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What is ‘social value’ and how can it help your start-up win customers?

What is ‘social value’ and how can it help your start-up win customers?

If your start-up wants to win government contracts, you might look for ways to maximise social value.

Any public body that’s tendering a contract – whether that’s the national government, a local council, or a publicly funded organisation – must consider social value opens in new window when making its decision.

You might think this would disadvantage new businesses, creating more paperwork and complicating the procurement process, but it can actually give start-ups an edge over larger companies in winning business.

Find out how social value works and how you can build your social value.


What is social value?

Social value is a term used in the public sector to measure the effects that businesses have on the world around them.

The model helps government bodies choose the most suitable suppliers for new contracts opens in new window.

It rewards bidders that engage in sustainable practices opens in new window across a range of activities.

Businesses are evaluated based on the way their operations impact:

  • the local economy
  • the environment
  • the local workforce
  • the local community.

The social value model helps the government meet broader objectives – from cutting carbon emissions opens in new window to supporting economic growth in local communities.

It also helps them identify suppliers that could use the contract to improve their local area – whether that’s by creating jobs, supporting the workforce, or investing in community initiatives.


Why social value is important for start-ups

Social value could be an essential consideration for your start-up.

Under the Public Services (Social Value) Act 2012 opens in new window, all public bodies that offer contracts are required to consider social value when offering tenders.

This legislation is supported by Procurement Policy Note 06/20 opens in new window, which states that social value must be given a minimum of 10% weighting in decisions to award central government contracts.

The good news for start-ups is that social value is rooted in local issues – from bringing new jobs to the area to supporting community projects.

Because of this, you might already have a strong social value compared to larger organisations, and you can use connections in the area to increase your value even more.

Beyond the ability to win government contracts, a positive social value can have many other benefits.

Training and development opportunities opens in new window can create a positive work environment, increase employee retention, and enhance productivity.

According to SurveyMonkey opens in new window, 59% of respondents said that professional training programmes improved their performance, and 51% said it gave them more confidence.

Likewise, paying attention to your environmental concerns and engaging in local initiatives can enhance your reputation and strengthen your relationships within the community.


How start-ups can track their social value

It can be helpful for start-ups to measure and monitor their social value, so they know which areas they’re excelling in and where they need to improve.

One way to do this is by setting goals – such as allocating a portion of your budget opens in new window to be spent on local businesses.

You might also create initiatives to support community projects and measure their impact.

For instance, you can consider how these activities raise your business’s public awareness or reputation opens in new window by creating questionnaires and feedback forms opens in new window asking how customers heard about you.

Another thing to track could be the environmental impact of your business.

This is particularly true if you’re bidding for large contracts – the government will ask for a Carbon Reduction plan opens in new window for any contract worth over £5 million.

But even for smaller bids, contractors may look favourably on organisations that take steps to tackle environmental issues opens in new window as part of broader supply chain initiatives opens in new window linked to sustainability.

You might track waste management opens in new window, energy efficiency opens in new window, and the indirect effects your business has on the environment – such as how employees travel to work.

Hiring locally means your employees have shorter commutes, and they may even be able to walk to work or use public transport, helping you address two aspects of social value at once.

These initiatives can also play a part in applying for environmental and sustainability standards such as B Corp opens in new window and ISO 14001 opens in new window.


How start-ups can boost their social value

Your start-up can improve its social value in many ways, some of which can be implemented relatively quickly, whereas others require a long-term commitment.

The steps you take will depend on the nature of your business, the opportunities in your region, and the resources you have available.

In general, you should look for ways a contract with your company can benefit the local area.

This includes the positive impact you have on the economy, the environment, the workforce, and the local community.

Here are some ways you can do that.


Hiring local talent


Supporting your community


Protecting the environment

  • encourage staff to walk or cycle into the office
  • reimburse staff for commuting costs
  • reduce energy consumption
  • implement recycling programmes and promote waste reduction efforts.


Getting started with social value

To create social value, it could be wise to look at your start-up and its operations as a whole rather than just focusing on one or two activities.

That might not mean you need to engage in every community project you find or refuse to hire talented individuals with no option but to drive into work.

But you could be better off considering social value from a strategic point of view, planning your activities carefully and looking for practical ways to incorporate sustainable and responsible practices.

If you’re familiar with ESG (Environmental, Social, and Governance) opens in new window concerns, this is something you might have experience in but there are key differences.

Primarily, ESG looks at policies and helps businesses document their commitment to sustainability, whereas social value is results-driven.


Learn with Start Up Loans and help get your business off the ground

Thinking of starting a business? Check out our free online courses in partnership with the Open University on being an entrepreneur.

Our free Learn with Start Up Loans courses opens in new window include:

Plus free courses on finance and accounting, project management, and leadership.


Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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