Feasibility study for a

regional flagship incubator in

Cambridge for Co -operative
and Social Enterprises.

March 2003
CONTENTS

1 Foreword by Anne Campbell MP

2 Executive Summary

4 Introduction

5 Methodology

6 What is a Social Enterprise?

7 What is a Business Incubator?

• St John’s Innovation Centre, Cambridge
• Self-Start Workshop, Godalming
• Wandsworth Youth Enterprise Centre, Tooting
• Community Action Network Centre, London
• The Genesis Centre, Alfreton

12 How will an Incubator help Social Enterprise in

Cambridge and East Anglia?

14 Results of Questionnaire

18 Why Cambridge?

21 Support and Possible Link Ups

23 Sites

26 Funding

27 Management of Incubator

30 Critical Factors for Success

• Development of physical Incubator
• For CSEs within the Incubator

32 Conclusion

34 Summary Table of Proposed Incubator Types

35 Acknowledgements

36 Appendices
FOREWORD by Anne Campbell MP

One of the key objectives of this Labour government has

been to foster the spirit of enterprise in a way that opens
up opportunities and prosperity for all people and
enriches community life. Social businesses are central
to this. They have the ability to generate jobs and
training for those outside the mainstream employment.
They can also stimulate enterprise in areas of social
disadvantage, which many businesses regard as
uneconomic.

I have seen many Co-operative and Social Enterprise

start-ups in Cambridge that have shown how the
synthesis of economic and social concerns is not only
possible – it has the potential to form a dynamic and innovative part of the economy.
Many have demonstrated that a business with social objectives can be impressively
successful. I think that this is attributable in no small part to the tremendous
enthusiasm and dedication of practitioners in the social enterprise sector.

But enthusiasm and commitment only go so far and I know from when I founded
Opportunity Links in 1994 that business support, financial advice and the practical
support of managed premises make an enormous difference to the success of a new
cooperative or social business. That is why I welcome this feasibility study for a
Social Enterprise incubator in our region and wish this project every success.

Anne Campbell MP

1
EXECUTIVE SUMMARY

Introduction

Currently, there is no existing provision for Co-operative and Social Enterprise (CSE)
start-ups, in Cambridge, in the way that there is for high-tech or graduate enterprises
such as St John's Innovation Centre.

In the dti’s recent Social Enterprise Unit (SEU) report called “Social Enterprise: A
strategy for success”, Prime Minister Tony Blair stated that the government wants to
‘create an environment in which more people feel they are able to start and
grow such businesses [social enterprises].’ The RT Hon Patricia Hewitt MP adds,
‘I want to ensure that we do more to encourage, grow and sustain social
enterprises – to ensure that social enterprise is not seen as a ‘side show’ to the
‘real’ economy but rather an integral and dynamic part of it’.

There therefore needs to be incubation support resources developed for these social
enterprises that reflect those available to mainstream businesses.

This report details the findings of a feasibility study to determine what a business
incubator is, how it would benefit Cambridge CSEs and if there is a need for such an
initiative in Cambridge. The research for this report also looked at; the availability of
land and property; the funding for such a venture and the commitment of any support
agency, local authority or other organisation to ensure the success of the initiative.

Objectives of the study

To establish what business incubation means by looking at various types and

evaluating best practice.
To establish whether or not a need for a Cambridge based CSE incubator exists
and what services it should provide.
To look at possible sites and funding opportunities.

Results of Study

All CSEs in Cambridge and its outskirts would like to see an incubator for start-up
and diversifying social enterprises. They all also thought that a CSE incubator based
in Cambridge would draw attention to examples of best practice used by CSEs in the
area and lead to better understanding of the sector by mainstream businesses,
networks and support organisations. The incubator would also provide an effective
model for replication. It would offer a central core of expertise supporting and
encouraging those vulnerable CSEs in other parts of the region to develop into robust
clusters.

There were many other agencies interested in the concept as they were looking to
set up similar developments for their client group. Currently it was estimated that an
incubator for CSEs exclusively would need to have 10–15 workspace units (including
light industrial and office space) and would need to provide shared administration
services, business and funding support, training and conference facilities. If linked to
other organisations the requirement would obviously be larger and more expensive
but would offer the chance of working with and alongside diverse cultures creating
‘synergy’, spin-offs and a greater understanding of the needs and solutions within the

2
social economy. The development of relationships, networking, inter-trading of ideas
and goods, mixing of cultures could only be of benefit to participants within an
incubator dedicated to community regeneration and economic development.

At the time of going to press no sites were positively identified for redevelopment
although there were a few possibilities to follow up if the development was to
proceed. The costings for two potential models indicate that capital costs could be
between £1.5M - £3M. Potential funding streams were identified if the project was to
be developed.

Critical factors of the project would be the need for, funding of and a site for an
incubator. If this initiative were to develop, finding an appropriate site could be an
issue. Further research into the possibility of setting up a flagship in the region is to
be commissioned by Business Link, this will add further insight into the needs
regionally and perhaps the best place to position a CSE incubator within the County.

3
INTRODUCTION

The benefits of business incubation are well recognised by mainstream business

judging from the sheer number of such units in existence throughout the UK. In
Cambridge, in particular, this is even more evident through the world-class incubator,
St John’s Innovation Centre. The Small Business Services (SBS) acknowledge this
through a government white paper published in 2001 ‘Opportunity for All in a World of
Change’ that ‘the lack of access to suitable premises, business advice and
other help, such as finance, can hinder the chances of survival for start-up and
early growth stage companies … 75% of businesses that start in such
incubation projects are still in business after 5 years compared with only 33%
which do not have such support’. The paper goes on to add that the development
of such business incubators ‘… is an important part of the SBS start-up policy’.

In the dti’s recent Social Enterprise Unit (SEU) report called “Social Enterprise: A
strategy for success”, Prime Minister Tony Blair stated that the government wants to
‘create an environment in which more people feel they are able to start and
grow such businesses [social enterprises].’ The RT Hon Patricia Hewitt MP
added, ‘I want to ensure that we do more to encourage, grow and sustain social
enterprises – to ensure that social enterprise is not seen as a ‘side show’ to the
‘real’ economy but rather an integral and dynamic part of it’.

Yet despite all this, there are no such incubation support facilities for Co-operatives
and Social Enterprises (CSE’s) in Cambridge. It is therefore felt that Cambridge
needs more business support resources, developed for CSE’s, to reflect those
tailored to mainstream businesses.

The East of England Development Agency (EEDA) funded Cambridge Co-operative

Development Agency (CCDA) to research the feasibility of an incubator for CSE’s in
Cambridge and the CCDA appointed Sue Roberts to ‘head up’ this research. It was
considered important to ascertain the level of demand for an incubator among
existing and recent start-up CSEs in Cambridge. CCDA was identified as the
organisation best able to accomplish this effectively as many of the CSE’s are
already in contact with CCDA and have a working relationship with them.

4
METHODOLOGY

There were five phases of the research:

Research on various mainstream and other incubators, for comparisons.

Information was taken from various sources including the Internet, Anglia Polytechnic
University’s WISE programme and publications from various relevant organisations
including United Kingdom Business Incubator Ltd (UKBI) and the Department of
Trade and Industry (dti). Requests were posted on relevant chat sites for information
including Co-operative and SSEER websites. Visits were made to different types of
incubators and other similar start-up business centres.

Established level of interest in a Cambridge incubator with local CSE’s.

Contact was made with existing CSEs to ascertain their particular needs at start-up.
A questionnaire (Appendix A) was sent to known CSEs in Cambridge and on the
outskirts of the city. Staff visited specific organisations identified as either emerging
or diversifying for in-depth research of their current needs.

Identified potential support from a variety of business support agencies

and other organisations currently supporting, or involved with, CSEs.

Telephone calls and meetings were made with appropriate agencies to discuss
concept and ascertain, in principle, support for the incubator.

Sites, or premises, which could be suitable for a CSE incubator were

researched. Implications for trade, logistics and funding were looked at.

Contact was made with local estate agents and developers, local authority planning
offices, economic and development officers and possible funding bodies.

Research on various possible management structures required for long-

term success.

Evaluation of existing incubators and other relevant research.

5
WHAT IS A SOCIAL ENTERPRISE?

Social Enterprise is a broad concept with no easily identifiable design. The Sector
addresses a wide range of social and environmental issues and operates in all parts
of the economy. The breadth of objectives and activity within the social economy
leads to a misunderstanding of it from mainstream business and organisations within
the sector itself. Misunderstandings also arise due to the Sector’s relative ‘newness’,
its lack of self-identification and lack of promotion in the general public domain.

“We see social enterprise as providing innovative solutions to some of the

challenges faced by many communities across the nation”
Douglas Alexander MP

The defining characteristic of a social enterprise is that it aims to benefit a

community, either geographical or in kind, through trading. As charities should not
trade they do not qualify as social enterprises. In many cases social enterprises aim
to provide training and employment opportunities for disadvantaged or disabled
people. They often find it more effective to achieve their aims through being
managed by the workers or community that are intended to benefit from the business
activities. They should also state, in business plans and so forth that their objectives
are primarily social. As a matter of principle all surpluses or profits (and assets if the
business were to be dissolved) should be reinvested back into supporting these
objectives.

There are many forms of social enterprise:

Employee-owned businesses
Community business
Credit Unions
Co-operatives
Development Trusts
Social Businesses
Intermediate Labour Market Companies

There is no single legal or financial structure for a social enterprise. As noted by

David Nicholls of Business Links Cambridgeshire at a recent seminar on social
enterprise “one size doesn’t fit all”. A social enterprise may be a company limited
by guarantee or it may be unincorporated. Many are co-operatives or mutual
societies. A social enterprise may be self-sustainable or have some grant
dependence. Each will have its own social mission, individuality, aims and objectives.

Cambridge has a wealth of assorted Co-operatives and Social Enterprises (CSEs)

profiled and supported by Cambridge Co-operative Development Agency (CCDA),
including a number of recent ‘start-ups’.

6
WHAT IS A BUSINESS INCUBATOR?

Incubation is a process to help ‘start-up’ businesses survive and grow. They are
usually managed premises comprising of small office or light industry work units with
meeting rooms, parking and reception. New start-up businesses are provided with
an informative and supportive environment. Peer group networking; business advice;
business mentoring; technology support services and assistance in obtaining finance
for growth are often found to help the new start-up businesses.

Each incubator has different aims pertaining to the economic development of its local
area. They can enable diversification of rural economies or, in urban areas, provide
employment and build local wealth. Incubators are sometimes used as a vehicle to
transfer technology from universities and major commercial businesses. Incubators
can focus on a particular market (technology based businesses are nurtured in St
John’s Innovation Centre in Cambridge) or have a mixed use that targets a specific
group of entrepreneurs, like the Wandsworth Youth Enterprise Centre in Tooting
(client group 18 – 30 year olds). Currently 82%, of business incubators in UK,
operate a selection policy for entry to their incubators and 48% of those select
business of a type (UKBI). The role of an incubator is to produce successful
businesses that are financially viable and self-supporting when they leave the
premises.

The National Business Incubation Association (NBIA) states that

‘Critical to the definition of an incubator is on-site management,
which develops and orchestrates business, marketing
and management resources tailored to a company’s needs’

The facilities on offer in an incubator usually include:

Appropriate rental space and flexible leases
Shared basic office services and equipment
Business advice and support
Assistance in obtaining appropriate finance for growth
Other shared facilities including meeting rooms, parking, reception

Start-up business development covers a wide range of processes. Incubators help:

Tackle specific problems of economic development in urban and rural areas
Increase the success rate of early stage businesses
Identify funding opportunities
Speed growth of companies
Create jobs

The NBIA states that two core principles characterise effective business incubation:
Incubator gets recognised as a dynamic model of sustainable efficient business
Local economy becomes improved due to successes of emerging companies

CCDA staff visited a variety of incubators seen as innovative and successful within
their own field. The management structure, funding strategy, success and issues to
bear in mind to help develop a new centre were studied. Though 52% of incubators
operate as social enterprises (UKBI), no incubator or enterprise centre catered for
CSEs exclusively. Most incubators had provided managed workspace for social
firms (a CSE with at least 30% employees with special needs) but not deliberately as
part of their policy.

7
CASE STUDIES

St John’s Innovation Centre, Cambridge.

St John’s Innovation Centre is a
mainstream business park providing
market rate premises for small and
medium sized businesses. In addition
it provides a supportive environment
with quality, cost effective services in
which technology transfer and innovation are promoted at local, national and
international level. Tenants include start-up companies, second stage technology
based companies, whose experience and maturity enable the creation of spin-off
companies and service companies that provide support specific to the business
genre including training, marketing and public relations.

Funding
The land is owned by St John’s College, which established the Innovation Centre
in 1987. The rental income is returned to the College in order to meet their aims.
Funding comes from the service charge and contracts carried out either privately
or for the Small Business Services (SBS) or other agencies.

Entry and Exit Strategy

Businesses have a three-year secured tenure but in reality they may stay up to
five years. This helps keep the premises occupied maximising the return on the
investment by St John’s College.
Tenants can exit with one month’s notice.

Facilities included in rent

Facilities available to tenants include a restaurant, conference rooms, reception,
phone switchboard, heating, lighting, car parking, maintenance, cleaning of all areas,
interview rooms, meeting rooms, library and security. Business support is also
provided on site. Services provided for an additional charge include reprographic,
telecommunications and postal services.

Other Information
The premises are based on the Science Park in Cambridge near to the A14 with
parking and a Park and Ride facility. It is a prestigious building, which encompasses
80,000 sq ft of space. Eighteen employees manage the Innovation Centre.

Results
“There are 50 companies on site, 100 graduated and the failure rate is about 15%
compared to 50% that may have been expected” (General Information, SJIC Jan
2002)

Self-Start Workshop, Godalming, Surrey

The workshop was set up by Surrey County Council in the mid 1980s in a redundant
Fire Station owned by the Council. The objective was to tackle the problems of
unemployment and lack of opportunities for young people in the area offering low
cost managed workshop starter units to 16 – 30 yr olds, looking at self-employment
as an alternative to unemployment. The Old Fire Station houses 5 workshops, some
licensed to partnerships. Self-Start provides free business support, information and

8
training tailored to their client group who rent the premises but also to all 16 –30 year
olds in the county. Rita Kelly who manages the Old Fire Station also runs ‘Live Wire’
which encourages young people to look at self-employment and a Business Club for
under 30 year olds.

Funding
Rental income used to maintain the building
Surrey CC employ a Project Manager who also manages on site services

Entry and Exit Policy

The voluntary steering group, consisting of business professionals in the area,
interview prospective tenants. On their agreement 6-month licences are given.
The steering group shares its expertise with the fledgling businesses including
free legal and business advice. This provides good value for the centre.
There is no exit policy as businesses have naturally grown and found bigger
premises in the area. Generally businesses stay in the incubator for 2-3 years.
Tenants have to give one months notice to vacate the premises.

Results
About 65% of businesses (both those contained within the Fire Station and those
outside of the premises) nurtured by the incubator have been trading for three years
or more. There is a higher success rate for those actually resident in the incubator.

Community Action Network (CAN) Centre (The Mezzanine),

Elizabeth House, London.
The CAN Centre is based on one floor in a major office building in Central London.
Mezzanine Services Ltd (MSL), a company limited by guarantee, runs the centre and
is administered by CAN. It is a network based social enterprise and has licensees
renting space within the open plan area maximising opportunities for like-minded
social enterprises to interact and work in partnership. Glass partitioning for
conference and meeting rooms further enhance the feeling of space and vibrancy.
Organisations are charged full commercial rates plus a service charge and
management fee.

Funding
Rent charged on individual occupancy of the Mezzanine is used to fund the centre’s
on-site management and lease. As MSL is a mutual society corporation tax is largely
avoided. MSL is a profitable, sustainable social enterprise completely unsubsidised
with 100% earned income. There are currently 25 organisations in the centre, which
is reliant on 100% occupancy to break even.

Entry and Exit Strategy

There is no formal policy, as full funding of the space is needed for sustainability
Occupants are members of MSL and sign a deed of adherence rather than lease

Facilities included in the rent

The licensees have access to a conference room with full catering, a central resource
base, office services and telecommunications. There is a consultancy available for
community development projects and social marketing initiatives. Elizabeth House,
in which the centre is based, provides the reception service. CAN calculate that an
organisation in the centre can save over £13,000 per annum due to shared facilities.

9
Future
This is a very busy, pulsating environment and many spin offs have been created
within the development. This centre offers professional facilities in the centre of
London with good access from within and outside the city. The Mezzanine recently
took over another 6,000 sq ft, which breaks even at 85% occupancy.

Wandsworth Youth Enterprise Centre, Tooting, London.

Wandsworth Youth Enterprise Centre (WYEC) was
set up in 1998 to tackle the growing areas of
unemployment, social exclusion and lack of
opportunities for young people. The low cost
premises (including offices, workshops and studios)
encouraged young people to start and develop their
own businesses. It has 30 units, 25 of which
are work units in various sizes (100 – 500 sq ft)
providing support and business counselling for 17 –
30 year olds in and around the Wandsworth area. There are 6 staff running the
complex and it is generally 90 – 95% full.

Funding
Initially from the local government, Training and Enterprise Councils, charitable
trusts, company sponsorship and the European Union.
The development of the Trident Centre, a £2.7M commercial business centre
complex which provides managed workspace for 90 small businesses, is the
commercial arm of the WYEC and generates an income to underpin the funding
of the WYEC’s core activity. It is also a progression path for those under the
WYEC scheme – aiding move on after two years in the ‘incubator’.

Entry and Exit Strategy

Two years tenure. Stepped licence fees prepare start-ups for commercial rates.
One month’s notice by tenants to vacate premises.

Facilities included in the rent

Young entrepreneurs also have onsite-shared facilities including a conference hall,
reception and administration office.

Free Services
In addition to this free specialised business counselling services are tailored to the
individual requirements of young people at both the pre-start up and post start-up
stages. Interlinked with this are free business skills workshops and training courses.
All counselling, workshops and training is provided by WYEC staff on site.

Future
85 - 90% of WYEC’s businesses continue to trade after 2 years. WYEC is currently
working with a number of agencies nationally and in mainland Europe looking to
replicate the model taking into account the needs appropriate to the region. For
example in the rural areas of Eger in Hungary and the Highlands and Islands of
Scotland ‘hub and spoke’ support models are being developed. The hub provides
the central core of expertise and activity, which in turn supports satellite incubator
activities enabling clusters of start-up enterprises situated in other localities to be
assisted.

10
Genesis Centre for Social Enterprise, Alfreton
The Genesis Centre for Social Enterprise is owned by His Upper Room Trust
(HURT). Its businesses and Family Entertainment Centre area are operated by its
subsidiary company Genesis Social Enterprise. It provides workspace (office and
workshop units) for up to 30 start-up firms with business support and advice. The
Family Entertainment Centre, catering business and conferencing facilities are on
site. The Centre aims to initiate and facilitate CSEs either as subsidiaries or to be
independent.

Funding
Initial funding was received from East Midlands Development Agency and grant
trusts (£678K for capital costs). A further £400K of loan funds including HSBC,
CDFI initiative and EMCLF.
The income is from the family entertainment centre, environmental and catering
contracts. Rental income is also received from managed office space and
workshops.

Entry and Exit policy

The initial tenure is for 3 years.
Tenants have to give between 1 and 3 months notice to vacate the premises.

Future
The Enterprise Centre is in its infancy and there are tensions between commercial
reality (the need for rental income) and the ideal of incubating CSEs at the Centre.
Issues regarding graduation policy and the lifecycle of the centre will be researched
as the centre develops. Development of another site could be a solution.

Conclusion

The incubators are very different and the difficulty appears to be sustaining the
incubation facility just for start-ups. This was successfully overcome by WYEC in the
development of their mainstream business that both underpins the funding of WYEC
and provides a successful graduation path for those coming out of the incubator.
The reality of unoccupied workspace is the loss of income needed to sustain the
programmes. Entry criteria and management of the incubator will need to be tailored
to the requirements of the CSEs. CAN’s research found that good relationships are
their key to success. Careful selection of potential clients and ensuring shared
values were maintained was found to be important. The open plan environment may
not be the Mezzanine’s defining character but it does seem to attract organisations
that are willing to share and be open with each other. The CAN Centre also
develops good relationships between the organisations, acting quickly and sensitively
to diffuse potential problems within the Mezzanine.

The research indicates that to be successful an incubator needs to:

Be seen as a dynamic, effective and sustainable business itself

Must have on-site management
Ensure that activities and values complement and integrate within the community
Ensure relevant agencies make it part of the local economic development policy
Tailor its resources, advice and support to the specific development needs of
those using the facility
Develop an effective management system that also collects information to
evaluate its effectiveness and ensure that the needs of the clients are being met.

11
HOW WILL AN INCUBATOR HELP SOCIAL ENTERPRISE IN
CAMBRIDGE AND EAST ANGLIA?

The Government’s Strategic Vision

‘is to create a dynamic and sustainable social enterprise sector,
as part of an inclusive and growing economy’
(Social Enterprise … a Strategy for Success, dti July 2002)

Many social enterprises encounter the same difficulties as mainstream business

although to date social firms and co-operatives have a higher survival rate. One in
five Co-operatives fail within five years as opposed to three in five mainstream
businesses failing within the same period (ICOM video).

The two main problems encountered by those in social enterprise are funding issues
and the misunderstanding of the sector. An incubator or development centre for
social enterprise and co-operatives will play an important role in the region in helping
to deliver on many of the Government’s key issues raised in the Social Enterprise
Unit’s report.

‘many social enterprises are undercapitalised and struggle to access

external finance, particularly when starting up’
(Social Enterprise … a Strategy for Success, dti July 2002)

An incubator will be an opportunity to offer a supportive environment in which to

establish new social enterprises. The inclusion of favourable rent and lease levels
will generate more support and security, creating wealth that will ensure greater
sustainability for CSEs and a broader provision for their client groups. Through being
able to access more support through managed premises, CSEs will benefit through
not having to deal directly with commercial landlords who will likely not understand
their specific needs – being in an incubator will free up CSEs time to focus on the
needs of the business and the groups they are seeking to support as they won’t be
haggling with landlords over rent levels or service contracts. Provision of appropriate
business support and financial advice would facilitate CSEs to move away from grant
dependency, encourage them to look at other methods of sustainability or to work
with other members on site in joint funding bids.

The report also identifies the need to develop CSE networks

‘Networks of social enterprises and social entrepreneurs,
ensure that the social enterprise voice is heard and can play
an important role in the sharing of best practice’.

An incubator where CSEs converge will automatically generate such networks and
facilitate a continuous exchange of best practice. This will drive up the
competitiveness of social enterprise within mainstream business, creating spin offs
and further productivity and employment.

‘Lack of visibility and misunderstanding of the sector also needs to be

addressed – we need to engage in active promotion, to give a higher profile to
the sector and help spread understanding’
(Social Enterprise … a Strategy for Success, dti July 2002)

12
EEDA stated through their 2010 strategy that they want to pursue the themes of
‘creativity, innovation and enterprise, leading-edge infrastructure’.

An incubator for CSEs would develop infrastructure and encourage entrepreneurship

by providing a tangible base and resource centre to build upon their skills helping to
‘attract new businesses and help existing businesses grow’. It will promote the
experience of new ways of working throughout the region leading by example
providing a central core of expertise supporting and encouraging those most
vulnerable to develop into more robust social enterprise clusters and through
replication.

In practical terms, the real economic impact of an incubator for social enterprise will
be the same as for mainstream business. Co-operatives and Social Enterprises will
benefit from:

A stable peer-group network

Affordable premises
The shared benefits of greater economies of scale
Opportunities to inter-trade
Partnership working within its own sector and with mainstream business
Funding advice and the opportunity to make joint funding bids
Joint bids for public procurement contracts
Explore ways of moving from grant dependency
Ability to take risks in a secure environment
Provision of administration support with shared office equipment
Provision of business advice tailored to individual organisations needs
Access to shared technology

The strength and success of a development centre will rely on the management of
the site, the seen professionalism and effectiveness of the development and the
provision of specific facilities required by those who use it. Not all social enterprises
will be able to take up residence in one particular location however, the facilities
could be made available to all in the social sector to enable growth, provide relevant
support and encourage new social entrepreneurs to expand their ideas in a relatively
secure environment.

13
RESULTS OF QUESTIONNAIRE

A questionnaire was sent to 28 known Co-operative and Social Enterprises (CSEs) in

Cambridge and its outlying areas. These were identified through the Guild’s recent
mapping and Cambridge CDA’s ongoing mapping of this sector, in the area it serves.
Ten CSEs were targeted for an in-depth study on the basis that they were
diversifying their operations, start-up businesses or needed new premises. The
remaining CSEs were sent an accompanying letter explaining the incubator vision
and asked to complete the questionnaire (see Appendix A).

For a full list of CSEs questioned please see Appendix B. Housing Co-ops were not
included as the original funding bid specified that office and light industry were the
managed workspaces to consider. Agricultural based CSEs were not targeted, as
their business would need to be based near to or on a farm.

71% of targeted CSEs completed the questionnaire. 25% of those were classed as
emerging social enterprises whilst the remaining 75% have been in operation for two
years or more. The trading activities of these CSEs were diverse and ranged from
office-based firms to manufacture, retail and art based activities.

Main issues faced at Start-up

85% of CSEs who completed the questionnaire stated funding as a major problem at
start up. Many used their own capital to set up the business, whilst others used
loans from Industrial Common Ownership Finance (ICOF) as they provide loans
exclusively for CSEs. Many organisations felt that mainstream funders did not really
understand their needs and the fact that they were operating a non-profit making
business. Fundraising or looking for grants was thought time consuming and most of
the time quite ineffectual. This led to despondency within the sector and reluctance
to keep applying to potential funders. Many CSEs were successful in creating
surpluses. However, there are many that depend heavily on day-to-day finance and
grant funding.

60% of the CSEs stated that access to affordable, appropriate premises had been a
major problem in setting up their businesses. The spiralling costs of premises in
Cambridge had proved a major problem with the new start-up CSEs. This trend may
also be a major concern for mainstream Small and Medium-sized Enterprises
(SMEs) in the present economic climate.

30% of the CSEs said they would have welcomed business advice relevant to their
businesses structure. Available advice had not always been specific to their needs.

Other issues raised were legal advice on the issues of renting and agreeing the use
of premises. Lack of access to shared marketing tools also caused problems.

The Need for a low cost start-up property development for CSEs
CSEs agreed unanimously that there was a need for an incubator-type development,
for many reasons. Provision of low cost premises and access to funding advice were
the most important feature however those questioned were keen to see the profile of
the sector raised giving it equanimity with its profit making counterparts and also to
show how useful and successful the sector is. Although CSEs targeted in this
research had totally differing trading activities and many were serving specific
communities, such as Barnwell Community Café, 70% agreed that Cambridge would

14
be a good place to set up a ‘flagship incubator’ for the sector. Reasons included
strong support for CSEs in the area and that Cambridge is very visible to other parts
of UK with the success of the Cambridge Phenomenon. Even though many did not
want to take up residence in the development they were interested in the advice and
support network of a ‘virtual’ incubator and felt that this could only be of benefit to all
in the sector.

Issues to take on board in the location of the incubator included: accessibility, many
thought the outskirts of Cambridge would be easier to get to for their customers,
trainees and employees. Some suggested near to Cambridge Regional College as
many of their client group were supported and trained with CRC. Some CSEs
thought that the incubator would work within the city but not in rural areas, although it
could provide support to clusters of CSEs in these areas. One CSE felt that Ely
should be the city as it was central to the region and accommodation cheaper.

Benefits of a start-up firm property development

Most CSEs felt that a specific property development for the sector would be cost
effective, especially with the provision of low cost premises, shared admin facilities
and with the benefit of a shared conference and training rooms. It was felt that
working in close proximity with other like-minded businesses would provide peer
group support and make the sector robust, not scattered and vulnerable, offering
encouragement to other social enterprises and providing further employment and
training opportunities. Training, funding and business advice appropriate to the
sector would also be beneficial. Collectively this would enhance the sector and make
it more visible and competitive with mainstream businesses. It was felt that the
development should be managed on-site and that the provision of payroll facilities
would be a practical and invaluable service. Shared transport facilities, for example a
shared minibus, were thought to be a necessary service especially for those CSEs
whose trainees and employees are financially, medically or physically disadvantaged.

Possible problems that could be encountered

Some CSEs felt that their autonomy could be threatened unless the development
was independently managed. It was also felt that ineffective management could lead
to reduction in efficiency if too much time was spent on sorting out ‘sharing’
problems. These were perceived as being territorial issues such as parking and
waste disposal. Accessibility to individual CSEs client groups was also seen as a
possible problem depending on where the development was situated.

Some questioned thought that there should be a selection criteria for such a diverse
sector as an unstructured mixture could cause problems, such as duplication of
services or problems applying for planning permission. Facilitating units for
businesses such as hairdresser or catering organisations was seen as not cost-
effective especially if there was a ‘graduation’ policy. This would have to be pointed
out to prospective tenants. It was felt that some of these areas could be overcome if
there was an effective selection criteria and the visibility of different groups of the
sector were kept separate. Perhaps separate office and industrial unit areas. Many
expressed the need to present a collective, dynamic image and that the management
and presentation of the development should reflect this. Many were in agreement
that the building/s should look prestigious and well managed to present to the ‘real’
world the effectiveness of the social sector. Some were concerned that a complex
exclusively for CSEs could promote exclusiveness and the reluctance to work with
mainstream business.

15
Agencies already used by CSEs
It has already been stressed that CSEs feel that their main start-up and second stage
issues revolve around premises, business advice and funding issues. Many do use
agencies in the area. CCDA is seen as one of the most effective providers of
information and signposting to appropriate advice and help with 65% of CSEs using
the CCDA on a regular basis. Other agencies used were CCVS, CEA and Business
Link (20% use each). It was felt that mainstream business advice given was not
always appropriate to individual organisations and that it could be presented in a
more understandable and relevant way to CSEs. CSEs understood that the diversity
of their sector does lead to misunderstanding and felt that an incubator would
highlight their specific needs and also give them a better understanding of their own
sector. Many expressed the desire to operate an efficient, effective and sustainable
business even though their primary objectives were in the main different to
mainstream businesses.

The research highlighted the number of agencies used by CSEs in the area – 24
agencies were mentioned (Appendix C). Many partnerships have been formed and
this relates to the individual CSEs training objectives, care provision and trade.

Type of property
An overwhelming response was that the development should be prestigious and to
be shown to be an effective and professional business. 25% of CSEs felt an
incubator with mixed premises (office and light industry) would be the best solution to
cater with the diversity of the sector and to fulfil their particular needs. 25% indicated
that light industrial would satisfy their requirements and 20% indicated that they
would prefer retail outlets (however these were not looking to move into such a
centre in the near future).

Wish List
Many of the benefits highlighted in the questionnaire so far were seen as
encompassing most of this sectors visions. Other requirements included, a
marketing team, payroll, financial advice (profit and loss), community café, aesthetics
(views over Cambridge that mainstream businesses would die for), quality business
advice, ecological aspect taken into consideration in the design of the development,
sprung floor and rigging (for art based organisations), shop fronts to display services
or products, easy access and communal transport. Good transport infrastructure
enabling disadvantaged and disabled trainees and employees easy access to the city
and workplace

Three factors for operating a successful enterprise

CSEs were asked to reflect on what they though were the three successful factors to
sustain growth of a successful social enterprise. 55% pinpointed persistence and
commitment as the top factor, 35% a sustainable funding stream, 20% sound
Business Plan and 20% understanding the market and having a solid client base.

CSEs interested in renting space if a development was made available now

Based on the enterprises polled during this research, seven organisations would be
interested in renting premises if this initiative was developed in Cambridge, two
possibly in the future, three would be interested in the future if in another part of the
region.

Summary
There appears to be an overwhelming need for some type of development from the
CSEs perspective. This could be an incubator or managed workspace with the

16
provision of shared facilities, business, legal and funding advice. More established or
diversifying CSEs still had the problem of finding suitable premises to take their
businesses forward. Start-ups also had this initial cost and with funding issues felt
that they would benefit from a secure centre offering the facilities mentioned. All
CSEs who replied felt that such a development could only benefit the sector. As to
the role of the incubator, many felt that there were many issues to take into account
in deciding if the development was made available exclusively for start-up firms. It
was felt that the experience of second stage social enterprises would encourage peer
group support, provide welcome experience and present opportunities for spin-off
businesses, which would be unlikely to develop with only start-up enterprises. Also
consideration had to be given to the commercial reality of rental income sustaining
the incubator. Interaction with like-minded enterprises would encourage networking
and add to the wealth of support. The provision of business, legal and funding
advice tailored to the sector was felt to be essential with perhaps the CCDA
managing the centre, working with other agencies such as Business Link and
educational establishments in the area.

The recent research on training and development opportunities undertaken by CCDA

has identified that CSEs are prevented from engaging more fully with training
because of the lack of knowledge as to the provision available. This appears to run
concurrent with the sector’s knowledge of outside agencies available for business,
funding and legal support – although it is agreed that the CCDA has at different
levels over the years been the main organisation that has supported and offered
most of the appropriate advice. This is not to say that other agencies have not been
willing to offer support, but there does appear to be disparity in the levels of support
due to a lack of understanding of the sector. An incubator would encourage
communication of needs, understanding and practicalities of this sector in order to
better support and help them engage with networks to remain better aware of support
and advice opportunities.

Conclusion
Co-operatives and Social Enterprises agree unanimously that an incubator type of
development would be beneficial and that a ‘flagship’ would probably be best situated
in Cambridge.

If a potential site and costs were identified there will be a need to acquire concrete
evidence from social enterprises as to their intent to take up space in an incubator
and how much they would be willing to pay.

17
WHY CAMBRIDGE?

Cambridge has become a world centre for generating and growing successful
businesses mainly in the scientific/hi-tech fields but is now a deeply polarised city.
Congestion and spiralling property prices have excluded local communities to the
effect that two wards within this perceived economically successful city, Abby and
King’s Hedges, are eligible for special help, as they are amongst the 2000 worst
wards in England. Concern about the implications of the divide was raised at the
Greater Cambridge Partnership annual conference in 2002.

With the Government’s current resolve to encourage, grow and sustain social
enterprises nationally, an incubator or development centre within Cambridge
provides an ideal opportunity to widen the benefits of enterprise to all the city’s
citizens irrespective of background.

There are many successful social enterprise clusters in the city and this would give
an ideal foundation for a successful flagship that can be replicated in the region.
Building on existing relationships with educational establishments, commercial,
statutory, health, voluntary, community and social economy and a commitment to
working together would further strengthen and help to ensure success of such a
venture. The support of Cambridge Co-operative Development Agency, a pro-active
unit that encourages and supports new social enterprises and the active and strong
base of the Cambridge Council of Voluntary Services ensures that a physical and
cultural supporting infrastructure is already set in place within the City.

The recent report by CCDA into training needs of the social enterprise sector
highlighted the differences between the priorities at a regional and local level.
Namely, at regional level, the training needs are identified as being business
management and understanding the culture of social enterprise (The Guild) whereby
in local areas they were seen to be in-line with those of mainstream businesses:
business finance, management and health and safety issues. The report concluded
that the research found that “wherever Co-operative Support Organisations
(CSOs) exist, clusters of co-operatives, social firms and social enterprises will
develop around them and begin to organically network with each other,
sharing experience and culture’ (Training issues facing social enterprises in
Cambridgeshire, LSC) Regionally the disparity in the support given to social
enterprise means there is a greater demand to understand the culture and values of
this sector. A CSE incubator in Cambridge would act as a flagship for the region and
draw attention leading to better understanding by other mainstream businesses,
networks and support organisations. It would also provide an effective model for
replication regionally or provide a central core of expertise supporting and
encouraging those most vulnerable to develop into more robust social enterprise
clusters.

Cambridge also has a wealth of educational establishments that are leading the way
in encouraging understanding of the social economy. Judge Institute of Management
University of Cambridge is currently piloting a Master of Studies in Community
Enterprise degree course, which includes the study of clusters and business
incubation, for social entrepreneurs who manage enterprises throughout the United
Kingdom. Anglia Polytechnic University is also currently piloting the ESF funded
WISE accredited course on Understanding Social Enterprise. This will undoubtedly
create a further wealth of social entrepreneurs in the area that have a better

18
understanding of and can convey the achievement and advantages of the social
economy. Many of the Colleges have experience and involvement in the
development and economic success of Cambridge such as Trinity College and St
John’s playing a key role in the development of the Science Park and St John’s
Innovation Centre.

Added to the support and mentoring of established organisations, Business Link has
recently provided a new post in support of Social Enterprise in the county. The
Social Enterprise Adviser, will map and support social enterprises delivering advice,
business support and training. It will also look at business incubation regionally for
this sector.

Although a higher percentage of CSEs in the region operate outside of Cambridge

City and its outskirts, those that do operate within the City have created a robust and
solid foundation within the area and are supported by local authorities and colleges.
Although other areas in the region would also benefit from an incubator, the high
profile of Cambridge would give high visibility to this initiative providing the central
core of expertise and activity which in turn would support satellite incubator activities
in the region enabling clusters of start-up enterprises situated in other localities to be
assisted. This would be even more effective if set up in the disadvantaged wards of
Cambridge.

Other initiatives in the Region

There are a number of similar activities taking place in Cambridge and across the
region and a few have been identified below as examples of good practice. They are
at different stages of development and it is important to learn from the experience in
the county and regionally to prevent overlap and to improve the sustainability of the
initiatives instead of competing with them. Examples of other initiatives in Cambridge
and in the region include:

Zion Baptist Church

Suffolk Connect
FACET

Zion Baptist Church, Cambridge

Zion Baptist Church is situated in the centre of Cambridge. The refurbishment of the
crypt 6 years ago enabled the set up of Jimmy’s Night Shelter, a social enterprise
with charitable status providing 31 beds, food and resting place for Cambridge’s
homeless people. Through Rev A Barker’s entrepreneurship, motivated by his faith
and the need to finance other projects, Zion Baptist Church currently houses five
other community enterprises including Aspire, a social enterprise that provides work
for homeless and ex-homeless people, the Bike Project and a Resource Centre for
Home Educated children. Dial-A-Ride, another successful enterprise, has recently
moved due to the expansion of its operation. All projects have evolved from clients
needs, many clients are part of projects within Zion. There is one administrator to
oversee the lettings.

Funding
The building belongs to Zion Baptist Church. Income received from statutory grants,
trust funding, donations and rent is needed to maintain and develop the services.
Individual projects are funded by their own means.

19
Exit and Entrance Strategy
There is no strategy for exit. If the space is available and the organisation has a
social theme then organisations can rent the space. They tend to be spin offs from
those already housed in the church or developed to clients needs. Zion is not
formally set up and has grown organically. This implies that although infrastructure
and a built environment may provide the basis of a sustainable and vibrant incubator,
long term success relies on solid partnerships and perhaps in the social sector there
is more awareness that community, client group and worker groups needs are as
important as the business needs.

Facilities included in the rent

Subsidised rent, heating and lighting, kitchen facilities and meeting rooms. Help is
given with funding issues including filling in application form. Rent varies according
to the organisations income.

Outcomes
Spin off organisations – Aspire social enterprise
Partnerships – Cambridge Foodbank, on separate site, with Emmaus Cambridge

Suffolk Connect
A feasibility study commissioned by EEDA is currently researching the
redevelopment of Bury St Edmunds Railway Buildings. Suffolk Connect is the lead
partner. The vision is to redevelop the site providing a cluster of social enterprise
initiatives with an emphasis on ideas, innovation and business start ups, in particular
waste and recycling initiatives. The centre intends to provide an Internet café,
serviced office spaces, serviced starter units, training and conference facilities.

Fenland Area Community Enterprise Trust (FACET)

FACET is based in March, Cambs and was set up to create new social enterprises
for its local geographic community needs. Although this study focuses on a city
development, FACET is situated and supports rural enterprise and it is important to
note that rural models of incubator ‘type’ developments are also seeking to meet the
needs of their communities. A central incubator situated in Cambridge although
facilitating a different market could extend research, support and advice to satellite
developments such as FACET gaining knowledge of the specific needs of rural
areas.

20
SUPPORT AND POSSIBLE LINK UPS

Views were sought from various local agencies with regard support for an incubator
type development for social enterprises and co-operatives. In principle most local
bodies were very interested in the idea and would like copies of the completed report.
The research also found support from like-minded organisations that expressed an
interest to link up ideas if the concept was developed further.

LOCAL AUTHORITIES
Economic and Development Department – Cambridge City Council
Martin Clark, Citylife Ltd (see below) met with Brian Human Head of Community and
Economic Development who indicated in respect of their vision of a Community
Enterprise Park that they would offer unqualified support in principle and liked the
possible link up with a CCDA social enterprise incubator. Small grants may be
available for development of the idea, capital or operation costs. They would be able
to help in the planning process. Andrew Poulton, Senior Economic Policy Officer
commented that the City Council are reviewing their Economic Policy Statement in
particular to business support in the City so this initiative could very well fit in with
their targeted areas.

South Cambridgeshire District Council

Cameron Adams, Strategic Development Officer would welcome in principle an
opportunity to help endorse the venture. This type of development complements the
council's vision to promote employment and training opportunities for all sections of
the community across the district. A modest community fund has now been
established by the council to help “kick start” new social enterprise schemes. For
further information about the community fund and how to apply please contact
Cameron Adams on 01223 443135.

Cambridgeshire County Council, Simon Smith (Head of Economic

Development)
In partnership with other authorities the County Council are developing a series of
workspace units in the fenland area. At this stage they had not considered any CSE
specific incubator development for Cambridge and anticipate that the fenland
development will adequately cater for the needs of start-up social enterprises in that
area.

DEVELOPMENT AGENCIES
East of England Development Agency (EEDA)
EEDA have expressed an interest in seeing incubator initiatives developed
throughout the region as shown in their regional development and corporate plans.

Cambridge Co-operative Development Agency

CCDA, who is administering this Feasibility Study, is keen to continue to take an
active role with such a high profile and prestigious initiative.

21
BUSINESS SUPPORT AGENCIES
Business Link
David Nicholls, Business Development Manager, commented that in view of the new
emphasis of Business Link with social enterprise that they would be keen to support
a ‘flagship-incubator’ wherever it was located in the county. They would consider
placing a Business Link Officer in situ probably the newly appointed Social Enterprise
Adviser and would recommend that advice and support be made available within the
incubator from enterprise agency advisors such as the CCDA. Business Link are
currently looking to further this research, looking at developments in other parts of
the region.

EDUCATION AND TRAINING

Anglia Polytechnic University
Anglia Polytechnic University is currently piloting the ESF funded WISE accredited
course on Understanding Social Enterprise that provides practical business advice
for and promotes the understanding of Social Enterprise. Lewis Herbert, Manager of
the Wastewise part of this course, commented that a link up may be possible as he is
currently looking to set up Re-use centres in the region, encouraging social
enterprises to look at waste and recycling initiatives.

OTHER ORGANISATIONS
Eastern Touring Agency
ETA has recently received funding from the Arts Council to look at the demand for an
Arts based incubator in the region. They have recently visited San Jose to look at
models in America. Interest was shown by John Wroe, Managing Director and
Pauline Catlin-Reid, Diversity Programme Manager in this current study. The
possibility of link up was discussed and the ETA position is that if a development of a
social enterprise incubator takes place, ETA would very much like to be part of and
be involved in the shaping of it.

They welcomed the potential to work in a social enterprise cluster as in their

experience working with and alongside diverse cultures has been one of the key
successes of work in their area creating ‘synergy’, spin-offs and a greater
understanding of the needs and solutions within their market. The development of
relationships, networking, inter-trading of ideas and goods, mixing of cultures could
only be of benefit to participants within an incubator dedicated to community
regeneration and economic development.

Citylife Ltd
Martin Clark of Citylife Ltd, a charitable industrial and provident society based in
Cambridge, has been studying the possibility of a Community Enterprise or
Innovation Park. This has involved looking at a provision of high quality but affordable
business start-up accommodation with on-site support services for a more
disadvantaged client group than is currently served by workspace in the city, such as
Prince’s Trust clients, (disadvantaged young people aged 18-30 years) and older
groups. Citylife has expressed an interest in linking up of ideas and would welcome
discussions and input if the incubator idea is moved forward.

Conclusion
There is a great deal of interest in the idea of a community/social enterprise incubator
within the City. Incubator type developments providing support for community
enterprise, arts based firms, etc are being looked at as a way to encourage growth
and regeneration within disadvantaged communities creating a ‘dynamic and
sustainable social enterprise sector, as part of an inclusive and growing
economy’ (Social Enterprise … a Strategy for Success dti July 2002).

22
SITES

Land and property prices in the area are currently at an all time high although the
market is becoming unsettled at the moment (Januarys Estate Agents, 2003).
Renting premises is a major issue for all new (and established) small businesses due
to rising costs and many small firms are having problems sustaining their businesses.
Research has looked into the current availability, future development and possible
costs of sites within Cambridge and its’ outskirts. Issues raised by the questionnaire
have been taken into consideration when looking for a possible site for an incubator
development. These include:

Low cost land or premises, free hold or long lease

Suitable site to house 10 – 15 units, office and light industrial. This was based
on current needs (7 properties needed with provision for meeting and admin
office support) with a few extra spaces for new or other types of businesses
Good transport infrastructure. Access to site by client group and consumers
Near to learning establishments used by client group
Near to Science Park for credibility and visibility

Contact was made by telephone, email and letter with; local estate agents;
developers; local authority planning offices; economic and development officers;
college property managers and other connected agencies to look at current (and
future) development planned in the environs of Cambridge to see what possible sites
are available now, that may be suitable for a CSE ‘incubator’.

Results
At this present time Cambridge City Council only has individual units for leasehold
available. Listing of their property can be found on their website, details see
Bibliography and these are available at market rates. The current market rates for
leaseholds in the centre of the city are; £5 - £8 per sq ft for light industrial warehouse
and £17 - £25 for office space. On the outskirts it’s about £5 - £6.50 for industrial
warehouse space and £9 - £20 for office space, dependent on facilities and the state
of the building (DJ Wisbey, Januarys, 2003). Research and Development Centres
range from £20 – £22.50 per sq ft (Slough Estates Plc 2003).

Stephen Conrad, Sales and Acquisition Manager (Property Estate, County Council),
explained that all local government properties needed to be sold at market rates for
best value and that sites with properties in declining use currently available have a
market value of £1.5M per acre.

The two models below look at the possible costs of new build or refurbishment of
existing buildings. These estimations are based on current market price and
information gathered from Bidwells Property Consultants in Cambridge. A model
incubator, based on the requirements of CSEs, would be 10 light industrial units
(approx 1000 sq ft each), 4 office space (350 sq ft each), 1 conference room (350 sq
ft). This gives an estimate for the land needed as being up to ¾ acre, working on the
premise that the whole site will include car parking and space to move around
(actuals 40% of whole area needed).

Industrial land available for development is scarce in Cambridge however these

models are overviews to give an idea of potential cost. Figures calculated are ‘ball
park’ figures of whole cost.

23
Model 1: Purchase of Land and New build
Purchase of land ¾ acre @ £1.5M per acre £1,125,000
New office bespoke approx £100 per sq ft £175,000
Light Industrial Unit approx £50 per sq ft £500,000
Car Park
TOTAL £1,790,000

Model 2: Leasehold and refurbishment of existing building

– based on current building in Cambridge
20 year lease 17, 081 sq ft x £5.50 £2,254,920
Refurbishment approx £50 - 100 per sq ft £1,000,000
Car Park
TOTAL £3,254,920

These figures are maximum costings. Industrial land is scarce so the ‘real’ cost of
land is based on the ‘incubator’ being set up within a residential development.
Refurbishment on existing buildings is also estimated at maximum cost however
actuals will be dependent upon the building and the specifications of refurbishment
and therefore could be considerably less than the above estimate. Although the cost
of the leasehold is based on 20 years at current market price, a more favourable
tenure could be negotiated and in the present unsettled clime there could be
opportunities to obtain buildings at a more affordable price. Obviously issues to take
into consideration include planning and integrating businesses into existing premises.
There are other cost considerations to be taken into account including rates, although
the organisation leading the development may be entitled to 80% rate relief
depending on status.

Planning Permission
Another point to bear in mind is planning application for new build or change of use of
existing premises. The contact with City Council indicated that the presumption is
that most land waiting to be developed will be used for residential build. General
planning policy is to restrict office development and to protect industrial land as there
is too much of the former and not enough of the latter, resulting in an imbalance in
the labour market. Consequently, because the plan for a social enterprise ‘incubator’
involves office developments, a special case will have to be made if it is to be
allowed.

New Developments
New developments may be a possibility but will still hold the market value. Gallagher
Estates has recently distributed plans for the Arbury Camp development site in Kings
Hedges. There is provision for mixed commercial development areas. One intention
is to encourage local young entrepreneurs to remain in the area. Contact has been
established with Gallagher Estates who commented that the planning application is
with South Cambs District Council at present. This site could offer many benefits:

Close to A14
Extension of Kings Hedges and Arbury districts that already house stable,
successful CSEs including Daily Bread and Kings Hedges Community Centre
Near to Cambridge Regional College
Plans to be serviced by the Rapid Transport System, a single integrated public
transport scheme linking up St Ives, Huntingdon and Cambridge.

24
Local Estate Agents regularly send information of available sites. Many have
included warehouse structures outside of Cambridge including Ely and Fordham.
Prices are not so high in these areas but further research would be needed to look at
setting up a ‘flagship’ incubator further out of Cambridge.

Conclusion
Various possibilities have been researched including buildings, brown sites and
developed land in Cambridge. Unfortunately no suitable site has been found at this
time although there are possibilities that will need to be followed up. If an incubator
development is to be taken to the next stage the requirements will need to be more
specific. Space in Cambridge is hard to find and beyond the scope of this overview.
Further research will need to look at:

Buildings in declining use that are owned by a sympathetic owner or local

authority who would like to sell it at a reduced rate. Possible candidates could be
churches, redundant schools and community centres. An important issue to
understand is that although the ‘incubator’ could bring employment to the area,
provide community driven commodities and sustainable regeneration, the
community must be the focus of the development. Although an area or building
use may be perceived to be in decline, it still may provide a vital use for a small
part of the community that may not see how a new development could benefit
them if it replaces a function central to their current needs.
Future developments in the area include Arbury Camp and Newmarket Road.
Use of brown field sites
Identifying a benevolent landowner or a charitable trust
Negotiating favourable long-term leaseholds on existing buildings
Look at possible sites further outside the City
Planning implications for identified sites

The cost of a new build on freehold land is estimated in excess of £1.5M and for a
20-year lease hold with a complete refurbishment of premises, the cost could be in
excess of £3M.

25
FUNDING

One of the critical factors for success in respect of the incubator development is the
affordability and sustainability of the project. At this initial stage of research actual
figures are not required. However, working on the assumption that the incubator
would be a new build and that the cost of the scheme would reflect market price in
Cambridge at this time, a cost of £1.5M would be a realistic estimate of capital
needed to pay for the land, building and equipment. This would of course decrease if
benevolent landowners were found or the economic climate changed and so on.

Possible Sources of Funding

SBS Business Incubation Fund – available for loans up to 50% of capital costs of
incubator. This fund can be used for new incubation projects, workspace
refurbishment into incubators and infrastructure initiatives such as broadband
and other technical services. This loan fund is only available for non-profit
making and charitable organisations, local authorities and Higher Education
Institutions.
European Union Social Fund grants – administered through GO-EAST.
Adventure Capital - bursaries administered through the DTA for start-up SEs
Regional Development Agencies providing access to Regional Innovation Funds
of £50M, nationally, to support business clusters and incubators.
Phoenix Development Fund – promoting innovative ways of supporting
enterprise in deprived areas
SSEER – Supporting the Social Economy in the East of England Region –
supported by EEDA led by Business Link Herts.
Industrial Common Ownership Finance (ICOF) – ICOF are very interested in the
incubator concept and in principle could pull in a £300,000 loan for the project.
Citylife Ltd raises capital and revenue to achieve social goals through the sale of
bonds. They could feasibly raise upwards of £2M which would mean £1.5-1.6M
loan for capital (purchase and new build of housing and workspace) and £400-
500K for revenue to ensure the development achieves its goals.
Banks
Local Authority and Trust grants
Rental income
Other initiatives within complex, training, community café, hiring of rooms etc

Conclusion
There are a many options for raising capital and applying to grant funding bodies.
Once further research ascertains actual costs then potential funders could be
approached with clearer objectives and plans.

26
MANAGEMENT OF INCUBATOR

Research has shown that local CSEs have not expressed any preference for the
management structure of the incubator. Profiled case studies have shown that in this
research there are no standard models for management that are universally used.
There are, however, some common themes explored later in this section.

At this stage, taking into consideration the results of the questionnaire, it would seem
that the most appropriate model for an incubator for CSEs is a mixed development
site. Office space would be interspersed with light industrial units, varying from 350 –
1,000 sq ft. The incubator could offer services to pre-start-up, start-up and more
mature businesses.

As stated by NBIA a critical factor of a successful incubator is on-site management,

although recent research by UKBI Ltd showed that only 69% of incubators in UK
actually have on-site management. Taking into consideration the experience of
incubators in the case studies, on-site management provides effective operation of
the incubator and if this is to be a ‘flagship’ for the region the incubator will have to be
seen as an effective and efficient business itself.

The incubator could be managed by:

An appointed agency or paid staff
The occupants
Or a mix of both. Day to day operations staff responsible to the tenants’ board,
which would set the long-term strategy and aims

Cambridge CDA recommend the third option as this would be most familiar with the
CSEs, as most of them have a similar structure.

Possible key players in the management of the incubator

On-site Manager to; encourage 100% capacity of incubator; maintain building;
employ staff; oversee operation of the incubator; monitor entry and exit policy
Receptionist and administrative staff to deal with; visitors, direct enquiries and
manage conference rooms for meetings, training events and bookings. They
would also manage any communal office equipment and operate a ‘back office’
facility for licensees
Cleaner employed by site for office and communal spaces

Facilities
Facilities on offer need to be tailored to occupants. The physical or learning
difficulties of the employees and trainees needs to be catered for. Structural
design would have to take the current and future possible needs into account.
Good transport infrastructure will be needed to ensure accessibility for those with
special needs. Many organisations suggest the incubator could provide a
communal vehicle for use by occupants perhaps to hire out at agreed times to
cover costs.
A Community Café could provide an informal place for occupants and visitors to
interact, sharing ideas on good practice. It could be a focal point to encourage
networking especially for those in the light industrial units.

27
Services
Provision of business services – this could be provided by on-site managers of
the operation if suitably experienced i.e. CCDA, or provided by service providers
renting space such as Business Link. The important aspect is that the
information, advice and training are relevant to the occupants.
Financial advice is also seen by the sector as a very important facility as
conventional funders see social enterprise as high-risk clients. Again this could
be administered from suitably experienced managers of the incubator or
information sessions arranged on site with relevant funders participating when
needed. Again it may be that a Development Agency would be the prime
contender to run the site, as it would already have these skills within its
infrastructure.

Policy
Entry criteria - The CAN Centre research has shown that relationships are a key
factor in the success of their model. Consideration must be given to the type of
social enterprise accepted into the incubator to avoid duplication of trades and to
look at the mix of organisations, how they will complement each other and do
they share the same values.
Exit policy - A business incubator in its truest form would have a graduation
policy. The role of the incubator would have to be decided from the outset
although it may have to be flexible in its approach to the operation taking into
consideration loss of income from unoccupied space. It would appear that many
business incubators operate a graduation policy with 49% based on length of
tenure (UKBI 2002). In the consideration of a graduation policy, the
infrastructure must be set up to ensure successful graduation into commercial
workspace such as stepping rent to prepare for market prices, business
development support, etc. If there is no graduation policy, how will the incubator
cope with businesses that do not want to leave the centre even if they have
become successful? Current research indicates that true forms of incubators
have organically grown and client needs have provided solutions such as
WYEC’s acquisition of the Trident Centre. The CAN Centre has just invested in
more space. The Genesis Centre development will research and consider the
‘bottle neck’ of enterprises within the Centre as the 3 year tenures come up for
approval.

Health and Safety

A collective health and safety policy for the whole complex

Preparation for the real world

If the incubator is to provide subsidised workspace and other complementary
services how will this encourage and develop sustainable social firms offering real
work enabling them to compete in the private and social sector, will subsidised
workspace offer ‘real’ experience? Models have shown that where reduced rents are
applicable, stepped rents and a good referral network outside of the incubator has
ensured successful placement of graduated businesses.

Funding of infrastructure of incubator essential

Revenue funding will need to be researched thoroughly if the incubator is to be seen
as professional and effective. Charges may need to be raised for business and
financial advice. Business support plus other services could be charged directly to
the tenants incorporated into their licence fees. If the incubator aims to promote
sustainability then it needs to be seen as pro-active and innovative in this area. The
Genesis Centre provides leisure and catering facilities, WYEC has rental income
from the Trident Centre and SJIC contracts out consultative work

28
Services offered outside the incubator
The diversity in the sector raised some concerns. Would an incubator be able to
accommodate all? Obviously this would not be achievable. However an incubator
would be able to offer its services to those not concurrently renting space in the
complex.

Conclusion
Whatever the model, the incubator will not serve all in the community but ongoing
monitoring of social enterprises’ will ensure that an incubator will be flexible and meet
most of the needs of the community it serves.

29
CRITICAL FACTORS for development of physical Incubator

FACTOR ISSUE COMMENT

Demand CSEs Established need through research and

interviews with CSEs and interested groups

Government Govt has identified needs for initiatives like this;

Strategy high visibility, mainstreaming and support

Land Planning Difficult if land is earmarked for housing, as

Permission most is at present
Possibility of new developments that have
already applied for planning permission for
mixed use i.e. Arbury Camp
Reuse of building will need planning, dependent
on previous use

Cost Current land cost £1.5M per acre

Cost at market price, unless benefactor found

Availability Need to continually track development in market

During research no ideal sites but possibilities,
see Sites section

Funding Initial Purchase CAPITAL

Estimated cost of 10 – 15 unit incubator
including land, building and equipment £1.5M
new build, £3M lease and refurbishment
REVENUE
Management and maintenance of complex
including fulltime manager and associated costs
£50,000 pa
Available funding Plenty of funding pots available in business
incubation and promotion and growth of social
enterprise sector, regionally and nationally.
Funds available if good idea and proof of need.
Revenue Rental Income
Innovative ideas to create income i.e. training
for other organisations, community café, hiring
conference facilities
Other grants

30
CRITICAL FACTORS for CSEs within the Incubator

FACTOR ISSUE COMMENT

Partnerships Client Referral

Research has shown this development
Development of crosses many different sectors, CSEs
incubator to involved with many agencies
attract top class High level interest by other bodies i.e.
entrepreneurs voluntary sector CCVS and COVER
irrespective of Economic Partnerships
field of Statutory Authorities
experience

Attract Funding
Attract and Type of Research has shown hybrid building
Retention of Accommodation containing warehouse and office facilities
CSEs Prestigious building for high visibility and to
bring credibility to the sector
Good transport infrastructure
Proximity to centres of learning

Range of On site business and funding support i.e.

Services CCDA, Business Link
Training and conferencing facilities
Access to shared office equipment
Administrative support

Positive CSE success Entry policy

Benefits within Type of enterprise
development Values of enterprise
Direct competition?

CSE success on Lease Policy

graduation from Easy entrance and exit lease agreement
incubator Stepped rent for preparation for commercial
rates

Exit Policy
Build in flexibility. Will businesses outgrow
development?
Prescriptive exit policy on maximum
tenure?
Anticipate that need to ‘add on’ as unit
becomes managed workspace

31
CONCLUSION

All social enterprises questioned agreed that some type of incubator development
would be beneficial in order to promote and give visibility to the social enterprise
sector. Most agreed that Cambridge would present an ideal site for a ‘flagship’
development in the region. Although the idea of an incubator in its truest sense was
appealing many felt that primary need for their enterprise whether fledgling,
diversifying or expanding was access to affordable suitable premises. Therefore
further research is needed to establish what form the incubator should take and more
importantly what role the development adopt. The present research indicates that
the incubator needed now would be a development combining both office and small
industrial units. If available today, seven fledgling and diversifying social enterprises
would be interested in moving into a dedicated development in Cambridge (CCDA
questionnaire, Jan 2003). It would be feasible to look at a development that could
house 10 – 15 mixed units providing space for these interested CSEs, a conference
room, administration and management office and training areas. Surplus space
could be made available to other fledgling community enterprises.

The role of the incubator needs to be specific, although flexible, either a centre to
nurture existing enterprises through clustering and capacity building or to generate
new social enterprise through a genuine incubation patch. Once again initial
research indicates a hybrid development catering for businesses at all stages, with
part managed workspace and part incubator provision would be the most suitable
choice at this stage. As with other hybrids criteria will have to be set in place for the
management of such a centre taking into consideration the requirements of the
sector, the cost of running the centre and other issues such as the flexibility of the
operation and entry criteria. This will include the availability of space to social
enterprises and co-operatives exclusively or allowing access to entrepreneurs from
disadvantaged communities. The decision may rest with the economics of operating
the centre.

This research has shown that successful incubator type developments automatically
generate networks within their groupings, see case studies. A robust cluster of Co-
operatives and Social Enterprises in a prestigious development based in Cambridge
will ensure that their voice is heard outside the sector, whilst facilitating a continuous
exchange of best practice within. Policy makers, financial bodies and the general
public would become much more aware of the sector. This will enable support and
replication of the model in other areas of the region adjusting the set-up and
operation of such a development to meet localised needs.

As NBIA stated, effective on-site management is essential to the success of an

incubator. Cambridge is central in the region for supporting groups within social
enterprise with CCDA playing a key role. CCDA provides effective all round support
to the sector so it may be prudent for the local development agency to manage such
a venture if set up in Cambridge as the incubator would provide centralised support
and signposting to relevant organisations.

The difficulty has been at this stage to find a suitable site. Ongoing research of what
is on the market needs to continue if this idea is to be developed further.

32
Working on current market prices the capital funding needed to set up the incubator
could range from £1.5M to £3M. A comprehensive study of actual costs and funding
streams needs to be researched once a suitable site is located. Capital funding of
the centre could be achieved through grants, loans and fundraising initiatives. This
would help in the provision of subsidised and stepped rents to start-up tenants. The
rental income could pay for day-to-day management, operation and business support
and advice for occupants; again a comprehensive look at revenue costings is needed
to assess viability of identified sites. There are a variety of funding routes and the
role and type of incubator will have an impact on funding streams available.

There is a great deal of interest in the idea of a community and social enterprise
incubator within the City. The publication of the dti Strategy for Social Enterprise
report has heightened the interest in the sector. Incubator type developments are
seen as one way of encouraging growth in the sector, aiding visibility and
understanding within the entire community. It is seen as a tool to enable new and
established social enterprises to participate in the economy on equal footing with
mainstream SMEs, encouraging many to look at new ways of increasing their output
and sustainability. The development of this sector within an incubator will provide
even more necessary services and aid regeneration of communities by offering real
employment; training opportunities; effective services and competitively priced
products. Access to relevant business support and financial advice would encourage
competitiveness within their own sector and with mainstream business.

Although this study has looked at an autonomous development exclusively for CSEs,
the research has shown that there is potential to link-up with various other agencies
to develop a larger centre for multiple beneficiary enterprises.

33
SUMMARY TABLE OF PROPOSED INCUBATOR TYPES (Refurbished or New Build)
TYPE INFRASTRUCTURE FUNDING * BENEFICIARIES Possible Disadvantages MANAGEMENT ISSUES**

Mixed 10 –15 units Need sites near to A14 and bus CSEs May exclude itself Exit strategy – high profile
routes Trainees and employees from other incubation development reluctance of CSEs to
Near to learning establishments Mainstream business & initiatives move on
Needs to have scope for financiers (better
expansion – as more enterprises understanding of CSEs)
take up space
Exclusively Office On bus route or any road link city As above except CSEs Not suitable for all Possible entry strategy tensions
space centre, outlying villages such as would be trading as non- enterprises with the wider social enterprise
Histon manufacturing CSEs may be sector
perceived as cerebral
Exclusively industrial Needs good transport As for mixed units Not suitable for all Would need dedicated back office
units infrastructure for deliveries, near except CSEs would be enterprises to deliver greater admin support
to A14 trading as manufacturing Doesn’t give itself the Less aesthetically pleasing
and light industry opportunity to be Possible entry strategy tensions
reflective of the sector with wider social enterprise sector
as a whole
Hybrid (mixed Dependent upon type of units May bring in As above Lack of clear identity Possible conflicting values
tenancy) (see above) specific funding Disadvantaged would be for incubator between objectives of different
streams not entrepreneurs (i.e. groups of enterprises
targeted Princes Trust clients,
exclusively at ethnic minorities, etc)
social enterprise

Integrated Housing Location sympathetic to needs of Creates more As above Larger ecological Possible conflict of values and interest
and workspace housing tenants while still housing in line Individuals footprint needed and expectations
beneficial to the trading enterprise with govt targets disadvantaged in the demand for housing may outweigh
activity therefore money housing market ie demand workspace; site may
may be available homeless, low income evolve into housing estate
from central govt Housing tenant participation –
and housing conflict of expectations
associations Incubation issue – application of
entry and exit strategies in relation
to housing tenants or tied housing
*All funders in Funding Section relevant to all models unless otherwise stated ** All issues in Management of Incubator Section relevant to all models unless otherwise stated

Environmental Issues
All structures have the capacity to incorporate positive environmental features. Research needed into similar eco friendly housing and
workspace once model and site have been identified

34
ACKNOWLEDGEMENTS

• Cameron Adams, Strategic Development Officer,

South Cambridgeshire District Council
• Adrian Ashton, Development Officer, Cambridge CDA
• Rev Tony Barker, Minister, Zion Baptist Church, Cambridge
• Nigel Boldero, Eastern Regional Development Manager, DTA
• Matthew Brundle, Technical Director, WSP Environmental
• Pauline Caitlin- Reid, Diversity Programme Manager, Eastern Touring Agency
• Anne Campbell MP
• Martin Clark, Director of Employment Initiatives, Citylife Ltd
• Andrew Cogan, Managing Director, COVER
• Stephen Conrad, Sales and Acquisition Manager, Cambridge County Council
• Chrissie Davies, Cambridge
• Lorna Davies, Director, CCVS
• Tom Davies, Accounts clerk and Admin support, Cambridge CDA
• Craig Dearden, Speaking Up
• Arnaud Drapier, Research and Project Manager, UKBI Ltd
• Cllr John Durrant, Cambridge City Council
• Peter Durrant, Humberstone, Cambridge
• Donald Findley, Financial Director, CAN
• Martin Garrett, Director, Greater Cambridge Partnership
• Lewis Herbert, Wastewatch, Anglia Polytechnic University
• Walter Herriot, Managing Director, St Johns Innovation Centre, Cambridge
• Andrew Hibbett, ICOF
• Darren Hill, East Cambs District Council
• Steven Holmes, CX, The Genesis Enterprise Centre
• Owen Jarvis, Manager, Aspire Social Firm, Cambridge
• James Jolly, Development Consultant, Wandsworth Youth Enterprise
• Rita Kelly, Manager, Start-up, Godalming, Surrey
• Andy Lawson, Assistant Projects Director, Gallagher Estates Ltd
• Neil Longhurst, Keystone Community Partnership, Thetford
• Michael Manning-Prior, Managing Director, Wandsworth Youth Enterprise Centre
• Jamie Merrick, EEDA
• David Nicholls, Business Development Manager, Cambridge Business Link
• J Blott, Cambridge City Council Planning Department
• David Potter, Regional Director, RICS East of England
• Andrew Poulton, Senior Economic Policy Officer, Cambridge City Council
• Simon Smith, Head of Economic Development, Cambridge County Council
• John Wilkinson, Social Policy Inclusion Adviser, EEDA
• D J Wisbey, Januarys Chartered Surveyors, Cambridge
• John Wroe, Managing Director, Eastern Touring Agency
• Sara Gisby and Keith Fuller, Bidwells Chartered Surveyors, Cambridge

35
APPENDIX A

QUESTIONNAIRE – SOCIAL ENTERPRISES

Name of Organisation

Contact

How long has your organisation 0 – 1 yr 2 – 5yrs

been trading? Please circle? 1 – 2 yrs 5yrs +
At what stage of development is Start-up Expansion/Growth
your organisation? Please circle Diversifying New premises needed
None of the above

Which best defines your trading Agriculture, Arts, Catering, Childcare, Other care,
activity? Please circle Environment, Finance, Gardening/Horticulture, Housing,
Manufacture, Recycling, Retail, Training, Transport,
Other (please state)

Start-up. What were the Finance/funding

problems your organisation
encountered at start up?
Suitable premises/location
Business Advice/Support
Legal Advice/Support
Administration
Marketing/Visibility
Other:

Do you think that there is a Yes / No

need for a low cost start up
property development set-up for Where do you think this ‘incubator’ should be set up, and
Co-operative and Social why?
Enterprises?

What benefits do you think such Business Support

a development could offer to you
and other enterprises in it?
Networking (with other social enterprises)
Physical market to trade ideas/goods/services
Sharing of facilities
Cost effective
Visibility in the market place
Other:

36
What problems do you feel could
be encountered?

What agencies do you currently

use for advice and support?

What type of buildings would be Office space

most suitable for your
organisation?
Light Industrial Units (what access issues?)

Mixture of office space and Light Industrial Units

Other:

WISH LIST – If you have not

already been able to list them,
what things would you like to see
made available to organisations
being based in such a
development?
What three factors do you 1.
believe are necessary to ensure
success and longevity of your 2.
organisation?
3.

At this stage of initial research, Yes / No

would you be interested in being
based in an appropriately located
incubator?

Thank you for your help. Please return this form to:

Sue Roberts, Project Officer,

CCDA, Alex Wood Hall, Norfolk Street,
Cambridge CB1 2LD

Any queries please contact me on 07974676504or 01223 360977

37
APPENDIX B

Targeted Social Enterprises

3D Logistics, Sandy
Arjuna Natural Health Centre Ltd, Cambridge
Arjuna Wholefoods, Cambridge
Aspire, Cambridge
Biofuel, Cambridge
Branching Out, Ely
Burwell Community Print, Burwell
Castle Project Print Finishers, Cambridge
Daily Bread Co-operative (Cambridge) Ltd, Cambridge
Darwin Nurseries, Cambridge
Delta T Devices Ltd, Burwell
East Barnwell Community Café, Cambridge
FACET, March
Farmgate Dairies
Fledglings, Ickleton
Funky Flamingo, Bourn
Hyperion Auctions Ltd, Huntingdon
Micro-Robotics Ltd, Cambridge
Narinda Ltd, Cambridge
Opportunities Without Limits, Sawston
Papworth Trust, Papworth
Radical Changes, Cambridge
Regional Credit Union, Cambridge
Rowan Foundation, Cambridge
Silverfern Trust, Cambridge
Spectrum Co-op Ltd, Huntingdon
The Supply Teacher’s Co-operative, Cambridge
Workbridge, Huntingdon

For a copy of the Directory of Co-operative and Social Enterprises in Cambridgeshire

please contact Cambridge CDA, Tel No 01223 360977

38
APPENDIX C

Organisations used by local CSEs

Anglia Polytechnic University, APU

Business Links
Cambridge Action for Communities in Rural England, ACRE
Cambridge Centre for Voluntary Services, CCVS
Cambridge Co-operative Development Agency, CCDA
Cambridge City Council
Cambridgeshire County Council
Cambridge Enterprise Agency, CEA
Cambridge Housing Association
Cambridge Independent Advisory Service, CIAC
Cambridge Regional College, CRC
Council of Volunteers Eastern Region, COVER
East Cambridge District Council, ECDC
East of England Development Agency, EEDA
Get to Grips, GET
Huntingdon Regional College, HRC
Industrial Common Ownership Finances, ICOF, now part of Co-operatives UK
Learning and Skills Council, LSC
National Health Service, now Trust
Papworth Trust
School for Social Enterprise
South Cambridgeshire District Council, SCDC
Social Firms Eastern Region, SFER
Social Training Enterprise Networking Group, STENG
Speaking Up

39
BIBLIOGRAPHY

EEDA Corporate Plan 2002 – 2004

EEDA Eastern Region Regional Development Plan
EEDA 2010 “Prosperity and Opportunity for All”
ICOM Video “The Co-operative Advantage”
LSC “Training Issues facing social enterprises in Cambridgeshire”
Dti Social Enterprise Unit “Social Enterprise: A Strategy for Success” 2002
APU WISE – Working in Social Enterprise

Websites

www.businesslink.org Business Link

www.cambs.businesslink.co.uk Business Link Cambridgeshire
www.cambridge.cvs.org.uk Cambridge Centre for Voluntary Services
www.cambridge.gov.uk Cambridge City Council
www.camcnty.gov.uk Cambridgeshire County Council
www.citylifeltd.org Citylife Ltd
www.can-online.org.uk Community Action Network
www.co-op.co.uk Co-operative Movement
www.cover-east.org Council of Volunteers Eastern Region
www.dti.gov.uk Department of Trade and Industry
www.e-t-a.org.uk Eastern Touring Agency
www.gallagherestates.co.uk Gallagher Estates Ltd
www.gcp.uk.net Greater Cambridge Partnership
www.nbia.org National Business Incubation Association
www.sbs.gov.uk Small Business Services
www.social-enterpirises.org.uk Social Enterprise Unit
www.ermis.co.uk Social Firms UK
www.scambs.gov.uk South Cambridgeshire District Council
www.socialenterprise-east.org.uk SSEER
www.stjohns.co.uk St John’s Innovation Centre
www.surreycc.gov.uk Surrey County Council
www.ukbi.co.uk UK Business Incubation Ltd
www.wyec.org.uk Wandsworth Youth Enterprise Centre
www.wspgroup.com WSP Environmental

40
 Cambridge CDA
Alex Wood Hall, Norfolk Street, Cambridge CB1 2LD

T: 01223 360 977 F: 01223 50 90 40

E: CambridgeCDA@ConnectFree.co.uk
W: www.colc.co.uk/cambridge/ccda

Registered in England No. 1853517