Inspired by a survey I completed this morning for Birmingham Business Charter via Find it in Birmingham, I want to talk about ‘social value’: what it is and how small businesses in particular can leverage it to be more competitive when tendering for contracts.

Since the introduction of the Social Value Act in early 2013, more and more tenders have asked bidders how their business provides or helps to improve social value in their area.

What is ‘social value’?

Social Enterprise UK defines it in their brief guide rather neatly as ‘looking at what the collective benefit to a community is when a public body chooses to award a contract’.

(Their guide is aimed at social enterprises specifically but social value is equally applicable to businesses and organisations that aren’t officially ‘social enterprises’.)

While social value is important on a large scale, frequently it refers to local considerations, especially in tenders that are being run by local authorities. Generally then, social value is about developing, improving and sustaining:

• The local economy
• Local employment opportunities
• The local environment
• The local community

Bidders must prove that how they do business positively impacts the local social and economic value of their area.

A quick note: ‘economic value’ is a crucial element of social value. You can maintain a certain amount of social opportunity in areas with a limited economy. But it’s damn hard; economically deprived areas struggle most to develop and sustain social value.

How can social value give smaller companies the edge?

When it comes to goods or services that are relatively comparable across the board – the provision of equal quality services and/or widgets at a similar price, within similar timescales – one of the ways contracting organisations can decide on who to award a contract to is by identifying how much social value each bidder can offer to the local area. This is valid because, apart from getting the best value in terms of actual cost, publicly funded contracting authorities also have wider goals to meet, aims and objectives that benefit the communities they serve on a wider scale.

This is also one of the key ways even the smallest of businesses can knock out the ‘big boys’ and win contracts, even where their price is lower.

Let’s say you’re a smallish, family run business, established for a few years, providing services or goods locally. This is what you’ve got:

A track record of hiring locally:

• You actively seek local people to work in your firm
• You train them to do their jobs
• You promote from within, keeping your employee’s knowledge and experience within your company
• Perhaps you offer apprenticeship opportunities or work experience for local school kids

A local supply chain:

• You buy from local independent suppliers
• You buy from local branches of national suppliers

Local knowledge and community standing:

• The end users of your goods and services know who you are
• You know your local area, its good and not so good points
• Perhaps you’re influential within a local business association
• Maybe you sponsor your local sports team, maybe you run charity days for local causes

A low carbon footprint:

• Most of the travel your staff do during work hours is within the local area
• Some of your staff might walk, run, cycle or car share to work and back
• You maintain a minimal fleet of the right vehicles for the job you do

All of this is stuff that you do just because it helps your business remain in business. It makes economic sense for you to keep your fuel costs down, to hire locally, to develop relationships with local suppliers, to maintain your firm’s reputation and promote your business.

But in terms of social value, the ripples of what you’re doing go so much further:

• By using local suppliers, you’re also helping them employ local people and – certainly with independent suppliers – you’re keeping the money you spend with them within your local economy.
• By offering work and training to local people, you’re helping people stay in the area, send their kids to local schools, use the local libraries and health services and spend their money locally.
• By sponsoring local teams or contributing to charities or local causes, you’re helping to maintain community bonds and local pride.
• Through your ties to local business associations, you’re helping other local businesses succeed, which in turn spreads ripples of its own.

Your bigger competitors will have to work very hard to beat or replicate all of this. As much as they can throw money at ‘carbon offsetting’ and as much as they can promise to hire people locally, they’d need to do that from scratch. They’d need to learn about the local social and economic landscape and try to put in ideas and initiatives that might or might not work.

You’re already doing it.

What else can you do that the ‘big boys’ can’t?

Contracting authorities want to work with people and businesses who can help them meet their aims and objectives. Where social value is a key goal, you can afford to:

Be honest:

Many tenders will ask you to make commitments to take on a certain number of staff, or will want you to advertise any future employment opportunities you might have in a way that opens them up to those struggling with unemployment.

Your bigger competitors will just say ‘yep!’ and make commitments that might not hold up to reality.

You, knowing what you do about your community, can establish in your tender response what you know of the current situation and how those factors affect the commitments you make. You can suggest realistic numbers and, even where those numbers realistically are zero (and it’s quite possible they may be), you can suggest alternative ways you might help the contracting authority meet their goals.

Be open:

You’re in a good position to offer your years of experience and knowledge to the contracting authority. By looking beyond the goods and services your company provides and by understanding how your business directly or indirectly affects the local social and economic situation, you can seek to develop stronger relationships with the council, the local housing association, the organisations that offer support to job seekers and all the other publicly funded organisations in your area.

This will give you a reputation for genuinely being committed to the development, improvement and sustainability of the local area, rather than just giving it lip service to win a contract.

Be enthusiastic:

If you can prove that the way you do business directly and positively affects your local area you can shout if from the rooftops. Or write it down in your tender.

Bigger competitors might have a page-worth of population statistics and a ready-to-wear solution to all of your region’s supposed issues but you have the evidence of your impact on the actual issues right there in your back pocket:

• You can list how many local people you’ve taken on, what training they’ve had, how they’ve progressed and what their roles are now.
• You can state how much money you keep circulating in your local area, just by doing things the way you do.
• You can get testimonials from the people you sponsor and the organisations you support.
• You can draw up a like-for-like comparison between your carbon footprint and that of your main national competitor.

What’s the bottom line?

Social value is built into many small businesses. We should use this to win more contracts – yes because we want to win them – but also because we, our staff and our communities get the benefit of social value too.