schemes). This had the double benefit of reducing the labour cost and helping 

unemployed local people to get work experience and move into employment. 

1.9 Out of the Blue was heavily involved in the annual Edinburgh Festival and the 

New Street premises were used for performances and a meeting place for 

artists. Because of the success during the Festival, Out of the Blue got the 

80

confidence that their dream of a more permanent club /performance space was 

viable and decided to set up the Bongo Club, 

1.10 The Bongo Club, a combination of a bar/nightclub, a café, and performance, 

exhibition and rehearsal space, proved to service a gap in the market and soon 

became a popular place in Edinburgh. It was operating almost 24/7 and the 

people who used the space during the day, visited the club at night. 

1.11 The Bongo Club was set up without outside support and ran at break-even from 

the opening. Any profits are used to improve the facility and further the social 

objectives of the company. 

1.12 Around 1999 it became clear that the building was on its last legs and the 

developer notified Out of the Blue that it was soon to be demolished. This 

meant that Out of the Blue had to start looking for new premises. 

1.13 During this period the company grew fast, but it was lacking in a formal 

organisational structure. Financially there was significant growth through the 

letting out of more and more spaces, but no system to manage the money 

properly. As part of the Scottish Arts Council Advancement Funding Out of the 

Blue started working with an independent consultant, who discovered there 

was no proper management of finances. The company committed projected 

future earnings to projects to achieve its social objectives, but ran into trouble 

when the actual earnings fell short of the projections. The company spent more 

that it earned and the company ran at a loss ultimately. 

1.14 At this stage most of the people working for Out of the Blue were volunteers, 

but the company also employed its first staff members. Because of the lack of 

policies and procedures there were no adequate lines of responsibility and no 

appropriate accountability for actions and spending. There was also friction 

between volunteers and paid staff. 

1.15 It was clear that they could not continue like this and the management 

committee decided to appoint a Co-ordinator to improve structures and manage 

the growth. In 1999 the current Co-ordinator was hired with the remit to develop 

the organisation and find new premises. This was a major step for the 

company, because for the first time the company was looking forward and 

started planning in a structural way. 

1.16 The determination and the loyalty of the staff and volunteers and the 

appointment of a professional as co-ordinator were all crucial factors that 

contributed to the survival of the company. The staff agreed to a temporary 

salary reduction to ensure ongoing financial viability. 

1.17 What Out of the Blue learned from this period was that growth in the future 

should be more controlled and be managed in a staged way, based upon a 

strong vision, be realistic and with understood and calculated risks. 

81

Taking Control – New Street 

1.18 One of the first things the new Co-ordinator did was to get a grip on the 

finances and he produced the company’s first business plan. In 2001 the Board 

recognised that it was lacking financial skills and asked a local accountant to 

become a permanent advisor to the Board. 

1.19 Because of the reputation Out of the Blue had already built as an arts 

organisation, they managed to secure a grant from the Scottish Arts Council. 

This bought the company the time to sort out its internal issues and allowed the 

company to get on a more sustainable financial footing. 

1.20 The Co-ordinator reviewed the legal structure in the light of the growing scale of 

the company and its increasing financial commitments and the risks attached 

and advised the management committee to limit its financial liability and run the 

company as a company limited by guarantee. This happened in August 2002. 

The Bongo Club followed in September of that year as a private trading 

company limited by shares, with all the shares held by Out of the Blue. This 

allowed Out of the Blue to achieve some of its social objectives by attracting 

grant funding, whilst it optimised profit making by the Bongo Club. 

1.21 The company started looking for new premises. Initially Out of the Blue 

contacted the local authority to explore the transfer of council property that was 

surplus to requirement. This strategy was unsuccessful because there was no 

suitable property and the council was only willing to sell at full market value. 

With the help of an independent consultant, through the Scottish Arts Council 

Advancement Fund, the company started to look at the commercial market to 

purchase property. 

1.22 In 2002 they purchased the Drill hall, a B-listed building of architectural and 

historical significance in the Leith area and started Phase 1 of the 

refurbishment programme. The place was ideally located and had potential to 

be turned into a hub for arts and culture. Outright ownership of the building 

provided the best opportunity for income generation and gave Out of the Blue 

maximum control over its future. 

1.23 Seeing the Drill Hall and its possibilities was also a huge morale boost for the 

staff who had supported Out of the Blue during the earlier period of financial 

difficulties. The supportive and inclusive team culture, the flat organisational 

structure and the short lines of communication have been important for the 

development of the company. 

1.24 By this stage, Out of the Blue knew the property letting market in Edinburgh 

well and knew that they could service a loan from the revenue generated by the 

studio rental. Based on their business plan, Out of the Blue had managed to 

secure a loan from Triodos Bank and Social Investment Scotland to purchase 

the building. This was a testimony to the track record and reputation of the 

company, and the viable business plan established. 

1.25 It took until 2004 to make the building habitable and comply with health and 

safety legislation. 

82

1.26 The Drill Hall was not suitable to house the Bongo Club as well, and in 2003 

Out of the Blue found new premises for the Bongo Club at one of Edinburgh 

University’s buildings on Holyrood Road. This central location and its link with 

the university were a major boost for the Bongo Club. 

1.27 Strong leadership was becoming increasingly key to the success of the 

company. For example, the investors have stated that the entrepreneurial 

character of the Co-ordinator and the trust in his capacities was a major 

deciding factor in backing up the purchase of the Drill Hall. One consultee 

described how “they developed from being anarchists to being trusted by the 

banks with a major loan”. 

1.28 One of Out of the Blue’s strong points and key success factors from the outset 

was the commitment and enthusiasm of its staff and volunteers. During this 

time of transition to a more structured organisation, this was coupled to a high 

level of professionalism, but without losing their original spirit, passion and 

ethos. The company made sure that during the process of strengthening its 

operations and developing its organisational structure it did not lose sight of its 

social objectives. As one consultee commented “they became professional 

without being professionalised”. 

1.29 One of the reasons for this dedication is the fact that almost all staff members 

lived locally and continued to do so, which means that they have first hand 

knowledge about the needs of the area and have extra motivation to make Out 

of the Blue a success. Another reason is the flat organisational structure and 

the open internal communications. One consultee commented “a job-title is just 

a description of a person’s skills, it doesn’t have any other value”. 

1.30 The staff attitude and spirit is mirrored by the Board. As time has gone on they 

have increasingly played the role of strategic enablers and operational 

controllers in a professional way. At the same time they have remained very 

approachable to the staff and closely involved in Out of the Blue activities. 

1.31 The company applies this open communication culture also to its external 

stakeholders. They have remained open to feedback from partners, and 

importantly, act on it. Out of the Blue is also open to advice from others, 

including professional advisors (e.g. financial experts or architects) and 

specialist support organisations such as the Development Trust association 

Scotland. This is proof of the learning capacity of the company and contributed 

to its excellent relationships with others outside the organisation and 

contributed to its growth and success. 

Building a Stable Company - The Drill Hall 

1.32 The financial strength and success of Out of the Blue has been driven by the 

attractiveness and quality of its product offerings. 

1.33 The Drill Hall refurbishment was completed in three phases, because the total 

cost of refurbishment was estimated at over £3 million, which was too large a 

sum to secure in one. The three phases were: 

83

• Phase 1: making the building habitable and comply with health and safety 

legislation. This was completed in 2003 and Out of the Blue moved into the 

Drill Hall, and provided space to some 50 artists from 2004 onwards. 

• Phase 2: provided Out of the Blue with the first 30 studios for rent, a cafe, 

exhibition space and rehearsal space. This phase was completed in 2006. 

• Phase 3: the final phase was completed in May 2010 and included an 

extension to the cafe’s kitchen, 18 new studios on the first floor, a music 

practice room and the garden. 

1.34 The refurbishment was financed through a mixture of grant funding and loans. 

Scottish Arts Council funding was the basis for each of the phases and levered 

in additional grant funding. For the remainder of the funding Out of the Blue 

obtained a loan from Triodos Bank. 

1.35 The building is now completely fit for purpose, boasting 52 artist studios, a café 

with a designated training kitchen, a purpose built dance studio, a recording 

studio, meeting, training, rehearsal and exhibition space. This mix of facilities 

ensures that the company can achieve the financial objectives of its business 

plan while also achieving its social objectives. 

1.36 Purchasing the building has provided Out of the Blue with a strong asset base 

that will be crucial for the company’s future sustainability and growth. Out of the 

Blue’s business model is based upon making the best use of its physical and 

intangible assets to achieve economic, social and environmental outcomes for 

its beneficiaries. 

1.37 Because of the long waiting list, Out of the Blue entered into a partnership with 

BL Developments, whose Chief Executive was sympathetic to Out of the Blue’s 

social objectives, and agreed to manage the old Scottish Power building, that 

will be demolished at some point in the future, on their behalf. In 2004 Out of 

the Blue opened The Powerhouse, providing 32 temporary artist studios. When 

the Powerhouse will be demolished, BL development, as part of their corporate 

social responsibility, will build a new arts centre that will be sold to Out of the 

Blue at cost. 

1.38 One of the reasons that commercial companies, such as BL Developments, are 

willing to enter into partnerships with Out of the Blue is its strong reputation for 

delivery. This reputation is build upon the professionalism of its staff, coupled 

with their enthusiasm, passion and attitude. 

1.39 In 2009, at the suggestion of Senscot, Out of the Blue became one of the first 

five social enterprises in Scotland to be awarded the prestigious Social 

Enterprise Mark. This recognised that the company is founded on the highest 

environmental and social standards. The Social Enterprise Mark generated a 

considerable amount of positive publicity, but it is too soon to tell what the 

longer-term benefits of this will be. 

1.40 On of the internal consultees commented that Out of the Blue “developed from 

one level up from squatting to a leading arts organisation in Scotland”. 

84


1.41 So far the impact of the recession on Out of the Blue has not been significant. 

The company has mostly been preoccupied with the completion of the Phase III 

refurbishment during the recession and therefore not been able to offer studio 

space for rent. 

1.42 However, there is no doubt that the property market in Edinburgh has changed 

dramatically as a result of the recession, with increased supply of property and 

dropping rental prices, but at the moment there is still a long waiting list for the 

newly refurbished artist studios. It is unclear if that remains the case in the 

future. 

1.43 Also Out of the Blue’s business model depends on the economic sustainability 

of its tenants, artists and small creative industry companies. The question 

whether they can survive the recession will be key to Out of the Blue’s survival 

as a landlord. Until now no tenant has had to wind up its business. 

1.44 The success of Out of the Blue during this period has also depended on the 

relationships it has formed. It has developed very strong relationships with 

people and organisations around them. These relationships come in the form of 

partnerships with Scottish Power (to manage their property) and Edinburgh 

University (provide space for the Bongo Club) and investment/funding 

relationships with Triodos Bank, Social Investment Scotland and the Scottish 

Arts Council. During the years the company has made conscious efforts to 

develop and maintain good working relationships with Edinburgh City Council 

and other public bodies. 

1.45 These relationships have proven to be very beneficial to the company and are 

“deeper than just economic”, and will especially be crucial to the company in a 

period of recession to ensure ongoing tenancy of artists and support from other 

organisations. 

1.46 Out of the Blue has from its origin been deeply rooted into the communities it 

serves, whether its community of artists, the creative industry and audiences, 

or the geographic community in which it is situated. These strong relationships 

at grassroots level ensure that Out of the Blue keeps true to its values and 

social objectives, and has been identified as one of the key contributors to the 

company’s success. 


1.47 The success of Out of the Blue has inspired others to enter the market for artist 

studios, such as St Margaret centre, Forrest Cafe, and Red Door. On the one 

hand this is proof of the company’s success, but on the other hand this 

represents new sources of competition. At the moment Out of the Blue is well 

placed to beat the competition, because of the high quality of its space and its 

reputation and established base of tenants and customers, but increased 

competition may ultimately lead to increased pressure on rental rates. 

85

1.48 Out of the Blue operated its cafe since taking on the Drill Hall in 2004, which 

has grown into a popular venue in Leith. The Phase III refurbishment included 

the cafe and provided a fit for purpose dedicated training facility. Out of the 

Blue sees this training facility as a diversification from its activities and expects 

employment-related training provision to become an important component of 

the business. 

1.49 Out of the Blue is also moving into the field of environmental sustainability and 

carbon reduction. In November 2009 they appointed a part-time Carbon 

Reduction Officer to work with the company and the community. 

1.50 To reduce the dependency on the property market, diversification on the back 

of a business that works is considered critical to the future success of Out of 

the Blue. 

1.51 Out of the Blue has always been an innovative company with an ability to apply 

their creative skills in a business environment. The extent to which the 

company can keep this creative and innovative nature while growing and 

developing, will determine its future success. 

86


87

Timeline 


1994 Out of the Blue starts in Blackfriars Street 

April 1994 Out of the Blue became a registered charity 

1996 Move to New Street 

1996 Opening the Bongo Club 

1999 Rob Hoon appointed Co-ordinator 

2001 Accountant appointed to the Board 

August 2002 Out of the Blue registered as Company Limited by Guarantee 

September 2002 The Bongo Club registered as a Company Limited by Shares 

2002 Purchase of The Drill Hall 

2003 The Bongo Club moves to Holyrood Road 

2004 Out of the Blue moves into the Drill Hall (Phase I completed) 

July 2006 Start renting out studios (Phase II completed) 

2007 The Powerhouse opened 

2009 Out of the Blue receives Social Enterprise Mark 

November 2009 Appointment Carbon Reduction Officer 

2010 Completion of Phase III refurbishment 

88

CASE STUDY 9: POLLOK CREDIT UNION 



Pollok Credit Union was set up in 1993 as a non-profit-making financial co-operative 

run by its members. It was established to address the issues of poverty and financial 

exclusion faced by local people that shared a ‘common bond’ i.e. residence in the 

Pollok neighbourhood of south west Glasgow (later extended to cover a wider area). 

This purpose has remained constant despite many changes. 


Pollok Credit Union is owned and controlled by its members. It operates as a cooperative 

under the terms of the Industrial and Provident Societies Act, with activities 

regulated by the Financial Services Authority. A sister company - Greater Pollok 

Enterprise Trust – is used as vehicle to manage other commercial trading operations. 

Markets 

Pollok Credit Union provides a variety of services targeted at low income families in 

the south west of Glasgow. It provides financial products and services including low 

cost loans, savings accounts, budgeting advice, debt management assistance, a 

private members lottery, family funeral plans, affordable mortgages, and home 

secured loans. To this it has added a Post Office franchise and Southside Daycare, a 

nursery providing affordable childcare to children aged 0-5 years. 


The Credit Union mobilises a range of resources and assets. It operates with 24 staff 

across its services and is assisted by a pool of 21 active volunteers. Services are 

delivered through three locations - two shop front premises in busy shopping areas in 

south Glasgow and an administrative base. 


Pollok Credit Union is one of the largest community-based credit unions in Scotland, 

and is widely regarded as being among the most successful. It has been at the 

cutting edge of community-based financial provision for nearly two decades. It was 

the first credit union in Scotland to operate out of a prominent shop-front location and 

is still the only credit union in the UK to operate a post office. Each year it provides 

financial and related services to around 10,000 Glasgow residents. 


The Credit Union has diversified its income over the course of many years and 

steadily built its financial strength. In the last year the collective turnover across the 

Credit Union and its associated operations was around £4m. Over 80% of income to 

the Credit Union comes from trading, with only a small amount of grant funding 

received from Glasgow City Council and the Scottish Government Enterprise Fund 

for Development and staffing costs. The Credit Union now stands with net assets 

approaching £4m, and its ambition is to become entirely self-financing within 5 years. 

89


Getting started 

1.1 The story of Pollok Credit Union started in 1993 when a group of 12 residents 

of the Pollok neighbourhood in Glasgow came together to examine the 

possibility of setting up a credit union to tackle poverty on their estate. 

1.2 The prospects for the initiative were aided from the outset by the mix of skills 

and experience that were brought by the original Steering Group members: 

• a personal commitment and determination to tackle poverty locally; 

• a wide range of financial management skills; and 

• an understanding of how credit unions operated elsewhere. 

1.3 The formation of the Credit Union was also greatly assisted by the structured 

training and support provided by ABCUL (the Association of British Credit 

Unions Ltd). This ensured that the group was well organised, that market 

research was thorough, that a viable business plan was developed, that the 

credit union was registered with appropriate authorities, and that best practice 

procedures were followed from the beginning. 

1.4 Pollok Credit Union was eventually established in November 1993, and for the 

first four years it operated from the local Pollok Community Centre. It opened 

for 6 hours per week, across three days, and was run entirely on volunteer 

endeavour. While this limited the scope and the pace at which development 

could occur, it did ensure that the initiative was fully tested and grounded prior 

to subsequent expansion. 

1.5 This early period has been characterised by founding directors as a turbulent 

period that involved much learning and many “teething problems”. The group 

had to work hard to establish a shared vision, to ‘learn the ropes’ of running a 

credit union, and to fully understand the commitment that each individual could 

realistically make. For some this commitment was too great and their 

participation was fleeting as volunteers came and went in the early days. 

Beginning to look outwards and upwards 

1.6 By 1997 the Credit Union found itself at the first important crossroads in its 

story. A founding director describes the tensions that emerged within the board, 

between those that wanted the Credit Union to remain “small and local” and 

those that had ambitions for it to expand. These tensions were resolved when 

the determination and drive of those calling for change became too strong to 

resist. At this point a number of the founding group members stepped down 

and a new independent chair with significant experience in running credit 

unions was appointed. 

1.7 This ushered in a period of change for Pollok Credit Union, where as one 

director has described “we began to look outwards ... and to think big”. A more 

coherent vision for the future emerged and the organisation’s first five-year 

Business Plan was prepared in 1997. 

90

1.8 A grant from the Social Inclusion Partnership (SIP) Fund then provided an 

important catalyst for development. This funding was significant as it was the 

first source of regeneration funding that had become available to credit unions 

in Scotland, and it enabled Pollok Credit Union to: 

• employ its first staff member, a part-time Development Officer; 

• embark on a plan to engage more fully with other local organisations, in 

order to raise its profile and extend its reach; 

• widen its ‘Common Bond’ (the defined locality in which members could be 

recruited and services provided) from 10,000 potential customers to 40,000; 

• establish outreach points in new neighbourhoods, thereby extending 

services and growing membership; and 

• recruiting a growing number of volunteers to operates services from local 

venues across an expanded area of operations. 

1.9 The development strategy of the Credit Union was also aided by a number of 

external factors: 

• changes in regulation on the part of the Registrar of Friendly Societies in 

1997 enabled credit unions to extend their Common Bond; 

• there was a growing realisation of the potential of credit unions on the part 

of Glasgow City Council and accompanying support for this; 

• a growing network of partners and supporters that came forward and began 

to work on new opportunities with the Credit Union. 

1.10 By 1999 Pollok Credit Union had become a well established and prominent 

credit union in Glasgow with some 600 active members. Over a number of 

years it had exhibited steady but unspectacular growth in membership and 

financial strength. 

1.11 Increasingly the work of the Credit Union began to coalesce around a strong 

leadership team. This included a socially entrepreneurial founding director, 

who took up the post of Development Officer and who, according to one 

observer, other volunteers increasingly “looked up to”. This individual formed 

a productive working relationship with the experienced chairperson. 

Collectively they provided the experience, expertise, and determination to 

grow the Credit Union. 

The growth spurt 

1.12 Another critical defining moment in the life of Pollok Credit Union occurred in 

2002, when one key change triggered a period of rapid growth. 

1.13 The decision was taken in 2002 for the Credit Union to occupy a lease on 

shop-front premises in Pollok Shopping Centre. As the first credit union in 

Scotland to move into high street shopping premises this created considerable 

media attention. This combined with the high profile location and footfall in the 

shopping centre to bring about an explosive growth in membership 

(customers), from 1,407 adult members and 750 junior members to 4,067 

adults and 750 juniors in a period of just six months. 

91

1.14 One new staff member at the time recalls this period where membership 

almost trebled, recounting that “people were literally queuing out the door to 

join, with others joining the queue because they saw a queue”. 

1.15 Inevitably, this placed substantial operational pressure on the organisation, 

which by then included four part-time members of staff and a small pool of 

willing and able volunteers. Management and information systems as one 

staff member has recounted “began to creak under the strain”. However, as 

another staff member has described it, this was “a period of excitement rather 

than pressure” which brought renewed “confidence that people wanted what 

we had to offer”. 

1.16 A number of important measures were taken at this time to ensure that Pollok 

Credit Union didn’t buckle under the strain: 

• hard work on the part of existing staff and volunteers was an important 

factor according to the Manager to handle the “astronomical workload”; 

• additional volunteers were quickly recruited to bolster the Credit Union’s 

volunteer base and capacity; 

• a major investment was made to purchase a new management information 

system – the first credit union in the UK to introduce this system from 

Ireland, and an investment that greatly increased the financial transaction 

capabilities and productivity of the Credit Union; and 

• measures were taken to strengthen the board and change its role – from a 

hands-on, working board to a more strategic and experienced one able to 

manage a fast-growing social enterprise. 

1.17 This growth in membership, transactions, and income significantly built up the 

financial strength of the Credit Union. 

Business diversification and sustained growth 

1.18 From the platform enabled by the rapid growth in membership and uptake of 

core services, Pollok Credit Union began to take on a range of new activities. 

1.19 A growing number of new members brought with them raised expectations 

and calls for additional types of services. According to one insider at the time 

“we were beginning to be viewed more like a bank than a small savings club”. 

1.20 This demand stimulated new ideas and the impetus needed for the Credit 

Union to branch out and transform itself into a broad-based social enterprise, 

or community ‘anchor organisation’. A variety of major new services, projects 

and activities were introduced over the following seven years, including: 

• Pollok Budgeting Service was established in 2003 as an innovative form of 

money management and debt advice for people in financial crisis; 

• a School Bank programme was developed in 2006, comprising a financial 

education and savings service for local primary and secondary schools; 

• Scottish Financial Inclusions Services was created in 2006 to manage a 

unique loan guarantee fund supported by the Scottish Government; 

92

• an affordable loan fund for people on low incomes was developed in 2006 

using funds from the Department of Work and Pension; 

• a ‘white goods’ project was set up in 2007 to provide new, high quality and 

affordable appliances in partnership with a high street retailer; 

• a 46-place children’s nursery - Southside Daycare nursery – was taken on 

in 2007 at the request of nursery workers when it was on the brink of 

closure; 

• affordable mortgages were introduced in 2008 for members – the first 

credit union in Scotland to do so; and 

• the franchise for a local post office was taken on in 2008 – the first and 

only time a UK credit union has been able to do so. 

1.21 This service expansion was accompanied by geographic expansion, where 

the Credit Union’s Common Bond was further widened and a further high 

street base was opened elsewhere in the south of Glasgow in 2007. This 

territorial expansion was possible given that few other credit unions had 

become established in the south west of Glasgow. 

1.22 Throughout this period, “success” was defined by the directors of the Credit 

Union as the ability to continuously respond to local needs. In this respect 

there are a number of main points about led to this successful diversification: 

• most developments were a gradual extension of services, in response to 

expressed demands and consistent with the organisation’s social purpose; 

• the developments were the result of considerable creativity and embodied 

a willingness to think differently about solutions to entrenched problems; 

• all of the ventures were approached on a commercial basis (usually in 

conjunction with either public, private, or voluntary sector partners), and 

typically involved a variety of calculated risks; and 

• each new venture was structured differently, with Greater Pollok Enterprise 

Services set up as a charitable company to manage the commercial 

activities which the Credit Union was legally unable to do so directly. 

1.23 It is also important to note that there were difficulties as well as successes to 

navigate during this period. For example, the white goods service did not work 

as well as anticipated and as one director has described, the Credit Union 

“had the courage to admit when something was not working and stop it”. A 

forced relocation of the Credit Union’s main high profile premises also 

occurred while the Pollok Shopping Centre was being redeveloped, but this 

was managed effectively with temporary alternatives found until a new lease 

could be agreed for a shop unit in the improved and renamed Silverburn 

Shopping Centre. 

1.24 According to informed observers this period of unprecedented success for the 

Credit Union was due largely to the entrepreneurial driving force behind it – 

the founding director who took on the role of Development Officer and 

eventually Manager. This individual has variously been described as the 

innovator (“an ideas person”), who brings connections (“he knows everyone”), 

charisma (“gives everyone passion and excitement”), and a positive outlook 

(“operates not on the basis of ‘we can’t do that’, but rather on ‘how can we do 

93

that’”). A serial entrepreneur who set up three businesses before devoting 

himself to the Credit Union, and who developed his skills as a part-time 

worker supporting other credit unions, he brought the knowledge, expertise, 

and experience to excel in his role. 

1.25 The organisational back-up that enabled the Credit Union to deliver on the 

vision of its entrepreneurial leader has also been acknowledged as 

instrumental to continuing growth. Various important actions have been 

reported to: 

• build a well-rounded, governing board with the professional skills and 

experience capable of managing a growing business; 

• continue to strengthen the back office management, information, and 

administrative functions required to control the business; and 

• foster a strong team culture, where staff feel valued, and their talents are 

nurtured – most staff have as one director suggests “grown with the 

organisation” from being volunteers to holding prominent staff positions. 

1.26 The achievements of Pollok Credit Union have also reportedly owed much to 

the increasingly favourable policy environment in which it developed: 

• key changes in legislation and regulation by the Financial Services 

Authority since 2002 have removed many unhelpful restrictions on the 

operation of credit unions, and enabled Pollok Credit Union to provide a 

balanced portfolio of services across a large area and mixed income 

communities; 

• a supportive national policy agenda for credit unions meant that Pollok 

Credit Union and others have benefited from a series of national funds and 

support available from the Scottish Government for credit unions; and 

• highly supportive measures were put in place by Glasgow City Council to 

promote financial inclusion, including a more integrated network of 

community financial services, a Glasgow credit union strategy, financial 

support to credit unions (grants and rates relief), and dedicated business 

support was made available from CEiS and others. 

1.27 What seems to have made Pollok Credit Union stand out from other 

community-based credit unions in Scotland is that it contained the 

entrepreneurial leadership and determination to capitalise fully on these 

favourable conditions. 

Growing pains 

1.28 The rapid growth of Pollok Credit Union in itself created difficulties, however, 

with 2009 being variously described as a “stormy period” and “a tough year” 

for the organisation. 

1.29 During 2009 a number of mounting challenges came to light as the sustained 

diversification in services meant that costs had escalated and it had built up a 

structure that was increasingly inefficient: 

94

• the Credit Union had steadily accumulated services and costs as new 

ventures were added; 

• each venture had brought with them additional staff and separate 

management overheads; 

• many of the ventures continued to operate on a standalone rather than 

integrated basis; 

• two major new ventures – the Post Office and nursery –struggled early on 

to breakeven, placing further pressure on the Credit Union; 

• the grant funding received for the Credit Union for services was either 

being reduced or was due to come to an end; and 

• the Credit Union was again subject to increasing demand for its core 

services after its high profile move to a new shop unit. 

1.30 Fortunately the effective management information available to the board 

enabled the Credit Union to quickly spot emerging difficulties, to monitor the 

situation closely, and to take decisive but measured action when required. 

1.31 The strategic decision was taken by the board for the Credit Union to 

consolidate its activities. As one director commented, “it was growing so 

quickly it was getting out of hand, so we had to stabilise it”. 

1.32 With outside support the organisation embarked on a process of business 

restructuring and cost reduction. This included: 

• realignment of the operations managed by the Credit Union and its sister 

company Greater Pollok Enterprise Trust; 

• integration of the complementary services offered by the Credit Union and 

the Post Office in order to bring efficiency savings; and 

• the redesign of staff job roles and responsibilities to streamline operations 

and ensure improved service delivery. 

1.33 The tough but necessary decisions taken by the Credit Union resulted in a 

reduction of over 40% on the £530k staff cost carried into 2009 by the Credit 

Union and its various trading operations. It also laid the foundations for a more 

efficient, flexible, and integrated set of services for customers. 

1.34 A successful outcome during this challenging period was also assured by 

taking the right types of outside professional advice at the right times: 

• human resources support from third sector HR specialists EVH; 

• business restructuring support from social enterprise specialist CEIS; and 

• financial consultancy from a new Financial Director appointed by the Credit 

Union for two days per week. 


1.35 The period of internal restructuring for Pollok Credit Union occurred against 

the backdrop of difficult economic conditions across Scotland. 

95

1.36 These conditions have brought both opportunities and threats for the Credit 

Union. On the one hand the loss of trust in mainstream banks in the UK has 

brought opportunities as people look for more principled sources of assistance 

to manage their finances. On the other hand, credit unions like banks have not 

been immune to the worsening financial position of local families. Overall, as 

one staff member put it, local people have increasingly been looking to the 

Credit Union as a “safety net during these hard times”. 

1.37 Despite this economic turbulence and uncertainty, Pollok Credit Union has 

come out of the recession somewhat better that first anticipated. 

1.38 In relation to the core financial savings and lending services of the credit 

union, a simplistic analysis of the situation suggests that during the recession: 

• there was an increase in savings deposited with the Credit Union, as 

people switched from banks to achieve better interest rates; 

• there was a reduction in borrowing from the Credit Union, with the level of 

financial transactions slowed down and people become more prudent; and 

• there were greater financial difficulties for members, who were slower to 

repay loans or were forced to renegotiate or occasionally default on these. 

1.39 As a result, more modest levels of financial surplus were generated by the 

Credit Union during this challenging period. Nonetheless, other services 

offered by the Credit Union took on a new significance. The Pollok Budget 

Service is now dealing with over £3m of debt on behalf of members and 

offering a vital source of support to vulnerable families. 

1.40 The ability of Pollok Credit Union to remain on course seems to owe much to 

the organisation’s deep understanding of the key drivers of financial 

performance in the business, as well as the actions that it has taken to stay on 

top of the financial situation. Actions have included: 

• a clear out of ‘dormant accounts’ to understand the true financial picture; 

• more stringent lending criteria to lesson risk 

• tight credit control to avoid bad debt among members; 

• weekly finance meetings to review cash flow, examine projections, and take 

appropriate remedial action where required; and 

• monthly management meetings to examine any necessary collective 

response across all of the Credit Union’s trading operations. 

1.41 The continuing strength of the Credit Union also reveals the underlying 

resilience of its business model during these testing times. The financial scale 

and assets of the organisation, together with the range of income streams it 

has cultivated, are important factors in this respect. 


1.42 The changes that Pollok Credit Union made in 2009 have provided a strong 

platform on which to ensure future financial sustainability. 

96

1.43 The financial scale, critical mass of services, and capacity of the organisation 

means that it is well placed for steady and profitable growth. The core Credit 

Union services are now able to accommodate a large growth in customer 

numbers and financial transactions without consequent rises in administrative 

or staffing costs. 

1.44 The immediate priority for the Credit Union, however, continues to be 

consolidation. This means ensuring that the new integrated range of services 

on offer through the Credit Union, Post Office, and related services are both 

efficient and profitable. 

1.45 There will then be further opportunities to introduce services to a wider range 

of customers. The planned Legislative Reform Order in the UK in particular 

will remove a number of restrictions on co-operatives, allowing credit unions to 

provide services to corporate members (e.g. small businesses, other social 

enterprises, etc.). 

1.46 Over the medium to long-term the ambition is to build a broad-based social 

enterprise that will sustain a wide range of complementary services. The aim 

is for the work of the Credit Union to be completely self-financing (no grant 

subsidy) within five years, with sufficient resources to address financial 

exclusion and debt on a meaningful scale. In the meantime, the ability of 

Pollok and other credit unions to deliver on their desired outcomes will depend 

on continuing grant subsidy from the Scottish Government and others. 

1.47 The critical point made by representatives from the Credit Union is that future 

success will also depend on the organisation’s ability to remain close, 

accountable, and responsive to the needs of the local population – building 

services that are of value to local people will remain central to the approach of 

the Credit Union. 

97


98

Timeline 


1993 Study group formed at Pollok Community centre to explore 

starting a credit union (10 volunteers) 

1993 Pollok Credit Union formed 

1994 Credit Union opened 4 hours per week in Pollok and open 

collection point in Leithland Neighbourhood Centre 

1995 First Annual General Meeting 

1997 First five-year business plan prepared 

1998 First Development Day for Credit Union Directors 

1999 Social Inclusion Partnership funding secured to employ staff 

1999 Common Bond widened from Pollok to Greater Pollok area 

2000 1,000 th member registered with the Credit Union 

2000 Opened collection points at local halls in new common bond 

area 

2002 Move to highly visible premises Pollok Shopping Centre 

2002 Adult membership increases from 1,400 to 4,000 in six months 

2002 Greater Pollok Enterprise Trust formed by PCU 

2003 Revolutionary Management Information System purchased 

2003 Pollok Budgeting Service established 

2006 Scottish Financial Inclusions Services established 

2006 Temporary relocation to premises 

2006 Affordable loan fund established for people on low incomes 

2006 School Bank programme introduced to local schools 

2007 New branch office opened in Shawlands high street premises 

2007 Common Bond widened again to encompass the whole of 

Glasgow 

2007 Childcare nursery taken under the ownership of the Credit 

Union 

2008 New service introduced offering affordable mortgages to 

members 

2008 Post Office franchise taken on by Pollok Credit Union 

2009 Relocation to PCU to larger shop unit in the new Silverburn 

Centre 

2009 Major staff restructuring takes place across Credit Union 

operations 

2010 In September 2010 lending to members reaches a milestone 

of £20m 

99

CASE STUDY 10: THE ISLE OF SKYE FERRY CIC 



The Isle of Skye Ferry Community Interest Company (CIC) was established to 

continue to provide a vital ferry link between the Isle of Skye and Glenelg on the 

mainland, the oldest and fastest ferry crossing (in the UK). Established in response 

to the looming closure of the 400 year crossing, the organisation aims to use the 

Ferry operation to safeguard and enhance the local tourism based economy and 

therefore viability of local settlements. 


The Ferry is now operated as a Community Interest Company governed by five 

directors and accountable to a membership of more than 500 people. Income is 

generated through fares and associated merchandising from operating the seasonal 

Ferry service. The Ferry operates 7 days per week during the main tourist season 

(Easter to October) with sailings every 20 minutes (10am to 6-7pm) and a capacity to 

transport 28,000 cars over the season. 

Markets 

The Ferry is operated principally as a visitor attraction with an aim of maintaining a 

3% market share of the crossings made by visitors to Skye each year. With 85% of 

passengers making use of the Ferry for a single trip as part of their holiday 

experience, the success of the operation is dependent on the strength of Highlands 

tourist market, and subject to competition from the two alternative crossings to Skye 

from the mainland. 


The main asset of the CIC is a vintage vessel, the 41 year old ‘Glenachulaish’ Ferry, 

which is believed to be the last working turntable ferry of its kind in the world. The 

Ferry operation now incorporates a P/T Chief Executive Officer, a Skipper (F/T for 

the seven-month season), one F/T Skipper/Engineer, two Deck Crew (P/T for the 

Season), other P/T Deck Crew as required, and a Relief Skipper. 


In early 2006 the newly formed CIC rescued the Ferry operation from imminent 

closure, later purchasing the Ferry outright in 2007. Since then there has been a 

steady growth in passenger numbers (27,522 passengers in 2007 rising to 33,875 in 

2009. During this time the Ferry has received a range of publicity and plaudits 

including being named the ‘Best Ferry Journey in Scotland’ by the Scotsman 

newspaper in 2007. 


During each of the last four years the Ferry has operated profitably with no grant 

subsidy. Turnover has doubled from £60K to £121K, and modest profits registered 

each year (up to £11K in 2009); this growth has been driven by rising passenger 

numbers, increasing fares, and new income from merchandising/retail. The financial 

strength of the operation has enabled significant investment in the preservation of the 

vessel, the provision of discounted fares for local residents, and the ability to sustain 

a growing number of jobs. 

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The false start 

1.1 The story of the Isle of Skye Ferry Community Interest Company (CIC) began 

in 2004 when the private owner of the Glenelg-Kylerhea ferry announced his 

intention to sell the ferry operation, after a period of some 15 years operating 

the route. 

1.2 Faced with the option of a community buyout or leaving the sale to the 

uncertainty of market forces the Glenelg Ferry Action Group was formed to 

examine the prospect of a community buyout of the Ferry. 

1.3 This process was substantially encouraged by Highlands and Islands 

Enterprise (HIE), which along with Highland Council, commissioned a feasibility 

study and business plan to establish viability of a buyout. The study pointed to 

the potential feasibility of the buyout and the potentially devastating impact of 

closure of the Ferry route on the fragile Glenelg community – it suggested that 

closure was likely to reduce passing tourist trade and threaten the viability of 

the settlement. 

1.4 Given the designation of Glenelg as a priority, ‘fragile’ community, and as a 

result of the study, HIE, the Council and Communities Scotland committed 

funding to a value of £150K to purchase the ferry and associated operations 

outright, should any buyout be supported by the majority of the local population. 

1.5 The Ferry Steering Group soon transformed into the Steering Group for the 

fledgling Glenelg and Arnisdale Development Trust (as part of a parallel 

development supported by the Initiative at the Edge programme). Under the 

auspices of the Trust, a decision was taken to hold a community ballot on the 

decision to buy out the Ferry. 

1.6 Amid accusations of vested interests, worries about the value of the 

vessel/asset, and concerns about viability of the business as an ongoing 

concern (with the proposed removal of the tolls from the competing Skye Road 

Bridge), a formal ballot in February 2005 saw a majority vote against the 

proposed community buyout of the Ferry. On the face of it, the community was 

not prepared to accept the risk associated with the venture. 

1.7 With hindsight, shortcomings appear to include: 

• limited community consultation on early ideas and proposals prior to the 

vote of the finalised proposal to sanction the buy-out; 

• a degree of haste in the process, driven by agency encouragement rather 

than strong or widespread community interest; 

• parallel development processes to establish a Development Trust and a 

Ferry buy-out that had confusingly overlapping objectives; and 

• a decision to seek endorsement on the buy-out from the 119 members of 

the fledgling Development Trust, rather than the entire populations of 

Glenelg and Kylearhea. 

101

1.8 This unsuccessful process, served to highlight the misconception of the idea of 

a coherent ‘community’ interest in a shared asset, where in a population of 250 

people there are likely to be many different and conflicting opinions/interests. 

1.9 The effect of this ‘no’ vote was as widely reported, to “split the community down 

the middle” leading to deterioration of relationships, and growing animosity/ 

recrimination among the two factions within the community. This led to the 

immediate disbandment of the Steering Group that had supported the buy-out. 

These divisions in the community appear to run deep and have persisted to 

some extent since. 

Born out of adversity 

1.10 Following the decision not to pursue the buyout through the Development 

Trust, a new Ferry Steering Group emerged in June 2005. This represented a 

coalition of interests from both Kylerhea and Glenelg in favour of the 

purchase. In the meantime the Ferry remained in operation as normal for a 

final 2005 season, at which point it was due to terminate. 

1.11 The Steering Group comprised a small group of enterprising individuals that 

were inspired by the challenge, shared an ethos of independence and selfreliance, 

had significant business acumen (two of which had previous 

experience of running successful businesses in the village), and bonded by a 

determination to get things done in the face of opposition. 

1.12 The Group scrutinised the operations of the Ferry in great detail, examined 

potential role models (e.g. the ‘PS Waverly’ Ferry the last sea going paddle 

steamer), and explored all possible business opportunities. This process as 

one former director described was about “really understanding what business 

we were getting into”. This process was said to be greatly aided by the 

continuing, “efficient”, “steadfast”, “enthusiastic”, and “expert” advice from HIE, 

and its appointed business consultants. One group member described how 

this provided the confidence that “someone was there to support us”. 

1.13 The period up to 2007 has been characterised by former members of the 

Group as a “steep learning curve”, where the focus dramatically altered from 

an attempt to save the Ferry to a commitment to realising the business 

potential. 

1.14 The Steering Group formed a Community Interest Company in February 2006, 

one of the first CICs to be set up in Scotland. This organisational structure 

was identified as having the advantage of being sufficiently versatile to enable 

the Group to pursue its venture in an entrepreneurial way, while remaining 

accountable to a large community of interest (not simply Glenelg residents) 

and holding the vessel in trust for the benefit of the community. Subsequently, 

however, difficulties were identified in attracting grant funding to the CIC, a 

body unable to attain charitable status. 

1.15 In the absence of consensus, and indeed with growing animosity among 

factions of the community around how to proceed, Highland Council was 

unable to offer financial support for the purchase. This was a major obstacle, 

102

which made the purchase more unlikely, or at least significantly slowed 

progress. 

1.16 With no prospect of putting in place a funding package in time for the 2006 

season, and a rival approach to take over the operations of the Ferry from the 

Development Trust, an agreement was reached with the owner to charter the 

vessel and for the fledgling CIC to operate for an interim period until a deal 

could be concluded. This was enabled when the CIC mobilised a campaign of 

support which raised in excess of £9K in donations in a period of six weeks. 

1.17 Retaining the former crew the CIC embarked on a full seven-month season of 

trading. The main emphasis during this season was on imposing structures, 

systems, and processes in a business that had operated on a largely informal, 

cash basis in the hands of a sole trader. 

1.18 Nothing is said to have been able to have prepared the voluntary directors of 

the CIC for the challenges that lay before them. As one member put it “it was 

something that we couldn’t get out of” and another “if we knew what we were 

getting into then we all would have had second thoughts”. 

1.19 This steep learning curve served to identify a number of main challenges in 

operating the ferry service: 

• vulnerability to the weather conditions, which could lead to disruption in 

service and loss of earnings; 

• an inability to operate the ferry outside of the seven month tourist season 

due to problems of weather, safety, and viability; 

• competition from the Skye Road Bridge, which by this point was providing 

free passage to the Isle of Skye after the abolition of toll charges; 

• introducing modern, safe, and consistent working practices that are 

compliant with legislation/regulation and which impose extra costs; and 

• an aging vessel in a poor state of repair which in 2006 alone caused a 

significant service disruption and major costs to the CIC. 

1.20 It was the last of these points that provided the key challenge that the CIC 

overcame in its first year of ‘trial trading’. In a heavily regulated industry, the 

ongoing survival and success of the Ferry was ensured with close ongoing 

communication with, and response to, the requirements of the industry 

regulator the Maritime and Coastguard Agency. 

1.21 Despite the divisive process of taking on the Ferry, the continuing antagonism 

evident within the community, and the unfortunate service disruptions, the 

media publicity created served to generate free publicity for the Ferry. 

1.22 Despite a difficult first year of trial trading under charter to the owner, the CIC 

made a modest surplus in 2006 of £3K. 

1.23 Survival through this early period was reportedly due largely to the time input, 

perseverance, emotional investment, and skills of one voluntary director who 

played the operational role of Managing Director on an unpaid basis up to 

November 2009. It also seems to have owed much to the inner resilience of 

103

the voluntary directors in the face of adversity, the tight-knit board structure, 

and the ability to tap into the wide range of skills among the group from 

outside advisors. 

1.24 The experience developed during this year greatly assisted in developing a 

more detailed and grounded business case (one based on “real intelligence”). 

This in turn helped in February 2007 to secure a £120K funding package from 

the Big Lottery Growing Community Assets Programme and HIE Community 

Land Fund to purchase the Ferry. It also provided the confidence in the 

business required to secure additional working capital by way of a £20K loan 

from Highland Opportunities Ltd. 

A fully fledged business 

1.25 The initial two years of trading involved ‘learning on the job’, where as one 

former director describes it “a lot of mistakes were made”. Since then the CIC 

Board has been able to exert greater control and influence on Ferry 

operations. 

1.26 Critical to success has been the ability of the CIC to stamp its values and 

approach on the pre-existing business and employment practices. This was 

achieved by investment in staff training, quality standards, and processes. 

Despite this, the recruitment, development, and retention of employees has 

proven challenging in this remote rural location with a limited pool of labour 

from which to draw. 

1.27 More recently in 2009, the efficient operation of the business has been aided 

by staff restructuring that has seen the CIC take on a full-time 

Skipper/Mechanic 12 months of the year, and appointment of a part-time 

Chief Executive Officer. 

1.28 A more mature and considered business strategy has emerged in light of 

experience over the initial few years of trading. Key aspects include: 

• operating the business as a unique visitor experience involving the world’s 

last operational turntable ferry, the romanticism of the original crossing to 

Skye, and a crossing in a marine conservation area; 

• investing heavily in the promotion of the Ferry, including the establishment 

of website, distribution of welcome packs in 42,000 B&Bs throughout the 

West Coast, placement of information in one million Welcome to Scotland 

guides, and substantial use of the media; and 

• incrementally increasing the price of fares recognising that, as a visitor 

attraction, customers might not be as price sensitive as to other means of 

crossing to the island. 

1.29 Critical to this strategy has been as one director describes it “really 

understanding the business we were in”. This meant understanding the 

distinction between developing the business as a visitor attraction rather than 

transport service. It also meant understanding the main driver of success 

(tourist numbers), the sources of competitive advantage (over the alternative 

crossings), and the value in collaborating with other visitor attractions to 

104

provide a shared offering to tourists (as has occurred through participation in 

the Skye and Lochalsh Tourism Forum). 

1.30 This clarity of focus and direction is reported to have been assisted by both 

HIE and HISEZ (a social enterprise support agency for the Highlands) by way 

of continuing business planning and board development support. 

1.31 This clear strategy combined with the ongoing determination, hands-on work 

of directors, and the team working has now created a stable business. 

Turnover has doubled from £60K in the first year of trading (2006) to £121K in 

the most recent (2009), and a modest profit rising each year from £3K to £11k 

over the same period. This has enabled the CIC to make significant provision 

for repairs and maintenance of around £15K each year, and January 2010 

saw the start of the restoration programme with £25,000 being spent on the 

vessel in dry dock in Stornaway. 

1.32 This financial stability has justified the decision to offer a discounted rate to 

local residents of 50% for adults and 80% for pensioners (who currently travel 

at a nominal fee of £1 per journey). This is consistent with public benefit role 

of the CIC, although the priority as described by one staff member has been 

“business first and foremost”. 

1.33 Despite the success of stabilising a ‘cash hungry’ business, there has been a 

continuous stream of ongoing obstacles to tackle. In particular the 

requirement to invest in assets that are critical to business success: 

• the deteriorating, historic piers on which the continuing operation of the 

Ferry depends have required significant effort on the part of the CIC to 

unpick complex ownership/leasing arrangements, to agree maintenance 

arrangements for these, and develop funding package of some £40K for 

modernisation; and 

• the ageing ferry, which is a unique aspect of the visitor experience, has 

commanded significant ongoing maintenance and repairs, together with 

one-off investments in upgrading. 


1.34 The story of the Isle of Skye Ferry CIC is one that has been aided rather than 

challenged by the economic downturn in the UK. Both turnover and 

profitability have increased incrementally in 2008 and 2009. 

1.35 The success of the Ferry has remained largely dependent on the level of 

tourism in Skye and Lochalse - almost 85% of customer journeys on the Ferry 

have been based on single journey tickets. 

1.36 During recession it seems that market conditions have been highly favourable, 

with tourism to Skye and Lochalse buoyant. These market conditions seem to 

have been driven by ‘stay-at-home tourism’ in the UK and by an increasing 

number of European visitors attracted by a strong Euro. 

105

1.37 In any market, price is an issue. However, as the current CEO describes the 

Ferry is more “weather sensitive” than “price sensitive”. Although this is 

generally the case there is a continuing need to provide good value for money 

to tourists. This creates pressure to enhance the tourism experience. 

1.38 The Ferry’s market is also subject to fluctuation. While passenger numbers 

have held up, the ferry has been described by one staff member as “always 

on a knife edge” and subject to fluctuations in visitor numbers (determined by 

such things as weather, petrol prices, etc.). 

1.39 It is the ability of the Ferry to deliver continuing profitably when tourism in the 

area declines that will be a key test of success for the CIC. To this end, the 

strategy is to continue to invest significantly in marketing to attract passengers 

and to build up new income streams (e.g. from merchandising). 


1.40 The Ferry is now at an important crossroads in its development, with 

undoubted potential for future growth but with some key challenges ahead. 

1.41 Organisational governance and management is an immediate priority. In late 

2009, with energy levels dropping and tensions rising, a number of the 

founding directors took the decision to step back from an active role in the 

CIC. A turbulent period of transition has resulted in new voluntary directors, 

each bringing required skills. A priority now is to provide the continuity of skills 

and commitment required for continued growth. 

1.42 Another short-term priority is to keep profit margins high. This would involve 

maximising the efficiency with which the vessel operates. 

1.43 In the medium to long-term there is significant potential to grow the Ferry 

business as the Ferry is still operating at only half its full passenger carrying 

capacity. 

1.44 A growth strategy has now been set out in the CIC’s 2009-12 Business Plan. 

Key planned developments will include: 

• an increase in passengers through additional and targeted marketing of 

the ferry as a ‘visitor experience’; 

• a five-year programme of investment in the vessel, to upgrade and 

preserve it as the unique selling point of the Ferry operation; 

• shore-based developments at both Glenelg and Kylerhea, providing added 

amenities that will enhance the ferry ‘experience’ and generate additional 

revenue for the ferry and spending in the village; and 

• exploration of further business opportunities and income streams related to 

the Ferry and associated visitor offering. 

1.45 In the medium-term the ambition is for the ferry to achieve an annual turnover 

of £200K within the next five years, and to stabilise turnover at this level. 

106

1.46 The continuing growth and profitability will be influenced by changes in the 

regulatory framework, investment needs of the vessel, and fluctuations in the 

tourism market. 

107


108

Timeline 


March 2004 Glenelg-Kylerhea Ferry put up for sale on the open market 

April 2004 Glenelg designated priority area under ‘Initiative at the Edge’ 

April 2004 Glenelg Ferry Action Group established 

May 2005 Public meeting strongly supports investigation of buy out 

June 2004 Ferry Project Feasibility study and Business Plan prepared 

July 2004 Funding for purchase committed by Highland Council and HIE 

February 2005 Community ballot goes against buy-out of the Ferry 

June 2005 New Ferry Steering group established 

February 2006 Isle of Skye ferry Community Interest Company (CIC) formed 

April 2006 Around £9K raised in 6 weeks by ‘Save the Ferry’ campaign 

April 2006 Ferry chartered for season by Isle of Skye Ferry CIC 

May 2006 Major service interruption for repairs and MCA Inspection 

June 2006 Ferry starts running again after overhaul 

November 2006 Big Lottery application submitted 

February 2007 Funding package secured for Ferry buy-out 

March 2007 First AGM held by CIC and Directors appointed 

April 2007 Ferry and associated operations purchased by CIC 

April 2007 First full season of operation under ownership of CIC begins 

June 2007 Press attention as Ferry is used as prop for Hollywood movie 

July 2007 Radio Scotland programme ‘Radio Cafe’ recorded on Ferry 

July 2007 Voted ‘Best Ferry Journey’ by the Scotsman newspaper 

July 2007 Income secured from first wedding held on Ferry 

October 2007 Council agrees in principle to maintain Ferry slipways 

March 2008 Discount scheme for local residents introduced 

October 2008 Sponsorship secured for crew uniforms and wet-weather gear 

November 2008 Decision taken to invest significantly in marketing of Ferry 

July 2009 Part time CEO appointed to the CIC 

August 2009 The ferry had its busiest day with 128 cars crossing 

March 2009 Full-time salaried skipper/mechanic appointed 

November 2009 Glenachulish ferry 40 years old 

109

CASE STUDY 11: THE BREAD MAKER 



The Bread Maker opened its doors in 2006 as a bakery and coffee house offering 

meaningful work and training to adults with learning disabilities. The Bread Maker aims 

to enable each apprentice to fulfil their full potential, including the mastery of 

employment skills; development of social and communication skills; and growth in 

confidence. 


The Bread Maker is the trading name of the Aberdeen Day Project Limited that was 

established as a Company Ltd by Guarantee with Charitable Status in 2000. The Bread 

Maker is an emerging social firm. A social firm is a type of social enterprise that 

employs at least 25% of its workforce from among people who are severely 

disadvantaged in the labour market, an emerging social firm is a social enterprise who 

does not yet employ the required percentage of people within its organisation. 

Markets 

The Bread Maker operates from its bakery and coffee house in Rosemount Viaduct, in 

the centre of Aberdeen. It serves the general public and aims to become the baker of 

choice in the North East. It recruits its apprentices from Aberdeen and surrounding 

areas. 


The Bread Maker does not own its premises, but has secured a 25 year lease at a 

peppercorn rent. It is able to draw on the skills, knowledge and experience of six 

voluntary directors, 13 staff members and 20 apprentices with a learning disability. The 

Board is supported by three advisors with special knowledge (a retired civil servant 

with experience in employability, a Social Firms Scotland advisor, and a care home 

manager), two Bread Maker apprentices and two residents from Camphill. 


In 2009 the Bread Maker won Best New Social Enterprise in Scotland (Social 

Enterprise Coalition) and was short-listed for the national award in the same category. 


The Bread Maker has grown significantly from a turnover of around £130k in the first 

year of operation (2007) to over £375k in 2009, with over 97% of income from trading 

and contracts. At the end of 2009 the Bread Maker had net assets of around £280k 

(mainly bakery inventory). 

110


The Big Idea 

1.1 The story of the Bread Maker started in 1996 when Denis Durno, a doctor with 

a special interest in learning disabilities, was involved with the Camphill 

Community in Aberdeen, which run a bakery and coffee shop on a therapeutic 

basis. His ambition was to set up something similar, with the same ethos, but 

on a commercial (social enterprise) basis and in a central location in Aberdeen 

city. 

1.2 The founder formed a steering group to take the idea forward. The membership 

of the steering group included members of the Camphill Community, local 

business men and people with a social care background from Aberdeen 

ensuring the right mix of entrepreneurial skills with knowledge of and 

experience with learning disabilities. 

1.3 In order to fully explore the idea, the founder went on study visits to projects 

working with learning disabilities and food sales and production. This further 

formed his ideas about the business and its feasibility. 

1.4 The steering group then raised funding to conduct research and feasibility 

studies. This was helpful in exploring alternative ways of running the project, 

either as a voluntary sector organisation providing therapeutic placements or as 

a social enterprise providing real employment to people with learning 

disabilities. 

1.5 The decision was made to proceed on the basis of a social enterprise model 

because of the identified opportunities for long-term financial sustainability. 

Getting Serious 

1.6 In 2000 the steering group established the Aberdeen Day Project Limited as a 

company limited by guarantee and registered it as a charity at the same time. 

1.7 One of the main tasks in this period was to raise the funds to finance the 

refurbishment of premises and to cover the start up cost (salaries). In this 

period the company managed to attract almost £1 million in grant funding. 

1.8 Initially, based on external advice, the company tried to get this funding 

through one big application. This was a mistake and delayed the plans 

considerably. 

1.9 In this planning stage it was critical to get the right people on board and a lot 

of time and effort was invested into forming relationships and partnerships. 

1.10 In 2005 a local business man purchased the premises at Rosemount Viaduct 

and leased it to the company for a peppercorn rent. This enabled the Bread 

Maker to start implementing its plans. 

111

1.11 In 2005, the company employed its second member of staff, a General 

Manager (the current Chief Executive Officer). 

1.12 It took another year for the Bread Maker to open its doors. In this year the 

premises were developed, a brand designed and contracts lined up. Before it 

started operating, the Bread Maker had more than 40 referrals from Social 

Work and in principle agreement with Aberdeen City Council regarding a 

service level agreement to provide placements for people with learning 

disabilities. 

1.13 A key to the later success of the Bread Maker was the thorough planning of 

the business and its focus from the outset on ensuring financial sustainability. 

This meant that from its first day in operation the Bread Maker had a clear 

plan of how it would fund its charitable activities through trading. In relation to 

this the Chairperson has commented that “we are a real success, not just 

dressed up for a three year funding application”. 

1.14 The initial grant funding also contributed to the later success of the business. 

In the absence of interest payments on loans, the business was profitable 

from the start. 

Realising the Potential 

1.15 The Bread Maker opened its doors on the 1 st of December 2006. It got off to a 

good start and continued to grow in sales (83% in 2007, 63% in 2008 and 

39% in 2009). In 2009 the company was self-financing and no longer 

dependent on start-up grant funding. 

1.16 One of the main issues in the early trading period was in finding the right 

balance between its social and business objectives. In the early years 2006-7 

there was too much of an emphasis on the social objectives, which hindered 

profitability and sustainability in the longer-term. This was solved by recruiting 

people with an industry background, rather than a Social Work or voluntary 

sector one. 

1.17 The Bread Maker has focused on quality from the outset and pitched itself at 

the higher end of the market in terms of location and product offering. The 

CEO has described the ethos of “constantly struggling to be the best, in the 

quality of our products and with our apprentices” and the Chairperson added 

“we will not compromise on the quality of our products and service”. 

1.18 This deliberate market positioning was based on thorough market research 

which ensured that the Bread Maker knew its market in detail and ensured 

that it satisfied an identified customer demand in Aberdeen and surrounding 

areas. In relation to this, an informed observer commented that “their business 

idea was fully researched and decisions were made on this basis”. 

1.19 This also enabled the company to achieve premium prices and high profit 

margins, which in turn facilitated growth and profitability. The founder added 

that “the high quality of our product and customer experience is enhanced by 

the ‘magic’ of our apprentices”. 

112

1.20 The success of The Bread Maker lies in the right balance between running the 

venue as a business but carefully maintaining the focus on its social 

objectives. The apprentices with learning disabilities are treated as more than 

‘employees’ and The Bread Maker also fulfils an important role in their 

development (training, therapy) and social life. 

1.21 Even in the short period of time since existence, the company has 

continuously diversified its product and service offering. In 2007 it purchased 

a van and started delivery and outside catering. In 2008 it employed a 

confectioner and started to sell wedding cakes and other specialised 

confectionary. This can be seen as a sign of good business acumen and 

ambitions to develop as a business. 

1.22 Internally there has always been a strong emphasis on team working and the 

Board and management have invested considerable time and effort in this. 

The former Chairperson explained that “we aimed to create an environment 

that is a pleasure to work in, but that didn’t happen overnight and didn’t 

happen by chance”, while an informed observer commented “people are 

actively encouraged to participate at all levels ... and the best is brought out of 

everyone”. 

1.23 On commencing trading, the Bread Maker quickly realised that it needed 

different skills on its Board and actively began recruiting people with business 

skills. This has resulted in a well balanced Board, made up of a mixture of 

professionals (accountant, lawyer, HR consultant) and people with specific 

business knowledge (catering, employability). In relation to this transformation 

one observer commented “it is testament to the original Board members who 

provided a huge amount of time and resources during the pre-start up stages 

to recognise that their skills were not aligned to meet the needs of the 

commercial aspect of the enterprise and therefore stood down at the 

appropriate time”. 

1.24 Over and above their professional skills and experience, most Board 

members hold a personal interest in the social objectives of the company. The 

Board also draws on the expertise of a range of advisors, including five 

apprentices / service users, a manager of a care home and a representative 

of Social Firms Scotland. 

1.25 The individual Board members use their personal and professional network to 

support the Bread Maker for the benefit of the company (e.g. securing the free 

services of a professional marketing company). 

1.26 The Bread Maker also uses available external support, mainly Social Firms 

Scotland and Aberdeen CVS, to obtain relevant information and advice on 

third sector developments. 

1.27 Despite a very strong start to the business there are a number of main 

barriers to success. One of the greatest of these is the complex legislation 

that is applicable. The Bread Maker has a double burden compared to its 

competitors in the private sector: the industry specific regulation (health and 

113

safety, environmental health) and the regulation and accountability 

requirements imposed on social enterprises (charitable status, VAT). 

1.28 Another main barrier to success, as a social enterprise and in achieving its 

social objectives, is the ‘benefits trap’ that exists for people with learning 

disabilities that want to work. The Bread Maker’s social objectives are to 

provide supported work placements for people with learning disabilities, who 

after a certain period would move on to other paid employment. The ‘benefits 

trap’, however, poses significant financial disadvantages and risks and limits 

the number of apprenticeship placements the company can offer. In this 

respect the Chairperson explained that “we are hugely successful as a 

training organisation, but we also want to become successful as an employer”. 

1.29 In 2008 the founder retired as Chairperson and member of the Board. Given 

the importance of the role, the Bread Maker took its time to find a 

replacement, and started a thorough procedure to appoint a new Chairperson 

in 2009, including a job description and interviews. 


1.30 The recession has had an impact on the business of the Bread Maker. As it 

operates at the luxury end of the market, it has been affected by the reduced 

spending power of its consumers. The company has noticed a slight decrease 

in sales volume lately (although this could equally be caused by the continuing 

bad weather). 

1.31 In other respects the Bread Maker’s business model can be regarded as a 

resilient one. By providing high value bakery products and operating an 

upmarket cafe, it is not really seeking to compete on price. Because price is 

not the main incentive for customers to purchase its products and services, it 

is therefore less sensitive to the recession than competitors competing on 

price alone. 

1.32 The company is also well placed to weather the recession due to the 

knowledge, systems, and processes that it has in place to monitor the market 

and to react quickly to changes in it. One informed observer commented that 

“they reviewed and implemented strategic and business decisions to adapt to 

the current climate .... and the direct result has been that the business has 

achieved higher levels of profitability than expected during this period and an 

increase in the range of products”. 

1.33 As a result of the recession the Bread Maker has increased its efforts and 

spending on marketing. It is currently in the process of rebranding and 

redecorating its shop front. The CEO explained that “in order to stay profitable 

in these times, we need to expand and increase our sales”. 


1.34 The Bread Maker has clear plans for the future. It believes the market demand 

is there to open two more sales outlets in Aberdeen. It is also looking at ways 

to increase its sales to the commercial market (hotel/restaurants). 

114

1.35 The Bread Maker also has ambitions to use its experience and expertise to 

help other social enterprises and third sector organisations in the fields of 

learning disabilities by providing consultancy or franchising the Bread Maker 

brand to other areas. 

1.36 A comment made by a representative of Social Firms Scotland sums it up: 

“They have evidenced their ability to establish a social firm, compete within 

the market place, provide high quality services and products whilst realising 

financial success and ... changing people’s lives. It is for these reasons that 

such a business should continue to be rewarded and supported over the long 

term”. 

115


116

Timeline 


1996 Steering group formed 

2000 Aberdeen Day Project Ltd established 

2005 Patron purchases premises 

2005 Development Manager employed 

1 December 2006 The Bread Maker opened 

2007 83% sales increase realised 

2007 Start of catering and delivery business 

2008 63% sales increase realised 

2008 Start of confectionery business 

2008 Dr Denis Durno, founder, retires as Chairperson and Board 

member 

2009 39% sales increase realised, company returns first profit 

without grant support 

117

ISSN 0950 2254 

ISBN 978 0 7559 9760 2 

web only publication 

www.scotland.gov.uk/socialresearch 

APS Group Scotland 

DPPAS10928 (11/10) 

ISBN: 978-0-7559-9760-2 

9 780755 997602

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